University of Chicago eyes further deficit cuts, staff raises | Evening Digest

University of Chicago leaders said Tuesday a yearslong effort to close a $288 million structural deficit is on track, with the gap expected to shrink to about $140 million by June.

U. of C. President Paul Alivisatos, Provost Katherine Baicker and chief financial officer Ivan Samstein addressed faculty and staff at Ida Noyes Hall, 1212 E. 59th St., offering updates on the university’s financial health amid uncertainty over federal research grants, a potential economic downturn and a unionization drive announced the previous day by workers at the University of Chicago Press. Campus leaders also outlined plans to use artificial intelligence to trim administrative costs and said staff would see their first meaningful pay raises in years.

The administration projected the deficit would fall by about 20% from last year, from roughly $173 million in fiscal year 2025 to around $140 million by the close of fiscal year 2026.

“We’ll have more than halved the deficit over two years into a four-year plan,” Samstein said. “We feel very good about the trajectory.”

The goal for fiscal year 2027 is to bring the deficit below $100 million, Baicker said. The university is sending budget targets to academic and support units with instructions to find roughly $50 million in additional savings and revenue gains.

“That is going to be an ambitious but achievable goal for everyone around campus,” Baicker said.

But some faculty have questioned whether trimming the deficit at the same pace is sustainable.

Early deficit reductions came heavily from restricting spending growth, including early retirement incentives for faculty, hundreds of layoffs and a pause on doctoral admissions for many graduate programs. 

The focus going forward, Baicker said, will shift toward growing revenues through expanded master’s degree programs, executive education, summer enrollment and philanthropic donations, which are expanding, according to presentation slides. Alivisatos said the university is on track for another record fundraising year, following a record of more than $1.02 billion in fiscal year 2025.

“We’re on track for an extremely strong year again in the development space,” Alivisatos said.

Philanthropic giving tends to track the performance of financial markets, Samstein said, with donors giving more during economic booms than busts. The S&P 500, a major U.S. stock index, has grown more than 40% in the past two years alone.

While the outlook is optimistic, the university is still grappling with an estimated $2 billion in deferred maintenance, concentrated largely in its historic quadrangle buildings, many more than a century old. Samstein said the figure reflects years of underinvestment in the university’s oldest structures and that upcoming fundraising will focus heavily on addressing it.

After years of near-frozen compensation, university leaders said units will have room to give merit increases in the 2% to 3% range in the next budget cycle, which they view as important for staff retention.

“We’ve been fortunate to have fantastic staff and have very low attrition,” Samstein said. 

On the status of federal research grants — which make up about 14% of the university’s revenue — Alivisatos said that while Congress has so far resisted the deep cuts proposed by the White House, uncertainty around the timing and priorities of the grantmaking agencies remains.

“Steadfastly the Congress, both House and Senate, have restored” funding levels, he said, although he acknowledged unresolved questions about whether appropriated funds would flow as expected. 

The Trump administration has tried to withhold or delay billions in congressionally approved funding despite a court ruling ordering it to do so.

Baicker said the university’s original plan had assumed 4% to 5% annual growth in National Institutes of Health and National Science Foundation (NSF) funding but has since revised those projections downward to “something that looks a little flatter than that.”

The federal government shutdown earlier this year halted grant awards for several months, and Baicker said it remains unclear whether the backlog will be made up before the university’s June 30 fiscal year ends. Last year, grant awards by the NSF were slow in the winter and spring months before picking up dramatically mid-summer as the end of the federal fiscal year approached.

Samstein also pointed to artificial intelligence as a growing tool for trimming administrative costs without cutting headcount. 

“There are a lot of opportunities, some of which we’ve begun to harness,” he said. 

Samstein described a recently deployed system that monitors “payroll exceptions,” cases where human error causes incorrect pay.

“We’ve been using AI to teach it little by little each month to read these exceptions before they happen,” he said. “If we can eliminate all that work and the displeasure for the person who was affected, all the better.”

Last month, the university announced a $50 million gift towards a “Mind and Machine Challenge” to support “the formation of a cohort of faculty who are pioneers in the use of AI in research in disciplines across the University.”

Baicker framed the university’s AI push as a way to free existing staff for “human” work rather than eliminate positions.

This “is not about employing fewer people,” she said. “It’s about all of the people who are here being able to do their best human work and taking the stuff that can be automated off their plates.”

Samstein said additional AI-related announcements are expected “in the very near future.”

One audience member asked whether the university would voluntarily recognize a union announced the previous day by workers at the University of Chicago Press. Baicker declined to say whether the university would do so.

“We are in receipt of a request from the Press, and normal processes are underway,” she said. “There’s not anything more specific that I can say on that.”

The union, which seeks to affiliate with the Chicago News Guild, would represent roughly 140 staff members out of more than 270 across the press’s three divisions. Organizers have described the campaign as the first organizing effort in the press’s 130-year history. Workers are seeking voluntary recognition from the university or, failing that, an NLRB election.

Another attendee asked how the university is preparing for a potential recession. Samstein said most of the university’s revenue streams have historically proven resistant to economic downturns, in part, because young adults tend to enroll in graduate programs during recessions, but acknowledged two significant vulnerabilities: philanthropy and the endowment. He said the university has modeled “a whole host of different economic scenarios,” including a 1970s-style stagflation episode driven by an energy shock, which he called “the worst economic scenario.”

While Samstein said the university would be able to withstand a downturn, he acknowledged that bad economic conditions could delay deficit elimination.

“It may take you off of this path, but we feel confident that it’s absorbable,” he said.

Baicker added that rising construction costs tied to an energy or supply shock could complicate the university’s capital plans and that leaders would continue to adjust as circumstances change.

“We had to evolve the plan substantially from 2024 to 2025 when changes in federal revenues came,” she said. “We have to continue to be nimble in adjusting to the external environment.”