We want to share an update on the University’s financial position, and the key considerations guiding our approach, as we begin budget planning for the coming fiscal and academic years.
At this time last year, there was considerable uncertainty about how evolving federal policy changes might impact us. In response, we took deliberate, proactive steps, beginning in March 2025, to slow the growth of expenses, constrain staff hiring, and closely review faculty hiring and capital spending. These actions required care, collaboration, and difficult tradeoffs, and we are grateful to all our partners across the Schools and Centers who made this progress possible.
As a result of these efforts, Penn is in a better financial position today than we anticipated a year ago—and without having taken the more stringent measures announced by some of our peer institutions. However, the impact of recent policy changes on future years is now clearer. These include: upcoming changes to student loan programs; changes in visa policies; an increase in the endowment tax; and ongoing negotiations related to research funding. In addition, legal, insurance, and benefit expenses that are shared across the University continue to increase faster than revenues, adding to ongoing budget pressures. Taken together, these conditions reinforce our responsibility to continue careful financial management to stabilize our finances for the long term.
To ensure that we are prepared for both expected and unexpected financial pressures, we have asked each School and Center to take two actions. First, Schools and Centers have been asked to continue the implementation of the proactive financial measures outlined in March 2025. Second, we have asked each School and Center to develop a plan to further reduce certain expenditures by four percent in the coming fiscal year. This includes building on actions already underway, so that progress made this year can contribute to the overall reduction. It is important to note that this planning effort is just that—an effort to plan deliberately and collaboratively against a changing financial landscape. Any actions resulting from this plan will be guided by our commitment to long-term financial sustainability, our academic mission, and a desire to preserve the flexibility of Schools and Centers. As we move forward, we will continue to update the Penn community.
Penn has navigated many moments of uncertainty throughout its history, and we remain energized by and optimistic about the mission that we continue to advance together. We appreciate your shared commitment as we face these challenges together.
Sincerely,
John L. Jackson, Jr., Provost
Mark F. Dingfield, Executive Vice President