Yale University this week informed faculty and staff there may need to be layoffs down the line, as the school continues tackling budget challenges amid federal actions. The issue stems from a major increase to university endowment taxes, enacted under President Donald Trump and Congressional Republicans’ “One Big Beautiful Bill”.
The university estimates it will pay the federal government $300 million per year beginning in July 2026. The Trump administration raised the endowment tax from 1.4% up to 8% on investment gains under the federal policy signed into law in July, as The Yale Daily News reported. Yale must pay the maximum tax, with its endowment valued at over $44 billion dollars.
Cost-cutting measures such as retirement incentives and a three-month hiring freeze, among other moves have already been in the works at Yale. The budget update from the Office of the Provost Wednesday said that’s helped but, “cannot make up for the significant long-term reduction in funds that support students, faculty, and staff.”
This fall the university also requested three-year budget plans from each school and unit, to tackle the rest of the funding gaps. In the update to faculty and staff on Wednesday, Provost Scott Strobel said more staff reductions may also be needed.
“Nearly two-thirds of the university’s expenses relate to compensation and benefits,” Strobel said in the written announcement. “Unfortunately, this means several units may need to meet their budget targets by reducing their workforce. We are hopeful that most reductions can be accomplished by eliminating open positions and through regular turnover and retirement incentives.”
Daniel Martinez HoSang is on the executive committee of the Yale chapter of American Association of University Professors (AAUP). He said people understand these are all difficult budget choices, but that more faculty, students and staff deserve a say.
“I think there is a growing concern among faculty at Yale and other colleges and universities that the problem is not a recognition about the crisis we're likely to face, but it's the very, very uneven ways that faculty, students, staff and others are allowed to participate in decisions about what the impact and consequences of these budget reductions will be,” said Martinez HoSang, a professor of American studies and political science.
He said there need to be better ways for people to weigh in.
“Other than a small number of faculty who might have appointments in these committees, many faculty feel kind of in the dark about these processes,” Martinez HoSang added.
Yale’s budget challenges also extend beyond the university, since the school gives tens of millions of dollars in annual funding to the city of New Haven. As Yale Daily news reported, the city of New Haven and Yale are in negotiations about financial contributions in fiscal year 2027, which is slated to decrease by $8 million.
