March 24, 2025
Dear Colleagues,
We are writing to update you on the steps that USC is taking to protect our financial sustainability and academic mission. We know that the last several weeks have been stressful for many of you. We have been working diligently to evaluate the evolving landscape and how to safeguard our mission of research, education, and clinical care.
As you are aware, colleges and universities across the nation are facing tremendous scrutiny and financial stress due to federal funding uncertainty, cuts, increased costs, and other risks. Like other major research institutions, USC relies on significant amounts of federal funding to carry out our mission. In fiscal year 2024, for example, we received approximately $1.35 billion in federal funding, including roughly $650 million in student financial aid and $569 million for federally funded research. The health system also receives Medicare, Medicaid, and Medi-Cal payments – a significant portion of its revenues – and the futures of those funds are similarly uncertain.
While every member of the university has contributed to the substantial progress we’ve made to mitigate and reduce our structural deficit, recent developments require us to take additional steps to increase our financial resilience in the face of exceptional financial uncertainty. Taking bold action now will help us to meet the challenges facing us while protecting and advancing our important academic and research missions for generations to come.
Next Steps
Effective immediately, the university will be implementing the following measures to limit and reduce expenditures. We thank each of you in advance for the role you play in ensuring that we are behaving prudently.
- Permanent Budget Reductions: Budget reductions for administrative units and schools that were implemented at the start of the fiscal year will be the new baseline moving forward.
- Procurement Control: All procurement contracts of $50,000 or more will be reviewed and approved by the senior vice president, finance, and chief financial officer, and an intensive review of all current procurement spend will begin in order to achieve efficiencies.
- Capital Spending Slowdown: All capital projects will be reassessed to determine which may be deferred or paused.
- Staff Hiring Freeze: A hiring freeze will apply to all staff positions with very few critical exceptions.
- Faculty Hiring Curtailment: Faculty hiring will be significantly restricted for all schools.
- Discretionary Spending Restrictions: Discretionary spending and expenses such as non-essential business travel, conferences, and entertainment will be limited moving forward.
- Enhanced Efficiency: All administrative units and schools will be directed to identify ways to further streamline workflows, services, and operations to meet new budgetary targets. We have already started this process with respect to our IT operations.
- No Merit Pool for Faculty and Non-Hospital Staff: With limited exceptions, we are unable to provide merit increases for the 2024 performance cycle effective July 1, 2025. A comprehensive list of exceptions to the merit increase policy – relating to promotions, equity, or legal considerations – will be provided to deans, unit leaders, senior business officers, and HR partners.
- Sunset of Extended Winter Recess: The extended winter break was put in place as a response to COVID and will be retired. We are letting university staff know now so that they can plan their vacation time throughout the rest of the calendar year accordingly.
We understand the impact that these decisions have for our dedicated faculty and staff and want to assure you they were not made lightly. As things continue to evolve at the federal and local level, we will regularly assess how we are progressing and whether further actions or adjustments are needed.
We remain optimistic that these measures will not only allow us to weather the current storm, but also place the university on a stronger footing for many generations to come. Our mission as a university has never been more urgently needed. Senior leaders across the university have been advocating in a variety of fora, including in Washington, D.C., and will continue to advocate on behalf of the vital work that each of you performs. We are grateful for your continued dedication as we navigate these uncertain times.
Sincerely,
Carol L. Folt
President
Robert C. Packard President’s Chair
Andrew Guzman
Provost and Senior Vice President for Academic Affairs
Steven Shapiro
Senior Vice President
for Health Affairs
Beong-Soo Kim
Senior Vice President
and General Counsel
Erik Brink
Senior Vice President, Finance,
and Chief Financial Officer