News Summary
The University of Southern California is experiencing a budget deficit exceeding $200 million for the upcoming fiscal year. This financial strain has led Interim President Beong-Soo Kim to propose a series of cost-saving measures, including suspending merit raises and a hiring pause. Contributing factors include declining federal research funding and potential decreases in international student enrollment. As USC navigates these financial difficulties, the leadership aims to engage with the community to explore sustainable solutions for the future.
Los Angeles – The University of Southern California (USC) is facing significant financial setbacks, with Interim President Beong-Soo Kim announcing a budget deficit exceeding $200 million for Fiscal Year 2025. This marks an increase from the previous year’s deficit of $158 million and is attributed to various challenges, including reduced federal research support and potential declines in international student enrollment. The total operating revenue for USC in Fiscal Year 2024 is reported at nearly $7.5 billion, while operating expenses have reached $7.6 billion.
In light of these financial struggles, Kim has proposed several cost-saving measures. These include the suspension of merit raises for the fiscal year 2026, reductions in discretionary and travel spending, and the sale of unused properties. Additionally, a hiring pause has been initiated, and adjustments to compensation for higher-paid employees will be implemented as part of the budget control strategies. Kim emphasized that without transformative adjustments, the structural deficit could severely impact the university’s cash reserves and future planning.
Kim’s budget announcement comes just two weeks into his presidency and reflects a growing trend among research universities nationwide, many of which are grappling with painful budgetary decisions as they adapt to changing financial landscapes. The announcement indicated that reliance on tuition revenue increases, endowment usage, or additional debt would not be viable strategies to remedy the budgetary challenges USC is currently facing.
Contributing Factors to Budget Deficits
Several factors have led to the current fiscal crisis at USC. The decline in federal research support poses a significant hurdle, as the university has received a substantial $569 million in federally funded research for Fiscal Year 2024. Furthermore, financial strain has arisen from anticipated losses in international student enrollment, alongside potential cuts in federal student aid. These elements collectively contribute to the university’s precarious position, making it essential for USC to re-examine its operating model.
Response and Future Planning
In response to these budget challenges, Interim President Kim is committed to engaging with faculty, staff, and community members through planned meetings aimed at discussing USC’s financial difficulties and exploring collaborative solutions. His commitment underscores the need for a shared understanding and potential strategies to enhance the university’s financial sustainability.
USC, founded in 1880 under the Methodist Episcopal Church, has grown to become a prominent institution with an enrollment of approximately 45,500 students. The university is well-known for its distinguished programs across various fields, such as film, law, music, and engineering, and operates around 100 research institutes. Among its notable research operations are the Southern California Earthquake Center and the Institute for Robotics and Intelligent Systems.
The university’s main campus is located at University Park, supplemented by additional campuses focused on health sciences in Sacramento and Washington, D.C., as well as a marine science center on Santa Catalina Island. Throughout its history, USC has produced numerous distinguished alumni, including military leaders, architects, and renowned artists, further solidifying its status as one of the largest and best-funded research universities in the nation.
As USC navigates this financial crisis, the emphasis placed on creating a sustainable operating model will be essential to ensuring the university’s long-term stability in the face of ongoing economic challenges.
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Additional Resources
- Higher Ed Dive: USC Budget Deficits
- Forbes: USC Faces Budget Deficit
- USC Annenberg Media: USC Sold Dead Bodies
- Mirage News: In Memoriam Jane Goodall
- LAist: USC Nontenure Track Faculty Union
- Wikipedia: University of Southern California
- Encyclopedia Britannica: University of Southern California
- Google Search: University of Southern California budget deficit
- Google News: University of Southern California
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