Officials announced Wednesday they will reduce the University’s expense budget by 3 percent next fiscal year to combat “difficult and immediate budget challenges” and higher education “headwinds.”

Provost Chris Bracey, Chief Financial Officer Bruno Fernandes and Chief of Staff Scott Mory said in an email to faculty and staff that GW will cut its fiscal year 2026 total expense budget by 3 percent to address a “structural deficit” after the University’s expenses have surpassed their current revenues in recent years, creating a “significant and unsustainable gap” that compounds annually. They also said usual merit-based staff salary increases will “not take place” in July, but officials plan to “revisit” the decision later in the year after determining fall enrollment revenues.

“Continuing this trend, while we expect modest revenue growth, it will not meet our projected expenses across many areas and the need to provide more financial aid to students,” the email states. “This trajectory threatens to undermine the university’s long-term financial stability.”

The email also said officials will end the position review process they implemented in February on June 30 to allow deans and administrative leaders to “directly” manage decisions about adding new positions and filling vacancies to align with the University’s budget strategy. The position review process added a step to the approval process for faculty and staff hiring and promotions to protect GW’s “limited” resources amid higher education headwinds posed by President Donald Trump’s recent executive actions. 

Officials said the Board of Trustees and University leadership set the goal to achieve an operating margin of 1 percent in FY2026 and 3 percent or higher operating margin within five years. GW’s operating margin was 2 percent in FY2022, before dropping to 1 percent in FY2023 and 1.4 percent in FY2024.

The email’s frequently asked questions website said decreasing the operating margin to 1 percent is a “key step” toward a “recurring and sustainable” operating margin. They said the “ambitious” yet “achievable” goal will allow the University to invest in its future and maintain financial strength that allows flexibility to deans and administrative leaders to manage their colleges or divisions.

The officials said the decision comes in light of changes to federal research funding, risks to other federal funding sources, economic and political instabilities and potential disruptions to student aid distribution and international student enrollment.

“Given these challenges and aspirations, it is crucial that we take steps now to help correct our course,” the email states. “Regrettably, some of the actions we need to take will have an impact on us all.”

Officials said GW does not plan to implement University-wide layoffs but said the leaders of each school or unit may reorganize teams, which could result in limited reductions in force. Fernandes said at a Staff Council meeting last week that University has not considered laying off staff members, despite more than 10 universities previously laying off staff and freezing hiring this year following Trump’s cuts to federal funding.

“We may have to make some of those difficult decisions. We’ve not made that yet,” Fernandes said at the meeting. “Our plan, whatever we put in place, is going to be to try to avoid that. That is our goal.”

Each school and unit leader will prepare a budget in the “coming weeks” to incorporate a 3 percent reduction from this year’s budget, the email states. Officials said the net 3 percent budget reduction across the University may not result in a 3 percent reduction in each unit. 

“Please know that the decisions outlined in this note were not made lightly,” the emails reads. “They were carefully determined to be what is required to help GW meet this challenging moment.”

The email states that University vice presidents, deans and vice provosts met recently to discuss the path forward. Officials said the University will utilize academic and administrative leadership expertise to develop plans for each school and unit. 

Bracey, Fernandes and Mory released a statement in April to announce the University is redesigning its budget model process over the next two years, eyeing to adopt it in FY2027. Officials said in the statement that the University launched the initiative fall 2024 to “evolve” the current budget model to “better align” financial allocations with academic, research and strategic priorities, which have “changed dramatically” since 2016.

Phil Wirtz, a faculty senator and professor of decision sciences and psychological and brain sciences, said at an April Faculty Senate meeting that he received calls from School of Business faculty raising concerns about “cutbacks in important school initiatives.” He said faculty attributed the alleged cuts to increased money requirements the schools are required to give GW from the school’s revenue, also called the school’s margin. 

Fernandes said during the meeting he was “caught off guard” by the alleged cuts and said officials did not impose them but that he would “look into” funding discrepancies happening in individual schools. 

He said the University has not ordered an increase on margin requirements to individual schools and this year’s margin was 1 percent, which he said is the minimum percentage that allows the University to “break even.” 

GW previously faced a $180 million pandemic-induced budget gap in 2020, where officials responded by stopping most new hirings, halting based and matching retirement contributions for faculty and staff, laying off more than 300 staff and freezing all senior officials’ salaries.