photo by: Shawn Valverde/Special to the Journal-World

KU's Allen Fieldhouse is pictured in this Sept. 27, 2023, aerial photo.

UPDATED 5:15 P.M. AUG. 6

The University of Kansas is implementing an immediate hiring freeze as KU’s top leaders are ordering deans and other department heads to find $32 million in annual savings on the Lawrence campus.

A Wednesday message to KU employees from Provost Barbara Bichelmeyer and Chief Financial Officer Jeff DeWitt also indicated that KU employees should not expect a 2.5% across-the-board pay increase that most other state employees are receiving as part of funding from the Kansas Legislature. Rather, the letter indicated wage increases would be more targeted.

“Please note that the across-the-board 2.5% pay increase the State of Kansas is providing to employees in agencies under the purview of the governor do not apply to KU employees,” the written message states. “KU has received an allocation from the state that will be used to help fund wage increases pursuant to our budget plan.”

The message calls on department leaders this fall to present budget plans that — in total — save the Lawrence and Edwards campuses $16 million by July 1. Then, from July 1 to June 30, 2027, the budget plans need to achieve — in total — $32 million in annual savings for the campuses.

“We are again navigating an uncertain fiscal environment because of external factors, such as disruptions to federal funding, changes in federal law, stagnant state funding, rising costs, changes in international enrollments, and a projected nationwide decline in college enrollments,” the pair of administrators wrote in the message.

The new budget directive comes after a set of more limited directives was issued in June. At that time, KU was projecting the need to find $20 million in budget cuts.

The June message also stopped well short of ordering a hiring freeze, but rather called for a 20% reduction in university travel budgets and another 5% in budget cuts through targeted expense reductions in various departments.

On Wednesday, KU rescinded those orders, saying the university wanted to provide more “autonomy and flexibility” as department leaders developed reduced budgets. But the Wednesday message replaced those budget cuts with an immediate hiring freeze for the Lawrence campus and the Edwards campus in Johnson County.

While the hiring freeze is more pointed than many of the June directives, it wasn’t immediately clear that the new directive was larger than what the university previously called for. Instead, KU is allowing the new budget cuts to be structured in a manner that only $16 million in savings will have to be found before KU’s budget year ends on June 30. In that regard, the cuts are less than the $20 million directive made in June. However, Wednesday’s directive also specified $32 million in savings must be found for the fiscal year 2027 budget, which begins in July 2026. That is a more specific cut for 2027 than previously communicated.

The Wednesday letter didn’t provide many details about why KU is now changing its budget plans. The letter did mention a multitude of funding challenges, including stagnant state funding and rising costs.

However, some of the challenges cited aren’t immediate. For example, the letter cited a projected nationwide decline in college enrollments. KU, though, is not expecting to see a decline in enrollment when classes begin later this month. Rather, KU officials have said enrollment is likely to set a new record for the second year in a row. However, the chancellor has said the incoming freshman class is expected to be smaller than last year’s freshman class, which is a sign that enrollments are susceptible to declines in future years, as the average sizes of high school graduating classes shrink.

Wednesday’s letter did not mention one factor that likely is putting immediate pressure on KU’s finances — changes in the economics of college athletics. Beginning July 1, college athletes became legally eligible to share in the revenues of their university’s athletic departments.

In June, a KU spokeswoman said leaders were estimating that once revenue sharing began, Kansas Athletics would have less money to provide to the university. The athletic department makes a variety of payments to the university, including for tuition, housing and meals for its student-athletes. In June, the spokeswoman said the changes likely would result in a $10 million reduction in funds from the athletic department to the university’s general operating budget.

The Wednesday letter did not mention the athletic department issues, but university leaders have continued to warn of the impacts in other forums. At a retreat for the Kansas Board of Regents last week, DeWitt, the university’s CFO, told regents the revenue sharing program would negatively impact KU’s general budget.

“Athletics has been a net contributor to the university,” DeWitt said. “Now, their ability to do that is largely gone. And so the issue is, if that revenue isn’t coming in, how are you going to manage your budget?”

University employees who were expecting a 2.5% pay increase this school year may have some personal budget managing to undertake. The letter made a point to note that the 2.5% pay increase isn’t automatic.

Most university employees aren’t part of the state’s general government pay pool. Because the universities are overseen by the Kansas Board of Regents rather than the governor, general across-the-board wage increases approved by the Kansas Legislature don’t normally apply to KU employees.

But often, legislators — as was the case this year — provide a separate funding package for university wages. Those funding packages aren’t as specific as the general across-the board-wage increase for other state employees. However, in recent years, KU has used that money from the Legislature to basically replicate the across-the-board increases other state employees received.

In a written response to Journal-World questions on Wednesday afternoon, a spokesperson in the provost’s office said the funding allocation from the Legislature often fell well short of providing enough money to replicate the across-the-board increases other state employees received. KU often would find money in its budget to do so, but it created other strains.

“We must always find other funds in our budget to make up the difference for salary increases,” KU said in its statement. “The approach announced today helps us use state funds to strategically address pay increases.”

KU leaders previously have said they are looking for ways to make targeted pay increases that address what they deem is a gap between what select KU employees are making versus what they would make if they had the same job in the private sector or at another major research university. Last year, the university estimated the “market pay gap” at KU was about $27 million a year.

In June, KU said it was budgeting to provide about $17 million in this year’s budget to address market pay issues. Wednesday’s letter says market pay remains a key strategic priority for the university, but the message doesn’t provide specifics on how large of a boost to market pay KU expects to provide during the year. In a statement Wednesday afternoon to the Journal-World, the provost’s office said addressing market pay issues would be a “multi-year project,” and that the university “would have more to say later about exactly how we will allocate wage increases.”

As for the hiring freeze, it does come with a few possible exceptions, including positions fully funded by grants and student and lecturer positions that are approved by the department’s leader. Each department on campus also will have a chance to be removed from the hiring freeze in October. Whether a department will be removed from the freeze, however, is dependent upon the department submitting a new budget plan that meets the new budget cut provisions.

The letter indicates each department will have a specific budget cut to meet, rather than the university adopting an across-the-board cut where each department has the same percentage of costs to slash. In a statement to the Journal-World, the provost’s office said a 6.5% cut to the department’s general budget — the portion funded by tuition and state dollars — is an expectation. But the spokesperson said that is different than a 6.5% cut to a department’s total budget, given that many departments receive grant funding, endowment support or other funds that are outside its general budget.

“Later this week, unit leaders and budget officers will receive specific budget reduction targets so they can develop plans by Oct. 15 to meet their respective goals,” the letter states.