Stanford to reduce budget by $140 million, lay off employees for next academic year

Stanford announced Thursday that it will impose a $140 million budget cut for the 2025-26 academic year to adapt to reductions in federal research support and an increase in the endowment tax.

President Donald Trump’s “One, Big, Beautiful Bill,” passed May 22 by the House of Representatives, proposes a 21% increase on Stanford’s endowment tax from the current rate of 1.4%. The bill is currently undergoing negotiations in the Senate before being sent to the president’s office. If signed into law, the increase would represent a tax of $750 million annually, placing some financial aid — over two-thirds of which comes from the endowment — at risk.

Recent budget cuts have also impacted research funding Stanford receives from the National Institutes of Health (NIH) and the National Science Foundation (NSF), as hundreds of grants have been terminated and funding freezes continue to slow the review process for new grants.

“There is significant uncertainty about how federal support for universities will evolve, but it is clear that the status quo has changed,” University president Jonathan Levin ’94 and Provost Jenny Martinez wrote in their announcement of the change.

According to the letter, the budget cuts will require a reduction in staff positions, including through layoffs.

“The university has benefits and compensation programs to support transitions in cases where layoffs are necessary, but there is no getting around the impact of such decisions,” Levin and Martinez wrote.

The figure of $140 million excludes funding cuts for the School of Medicine, which will separately decide on reductions in the coming weeks.

The University’s budget is managed through a system of 30 budget units, encompassing various schools, departments and administrative offices that contribute to the overall consolidated budget. Martinez told The Daily that the budget units will need to determine how best to implement the new budget restrictions — namely, where they can absorb cuts. 

Per the announcement, the provost’s Budget Group, a group of faculty members across different schools as well as senior staff who advise the provost on budget matters, considered both larger and smaller reduction scenarios over the past several months. 

“[The Group] felt like this level of cuts was prudent to put the university in a position to be resilient in the face of what developments may come in the coming year,” Martinez said.

In light of the budget reduction, Martinez added that the University will prioritize preserving research funding, particularly for PhDs, and undergraduate financial aid.

“For the PhD students, they have a five year guarantee of funding, and we’re committed to fulfilling that commitment to them. And for undergraduates, we’re committed to our need-based financial aid programs that we have and to sustaining those,” she said.

Referring to the halting of NSF grants, Martinez added that “cuts in science funding will really hurt the pipeline of future scientists.”

While Levin and Martinez have mostly refrained from direct criticism of the Trump administration, they have repeatedly emphasized the importance of federal funding for research and Stanford’s ability to sustain scientific innovation. They also expressed support for Harvard University after its president Alan Garber M.D. ’83 objected to demands of the White House.

“In all the departments in the humanities and social sciences, in the natural sciences and engineering, in the medical school and elsewhere, the importance of that work is for the future of the country and the world,” Martinez said. “The investment in education is for the long term benefit of society, and we really need to defend that.”

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