Dear Colleagues,
Following on President Price’s message, we are launching a process to carefully prepare for the possibility of significantly decreased federal funding support for Duke’s teaching, research and clinical missions, and taking action now to slow the rate of university expenditures.
Potential Federal Funding Impacts
We have already seen changes to federal research funding policies and practices that are affecting our ability to fulfill our missions. We updated you last month that the announced cap on National Institutes of Health (NIH) reimbursement of Facilities and Administrative costs would reduce funding in support of research at Duke by nearly $200 million per year. While this is currently under legal review, a reduction in funding of this amount would have a significant negative financial impact on the university. Additionally, we are actively tracking a variety of proposed and in-development executive and legislative actions that put another approximately $500 million per year in federal funding for our institution at risk, including:
- loss of direct funding for deprioritized areas of research;
- delay or loss in funding due to significant disruption of the grant review process;
- potential increase in the endowment tax;
- potential changes to student aid funding and policies at the Department of Education;
- potential reduction in government-funded healthcare programs (e.g., cuts in Medicaid).
Near-Term Expense Management Actions
While we do not yet know the extent to which these potential threats will affect Duke’s finances, we are already experiencing funding impacts. We believe it is prudent to take the following actions now to slow the rate of university spending:
- Suspend all capital spending on new buildings, renovations, and other capital projects that are not fully funded or deemed essential.
- Freeze staff hiring, except for critical positions, undergraduate student workers supported by work study, and those funded by active grants or restricted sources. Requests for exceptions and determinations with regard to continuing searches already in progress must be reviewed by school and unit leadership and approved by the Provost, Executive Vice President for Health Affairs or Executive Vice President.
- Freeze staff salary mid-year adjustments, including non-merit salary adjustments and position reclassifications that are not already in process. At this point, we are not yet recommending any changes to the university’s merit increase planning guidance and process for FY26.
- Review all faculty hiring, only allowing searches that schools deem essential to their missions and their highest critical priorities (and excluding searches already in progress unless determined otherwise by school leadership), pending review and approval by the Provost or Executive Vice President for Health Affairs.
- Slow all non-compensation expenditures for any non-essential needs, with particular focus on limiting non-essential travel, use of third-party services/contractors and entertainment.
You may receive further guidance that supplements or clarifies the above from your management center (Duke’s three financial management centers are the Provost Area, the School of Medicine, and the Central Administration) and/or school and unit leaders.
Strategic Re-Alignment and Cost Reduction Planning Process
At this critical moment, all parts of the university, not just those schools and units that receive significant federal funding or are engaged in the delivery of healthcare, will need to engage fully in this planning effort.
Informed by our understanding of the federal political landscape and consistent with Duke’s values, this planning process will carefully evaluate how we might best operate with dramatically different federal funding levels. We will ensure the ability to adjust our process as our understanding about the impacts of proposed funding and regulatory actions continues to evolve.
To accomplish this critical task, management center leaders will work with schools and units to develop cost reduction proposals, prioritizing cost reductions in administrative operations. Beyond the organization-specific re-alignment and cost reduction efforts, we will also carefully review administrative programs that serve the entire university (to include evaluation of opportunities related to process simplification and technology adoption, off-campus real estate and on-campus space consolidation, and employee benefit programs) and well-developed plans for increasing funding to support the University’s missions.
Process Timeline
The timeline for this work is ambitious. Soon, university leadership will provide guidance on planning process cost reduction targets to each management center with the goal of providing an update on our progress to the Board of Trustees in May.
Though this is an immensely challenging moment for our community, we remain confident that by working as one university, prioritizing our missions and upholding the values of respect, trust, inclusion, discovery and excellence that have guided this institution for more than 100 years, we will rise to meet it. We are grateful for your dedication and support as we work together to navigate these challenges, and we commit to keeping you informed regarding this important work.
Sincerely,
Daniel G. Ennis
Executive Vice President
Alec D. Gallimore
Provost
Mary E. Klotman
Executive Vice President for Health Affairs and Dean, School of Medicine
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