Officials announced Tuesday GW’s budget will face a net decrease of $46.5 million next fiscal year to combat ongoing financial challenges like declining international and graduate enrollment combined with rising costs as the University cuts expenses for the second year in a row.

The Board of Trustees approved the $46.5 million cut to FY2027’s budget at their annual May meeting last week to counter continued enrollment declines driven by “intensifying competition” with peer institutions who are recruiting undergraduate students, falling international student enrollment caused by President Donald Trump-era visa policies, reduced graduate enrollment due to changes in federal financial aid and rising operating costs in non-discretionary areas like infrastructure, utilities and transportation, officials said in an email to faculty and staff and obtained by The Hatchet Tuesday. The email, which University President Ellen Granberg, Interim Provost John Lach, Chief of Staff Scott Mory and Chief Financial Officer Bruno Fernandes signed, said the Board-approved budget includes allocated funds for a 3 percent merit pool to fund salary increases for eligible employees next fiscal year after officials halted the merit increase for FY2026.

“While we recognize that current conditions remain challenging, we are confident that the FY27 budget reflects a prudent path toward providing near‑term stabilization while preserving flexibility and positioning the University for long‑term financial sustainability,” the email states.

Officials said they are keeping college and school margins flat from FY2026 to FY2027, which comes after Lach told the Faculty Senate last month officials gave academic deans their “margin targets” for FY2027 and directed them to engage students, staff and faculty, where appropriate, about potential cuts. Officials told the Faculty Senate in January they had instructed school and unit leaders to prepare budget contingency plans, including five, 10 and 15 percent reductions, for FY2027. 

The message states officials made budget adjustments to the central administration, including cost reductions and revenue enhancements, that were of “roughly equal percentage” to those of academic units. Faculty senators this month pressed officials for transparency over how they are cutting the administrative budget as schools continue to face significant reductions.

The email also states the approved budget also provides for a 1 percent contingency and a 1 percent operating margin, as the University anticipates financial impacts of the transition of the Medical Faculty Associates amid ongoing negotiations with Universal Health Services to end GW’s financial support of the medical enterprise. Officials said this approach “preserves consolidated margin stability” at a school level while ensuring officials meet their FY2027 budget objectives — including bringing back a merit pool that officials said they will provide more communication on in the future.

Officials in April 2025 — when they announced the FY2026 3 percent expense budget reductions — 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.

Officials in December projected GW would break even in FY2026 after operating expenses exceeded revenue by $75 million in the prior fiscal year. Vice President for Finance and Assistant Treasurer Hemant Bakshi said FY2026 marked an “inflection point” for GW as officials work to reverse the structural deficit and reach a 2 percent operating margin in “the short term,” before stabilizing at 3 percent over a five-year period.

FY2027’s budget reductions comes as the University grapples with a $24 million operating deficit as of July amid revenue shortfalls, increased expenses and the MFA’s related costs — including GW loaning over $98 million to the MFA in FY2025. 

“This budget reflects a measured and deliberate approach to responding to the challenges described above while also pursuing a multi-year approach to addressing our structural deficit,” the email states.

The University’s payout from its $3.4 billion endowment — the amount from the endowment officials are approved to spend for specific purchases each fiscal year — will increase from 4.5 percent to 5 percent. Officials at the Board’s May meeting announced the endowment had risen nearly $590 million since the end of FY2025.

Officials cut the University’s expense budget by 3 percent in FY2026, triggering a pause to annual merit salarey increases, a hiring freeze, 43 staff layoffs and cuts to student resources and services. Granberg said during an interview in April budget cuts would be necessary in FY2027 as well to achieve the strategic framework’s broad goals, including improving student financial aid and strengthening academic and career advising.

The return of merit salary increases reflects officials fulfilling a goal Fernandes stated at a Staff Council meeting in December, saying officials were “committed” to reinstating merit salary increases in FY2027 after officials said in their April 2025 announcement canceling the raises that they would “revisit” the decision later in the year after determining fall enrollment revenues.

“We know how hard each of you work to keep GW moving forward, and we hope that the merit pool will both recognize that and provide some relief in these economic times,” officials said in their Tuesday email.

Staff Councilmembers following officials’ announcement that they would temporarily suspend merit-increases reported strained finances and morale, with some saying they relied on the annual pay bumps to cover the rising costs of necessities, like child care and health care.

The effects of FY2026 budget cuts were felt all across the University, with cuts to student services, academic and transportation resources and staff layoffs. The cuts have sparked ongoing frustration among students and faculty, as Student Government Association President MJ Childs won last month’s election on a platform of challenging officials to increase transparency in budget decisions, and faculty senators have repeatedly urged officials to explain their rationale for cuts to academic programs.

Co-chair of the Board of Trustees’ Academic Affairs Committee Christine Barth said during the Board of Trustees meeting Friday that while undergraduate enrollment remains stable, Vice President and Dean of Enrollment and Student Success Jay Goff told her committee that graduate enrollment deposits for the next academic year are down by 25 percent. Goff told the Faculty Senate in December GW’s total international student population fell by more than 10 percent, while graduate enrollment declined 6 percent in fall 2025 following Trump-era federal policy and visa changes.