We are writing to share next steps for engaging the Brown community in implementing strategies and actions to address the University's structural budget deficit and ongoing financial sustainability. This follows our campus message in October explaining the University’s initiative to ensure Brown's long-term financial health.

As we shared previously, Brown’s current Fiscal Year 2025 operating budget, approved by the Corporation of Brown University, contains a $46 million structural deficit. Without changes to the way Brown operates, the structural deficit is expected to continue to deepen significantly, including a deficit next year that would grow to more than $90 million, with steady increases in subsequent years. Although the current deficit of $46 million is only 3% of Brown’s total operating budget, increases in the deficit over time are not sustainable.

We are embarking on a multi-year effort to work with academic and administrative units across campus to resolve these shortfalls and achieve a balanced budget over the next five or six years. For next year, the University's goal is to limit the FY26 deficit to no more than $60 million (excluding previously planned investments in our affiliated health systems, which will generate revenues in the long run). Accomplishing this goal will require a concerted effort on behalf of the entire community. 

As Brown evolves its academic and financial model to align with our community's aspirations for continued growth as a leading research university, we must contend with the key drivers of the deficit. These include nearly flat net revenue from undergraduate tuition growth due to a steady size of the undergraduate student body, downward pressure on tuition increases, and increased financial aid; the macroeconomic factors of unexpected high inflation, growth in salaries and benefits, and national trends toward unionization; and rapid growth in faculty and staff positions coming out of the COVID-19 pandemic, with staff growth outpacing growth in faculty. We are also at the upper limit of the fiscally responsible range for taking contributions from the Brown endowment without reducing future resources available for financial aid, academic support and other priorities.

Through the ongoing work of the financial health initiative, first announced by President Paxson in May, we have identified an initial set of actions to constrain the deficit for FY26 and put Brown on a path — in five to six years — to the positive operating margins universities need to maintain facilities and fund unexpected expenses. Shrinking the deficit over time, rather than addressing it all at once, will make it possible for the University to continue to support academic priorities, maintain competitive compensation for faculty and staff, and provide world-class education.

Before describing these actions, it is important to share the core principles that will shape and guide the work across this multi-year effort.

Guiding Principles for Deficit Reduction

Brown is and will always be deeply committed to providing excellent undergraduate education. This includes a commitment to providing a liberal arts education while building our standing as a leading research university.

At the same time, the University can no longer maintain its historic, undergraduate tuition-dependent funding model, which is more reminiscent of colleges. To achieve our community's goals as a leading research university, we must significantly slow expense growth, explore innovative growth opportunities in education and research, and develop new revenue streams.

The following principles will guide this work:

• We will continue to make strategic investments in world-class research and teaching. 

• We will continue to pay competitive wages and salaries to faculty and staff. 

• We will continue to offer need-blind financial aid for undergraduates. 

• We will continue to nurture a diverse and inclusive community in service to our academic mission.

Four Actions to Constrain the Deficit

Brown has reached an inflection point that many institutions face as they adjust their operating and funding models to align with their growth. The following actions will make it possible to contain the FY26 deficit to no more than $60 million (again, excluding health system investments). 

Action 1: Hold faculty headcount growth to 1% and unrestricted staff headcount growth to a maximum of 0% (where “unrestricted” staff headcount refers to staff positions that are not fully funded externally by grants and gifts).

In the past decade, Brown’s faculty and staff have grown rapidly, reflecting the University’s need to support an expanded student body and its success in growing research. Although this growth responded to legitimate needs of the University, both faculty and unrestricted staff have grown faster than undergraduate enrollment, placing considerable pressure on the University’s tuition-dependent budget. Over the last 10 years, faculty headcount has grown by 20% and unrestricted staff by 28%. Undergraduate enrollment grew by only 13% over this period, and little further growth is expected.

In the coming year, a major area of focus will be to limit growth in unrestricted staff headcount, starting with an enhanced review process for vacant positions. Currently, job openings that have an incremental budget impact or that are being re-envisioned are reviewed by the Provost and Executive Vice President for Finance and Administration. Effective Jan. 1, 2025, all open positions will be reviewed to determine if they will be refilled. This review will not apply to grant-funded positions. Departments will receive follow-up communications regarding this process. 

It is important to reiterate from October's communication that there are no plans for across-the-board layoffs. Departments will be affected differently, with some being encouraged to restructure and/or adjust operational or service expectations, and other departments associated with revenue generation expected to grow at a responsible pace.

A number of factors will give us a better sense of exactly how much our community needs to work together to adjust cumulative staff headcount (whether maintaining headcount flat or further reducing) to accomplish approved spending on compensation. These factors include the Corporation vote on the salary pools recommended by the University Resources Committee (URC); unit budget submissions, which will shed light on how much we succeed in slowing expense growth; and any changes on a federal level that may have an impact on federal funding.

As noted above, remaining competitive for retained staff remains a priority, and Brown has been strategically investing in staff salaries to ensure competitiveness. The University also has been increasing the equity component of the total salary pool. 

Faculty growth will be managed through existing search approval processes. And just as is the case for staff, Brown is committed to providing faculty with competitive salaries.

Action 2: Reduce Ph.D. budget growth from the currently projected 6% growth to instead 4% growth by reducing admissions targets.

Brown recognizes the central importance of doctoral education to Brown's academic enterprise. At the same time, the overall cost of Brown's Ph.D. programs has grown quickly, by 43% over the past five years. Factors driving this increase have included higher fellowship costs per student, growth in the number of Ph.D. students admitted and increases in time-to-degree completion.

Reducing growth in the cost of Brown’s Ph.D. programs from 6% to 4% will require reductions in the size of cohorts admitted this year. Because graduate students are funded differently in different areas of the University, and the sizes of programs vary widely across departments, different departments will be affected differently. The Office of the Provost has been working with the Graduate School, relevant deans and departments to identify admissions targets for the coming year, informed by a thoughtful approach discussed with the Academic Priorities Committee.

Action 3: Hold growth in unrestricted operating expenses to 3% (down from an expected 7.3%).

One of the main vehicles to slow expense growth university-wide is through Brown's standard budgeting process. We have asked units to produce flat operating budgets for FY26, apart from compensation increases (which will be determined separately by the Corporation vote on the URC-recommended salary pools). We also are continuing the best practice initiated last year of asking units to do scenario planning to identify opportunities for greater permanent cost reductions. 

These efforts will be complemented by ongoing fundraising and investment efforts, focusing on achieving strong performance to yield sustained financial support for the University. They also will be supported by expanded academic offerings and research growth through new revenue-generating programs.

Action 4: Continue to grow master's revenue, ultimately doubling the number of residential master's students and increasing online learners to 2,000 in five years.  

Brown is more dependent on tuition to fund its operations than most research institutions in our peer set. However, undergraduate tuition, net of financial aid, is growing very slowly, with no growth over the last three years. Growing master's education aligns with diverse funding models for research institutions that are not as heavily dependent on undergraduate tuition to fund their operations.

In addition, growth in master's education aligns with Brown’s mission of “educating and preparing students to discharge the offices of life with usefulness and reputation,” ensuring this is not limited to undergraduates. Shifts in demographics and growth in the demand for advanced degrees provides an opportunity for Brown to extend its impact.

We are starting from a small base, and it will take time and some upfront investment — in faculty, staff and space — for master's tuition to offset slow undergraduate tuition growth. However, growing excellent master’s programs is a major component of Brown’s long-term financial health.

In Closing

We want to thank the departments and units across Brown for the work our community will do in the months ahead. We continue to perform data-informed analyses as we engage in prudent financial planning. We are seeking to slow expense growth in a sustainable way, with an eye toward long-term solutions that allow Brown's resources to continue to support our community's priorities and aspirations.

This work is important to ensure the University’s long-term financial health and its standing as a leading research institution, today and for years to come. 

Francis J. Doyle III

Provost

Sarah Latham

Executive Vice President for Finance and Administration