The University’s budget deficit shrank to $160 million in 2025, according to its most recent financial statement released this Wednesday.

The 44 percent decrease in fiscal year (FY) 2025 from last year’s $288 million deficit exceeded University administrators’ expectations. The large drop puts the University almost a year ahead of schedule in tackling its deficit, Enterprise Chief Financial Officer Ivan Samstein and Provost Katherine Baicker told the Maroon in an interview discussing the new figures last week.

The University was originally working toward a 25 percent deficit reduction in 2025, the first year of its four-year plan to close the deficit by 2028.

Revenue growth outpaced expenses in FY2025 to narrow the budget deficit for the first time since 2021. Since 2011, the University has operated at a deficit, which has ballooned in recent years. 

It’s “probably our biggest singular reduction in any year ever,” outside of an outlier COVID-era year, Samstein said.

The improvements come amid a prolonged period of financial struggle for UChicago, and as many institutions of higher education rethink their business models in the face of financial headwinds, such as growing administrative costs and increasingly unaffordable tuition rates.

To slash its deficit, the University has relied on a mix of revenue-generating measures and cost-cutting.

Revenue grew roughly 9 percent and expenses increased roughly 5 percent from FY2024 to FY2025, Baicker said.

The University restrained spending, and salaries remained flat for most University staff, with the exception of staff in the Biological Sciences Division (BSD) who provided services to the University of Chicago Medical Center (UCMed), according to Samstein.

Revenue from fundraising increased significantly, according to financial statements. Tuition revenue from academic programming also increased, while income from government grants and contracts dipped by $30 million, which was less than administrators had feared in light of the Trump administration’s federal funding disruptions.

Separate from its four-year plan to close the deficit, the University announced $100 million in sweeping spending cuts this fall, partially as a response to recent federal funding pressures. Some faculty, staff, and graduate students have questioned the reasoning behind those new austerity measures, accusing the University of years-long internal financial mismanagement, including heavy spending on new dorms and amenities in the 2000s.

The dramatic reductions to the deficit in FY2025 were achieved before the cost-cutting measures took effect this fall. They will begin to show up in the 2025–26 fiscal year that ends June 30.

Samstein said that about $15 million of the deficit decrease was due to “noise,” referring to sources of revenue and expenses they didn’t expect to recur in future years. Baicker and Samstein said that future deficit reduction efforts will start from a baseline of an estimated $175 million shortfall.

“You don’t want to bank on things that seem like one-time things to happen again,” Baicker said.

The University has front-loaded cost-cutting efforts, which provide more visible pay-off in the short term to deficit elimination than attempting to grow revenue, according to Baicker.

As its cost-cutting measures pay off, the University is also beginning to see the results of revenue growth efforts, Baicker said. “We’re seeing some of that start to come to fruition in FY26, but it’s going to keep building for the coming years,” she told the Maroon. 

Samstein said that several accounting changes could make year-to-year comparisons of some revenue and expenses categories, such as compensation expenses, difficult, but do not ultimately affect the bottom line. Accounting is done in-house by University administrators. KPMG, an external auditor, independently reviews the University’s financial statements before they are officially released.

Solid year for returns and “record-breaking” philanthropy

Overall, “philanthropy has been having record-breaking success” in 2025, Baicker said. The University received more than $1 billion in private gifts this year, according to a University spokesperson.

Last year, an anonymous donor gifted $100 million to the University for the creation of the Forum for Free Inquiry and Expression. In May, the University received $18.4 million for a new institute of theoretical physics. 

Heightened fundraising efforts will continue. The spokesperson said the University is in the “planning phases” of a new capital campaign, which will “support faculty and students” and the “renewal of the University’s infrastructure.” Its last five-year capital campaign raised $5.4 billion.

Revenue from both private gifts that were available to be spent within the fiscal year and donor-restricted gifts increased this year.

Private gifts able to be spent within the fiscal year went up by $42 million this year, increasing roughly 36 percent. Those gifts are counted toward operating revenue and contribute to the deficit decrease. 

Donor-restricted gifts grew by 57 percent to about $455 million, accounting for much of a $471 million increase in the University’s net assets, the 2025 financial statement shows. 

The size of the University endowment also grew by 5.7 percent from $8.7 billion to $9.2 billion this year. While the size of the endowment can affect how much the University takes out in funds from its endowment to spend each year, it does not directly affect the budget deficit.

The endowment payout increased by 10.3 percent from last year, but remained at roughly 6 percent of the total endowment, in keeping with previous years’ percentages.

Endowment growth was partially due to a “particularly good investment year” with strong investment returns, according to Samstein.

Investment returns totaled $848 million this year, exceeding the endowment payout of $551 million.

In the past two years, the endowment’s weak investment returns relative to stock market performance have led some to question the University’s investment strategy, which it has characterized as “conservative.” 

Graduate tuition revenue increases slightly higher than College tuition revenue increases 

The financial statements show College tuition income increased by $53 million, of which $22 million is true additional income. That’s an 8.2 percent increase. The remainder represents fees in revenue previously listed under other income, which are now counted toward tuition revenue, according to a University spokesperson. The sticker price of College tuition is now about $71,000, a roughly 5.8 percent increase from last year.

Graduate tuition revenue increased by almost $24 million, or 9.4 percent. The University has expanded its graduate offerings in recent years, launching new master’s degree programs in finance, management, and other disciplines. However, it will pause or reduce admission to some of its Ph.D. programs, including many in the Division of the Arts & Humanities, and other master’s programs for the 2026–27 academic year.

Income from continuing professional education and other programs, which often offer certificates instead of degrees, decreased by $7.6 million, from $10.8 million to $3.1 million. 

That’s a 71 percent drop. In a budget town hall last November, when the estimated deficit had decreased to roughly $221 million, Baicker previously included non-degree programs with other academic offerings that boosted income revenue. 

Baicker did not provide new specifics on the timeline for ongoing reorganization efforts in the Division of the Arts & Humanities or similar efforts across other divisions. She reiterated that the efforts are not a response to budget issues, a critique some faculty have directed at the University. 

“If we’re not organized optimally, one of the biggest costs is to faculty time [spent] managing structures that are not aligned with the way that they want to do their research and the way that their students want to learn,” Baicker said.

She said that reorganization is “much more about effective use of resources than saving money when you think about how to organize departments and divisions.” 

Federal grants losses smaller than expected from spring’s flurry of terminations

The University received $514 million in government grants and contracts in FY2025, roughly $30 million less than it received in FY2024, financial statements show. 

That reduction is still less than administrators were anticipating in the spring.

Earlier this year, President Trump took steps to eliminate what he called “wasteful spending” and diversity, equity, and inclusion–focused research. The federal government terminated hundreds of research grants at institutions across the country, including roughly 65 grants at the University. 

After last spring, however, “we actually saw pretty robust grant activity from August and September,” Baicker said, and funding for grants within the Biological Sciences Division (BSD) didn’t dip as low as administrators initially projected when the flow of grants first slowed.

The “slight reduction [is] mostly in the non-NIH world,” Samstein said. National Institutes of Health (NIH) funding for the BSD “generally held up,” he said. Other funding cuts to the University largely came from the National Science Foundation (NSF) and the National Endowment for the Humanities.

There’s “more uncertainty” for what the budgets from the NIH and NSF, the University’s two largest funders, will be in “FY27 and forward,” Baicker said.

“Changing dynamics” in federal funding are part of that uncertainty, Baicker added, in reference to a newly implemented policy prioritizing multiyear grants at the NIH and potential similar changes at the NSF.

More multiyear grants, in which larger lump sums of money are paid to researchers up front, mean less opportunity for smaller projects and an increase in overall competitiveness.

Additionally, the NIH could decrease the amount in indirect costs that the government reimburses to the University, Baicker said. Indirect costs cover expenses such as laboratory maintenance, utilities, and administrative costs necessary to conduct research.

According to Samstein, the University’s indirect cost recovery rate is nominally 64 percent, but its realized rate “is less than half of that,” after accounting for certain costs that aren’t eligible for reimbursement.

In February, the University was one of the 16 plaintiffs that sued the NIH over its attempt to cut indirect cost funding. The Maroon reported that the new directive, which imposes a 15 percent cap on indirect cost reimbursements, would threaten $52 million in University funding annually. The directive is currently tied up in court.

Baicker said that the increased grant activity in the summer and fall left her “cautiously hopeful,” but that she is “planning conservatively” due to the uncertainty ahead.

UCMed capital spending increase driven by Cancer Pavilion construction

Increases in spending on building construction came mostly from UCMed, while spending at the University remained relatively flat, financial statements show.

The increase at UCMed is “mostly driven” by construction for the AbbVie Foundation Cancer Pavilion, which will cost about $800 million total, Samstein said.

The 2025 financial statement shows roughly $400 million of acquisition spending on buildings and other equipment at UCMed, and half of that—$200 million—at the University.

The Maroon recently reported that plans for a new science and engineering building will be downsized. Additional space for non-quantum use is also likely to be scaled back, according to Baicker. Building expenses for the new building will show up in future years’ finances, Samstein said, except for roughly $35 million done “in pre-work,” accounted for this year.

UCMed maintains surplus, MBL halves deficit

Between the University, UCMed, and the Marine Biological Laboratory (MBL)—the three entities listed in UChicago’s financial statements—the University’s bottom line saw the most dramatic change from FY2024 to FY2025.

UChicago made an accounting change this year in how it represents transfers from UCMed to the University in its financial statements, but the deficit decrease is independent of UCMed’s transfers, according to the University spokesperson.

The University’s debt-to-endowment ratio, where debt is measured as notes and bonds payable, fell slightly from 55.8 percent in FY2024 to 54.4 percent in FY2025.

The University has been criticized for its heavy debt load, which is comparable to that of Princeton’s and Yale’s, despite it having less than half those schools’ assets, the Wall Street Journal reported.

The MBL’s operating deficit has hovered around $10 to $15 million since 2013, when it formally affiliated with the University. This year, the deficit was reduced by more than half and now sits at $5.8 million. The University has received pushback in past years for subsidizing the MBL amid its own financial difficulties.

Isaiah Glick, Evgenia Anastasakos, and Tiffany Li contributed reporting.