Liner Note 28: Hyponormalization of University Budgets

Dublin Bay on June 17, 2025   

Universities can’t fight an impeding fiscal disaster if they can’t face its size and destructive power.  Are they facing it?  Would they fight it? 

Sometimes yes on the first question, but the public versions so far suggest not fight but capitulation.  

 

Today’s example: The AAUP chapter at the University of Minnesota-Twin Cities put together a presentation for faculty about their administration's budget announcement. It's a downsizer. They cite their administration saying, “a financial model that relies on maintaining academic programs and activities at current levels is not sustainable, nor is attempting to be great at everything.”

 

The administration’s plan is a 6.5-7.5% tuition hike coupled with 7% cuts to academic units.  While academic units are cut $89 million, non-academic units lose $2.7 million.  It’s our old friend “pay more to get less” –academic management’s famous contribution to popular culture. And it’s our newer friend “enshittification” of the academic core.

 

For these cuts to the core come at the end of a decade of cuts.  Cuts on cuts, always with the sense that the cuts benchmark is reset each year, as though there’s no real cumulative damage, which of course there is.

 

 

 While they are cutting academic units by $89 million, Minnesota’s administration describes a decline in direct and indirect research income of $85 million, perhaps a bit more than 10% of their total research revenues. 

 

Two things jump out here. One is the likelihood that they are robbing teacher Peter to pay researcher Paul.  The numers are oddly similar.  They might say this is a misleading oversimplification, but if so, they should detail why. 

 

 

The administration can conceivably force instruction to fill in for research cuts only if those cuts are smallish, like 10%. But what if the research cuts are actually much bigger?  Then the instructional cuts are pointless, and also allow admin to avoid the real fix—a big, coordinated political fight with large state bridge funding, 

 

If Trump’s cuts go through, they will be catastrophic. To reduce my previous list of ten cuts to a big three, cuts are happening to state funding, student tuition (international and residential), and federal research funding. 

On international student revenues, Trump’s Secretary of State Marco Rubio has suspended interviews for student visas worldwide, so new international student numbers could go to zero in the fall. That wil mean a loss of about one quarter of international student fees off the top—plus other losses due to departure, non-matriculation, deportation, and the like.

 

In federal research funding, there are also three kinds of cuts.  There is the cut of all indirect cost recovery rates paid by NIH and other major agencies to 15%. I estimated the effects in February (see lower estimates via Eric Hays’s calculations for the University of California).  ICR policy is tied up in the courts, but the agencies may implement it anyway, and seem already to be. Universities could lose half to two-thirds of their ICR. 

 

The second kind of cut is current-year cancellation of grants coupled with non-payment on grants that haven’t been officially canceled. The Financial Times reports,

Treasury department data shows cash disbursed from the National Institutes of Health dropped to $2.8bn in May, down 28 per cent from April and the lowest absolute-dollar outlay since September 2014, according to Jefferies, an investment bank.

 

There’s also the spectacular blanket withholding from universities like Harvard, Penn, and Northwestern on top of the largenumbers of individual cancellations. Grants Watch recently raised its estimates of non-disbursements and cancellations. The total is now about 20% of NIH’s current-year budget for research. I don’t know why the University of Minnesota thinks its losses are half that.

 

The FT again:

The frozen NIH funds have blown a hole in university budgets across the country. For example, Northwestern University has been spending about $40mn a month to cover the missing NIH funds, according to Carole LaBonne, a professor at the Chicago-area school.  

“Research labs are looking at really stark choices about laying off personnel and not being able to take graduate students,” she said. 

 

Northwestern had not been paid since late March but had received no official notification from the government about a funding freeze, a university spokesman said. He confirmed the university was spending tens of millions of dollars a month to continue research.

 

Northwestern is a bad case, but there’s a lot of other overdue funding that may never come in.  Similarly, current-year NSF cuts were over a billion a month ago, on about $9 billion (Table 4). This 11% drop may now be higher.  

 

Third type of research cuts:  there’s the set of massive reductions slated for next year.  

Trump has requested cuts to science funding across the board — the US National Institutes of Health (NIH) would lose roughly 40% of its budget compared with 2024 levels, and NASA would be pruned by about one-quarter — but the NSF would lose a whopping 57%, taking its roughly US$9-billion budget down to $3.9 billion. These top-line numbers aren’t new: the administration released a ‘skinny’ budget with similar figures in early May. But the detailed budget released last week gives a fuller look at the historic cuts intended for the NSF — including the elimination of 99% of funding for clean-energy research and the surprise shuttering of a gravitational-wave observatory.

 

Let’s imagine that after some bargaining in Congress the two lead agencies, NSF and NIH, only get cut by 1/3rd.  For NIH that’s 33% on top of a 20% cut on the current year.  So Minnesota and everyone else should put their default guesstimate on 2024-26 cuts to direct research funding at 50%. 

 

This is in fact such an assault on the public science / federal funding model that university managers are dreaming of private equity.   You may be soon be reading more paragraphs like this one in STAT about Harvard.

 

Under the deal announced Monday, İş Private Equity, a Turkish firm, has committed $39 million to a laboratory run by Gökhan Hotamışlıgil, a professor of genetics and metabolism at the T.H. Chan School of Public Health. The firm, which is a branch of Turkey’s İşbank Group, also plans to invest an undisclosed amount of money in any drug candidates that come out of Hotamışlıgil’s laboratory and are moved into a new biotech called Enlila.

 

This model is a disaster for basic research and public missions without big return on investment, which is all of them.  But it might explain the University of Minnesota president’s use of $74 milion in reserves—perhaps to prime the private investment pump by giving sciene and tech investors some funding up front.  I’m speculating, but that’s the logic.

 

The default admin plan seems to be (1) backfill reseach losses with teaching and department funds; (2) hope the cuts are a fraction of the plan; (3) use reserves to seed private partnerships for research; (4) project no need for serious state support; (5) keep the faculty demobilized with minimal  and lowballed information.

 

Paul Campos has a truly exasperated post about the structural deficit at the University of Colorado-Boulder School of Law that was deliberated created and then absurdly plastered over, so “that the law school is effectively broke, and we’re going to have to start laying off people in the next year or two, including some of the faculty who have been paying no attention to any of this because it’s so boring.”  

 

Campos is right that budgeting fairytale storytime is a standard management strategy, generally leading its docile auditors to Matt Seybold’s pandemic of Ponzi Austerity.  It’s a go-to resource because it’s the Great Demobilizer, and also mad suppressor of noncapitalist realism and structural change. However, the Trumpian Massacre raises the question yet again of how much longer budget surreality can carry on.

 

Or hyporeality.  And hyponormalism.  If society has moved into the hypernormal, university management is still enforcing the hyponormal in relation to its expanding fiscal crisis. 

 

In both cases, people carry on as though the system wasn’t actually broken. In hypernormality, borrowing Alexei Yurchak’s term, the system’s dysfunction is widely noted. In hyponormality, information is withheld and discussion is blocked so that dysfunction can be denied.  In both cases, administrative authority is maintained as program damage propagates through the system. 

 

If Trump follows through, it means public universities need an entirely new state funding system.  If he does, states will need to send fewer taxes to the feds in exchange for picking up more federal programs, academic research included.  The Minnesota’s admin’s hypo-planning will keep that from happening. 

 

Like everywhere, that campus needs a much deeper and more open set of arguments about what to do.