Washington University just laid off over 300 staff: How federal funding cuts and tax changes triggered it

Washington University in St. Louis has laid off 316 staff members and eliminated 198 unfilled positions since March, according to a message from Chancellor Andrew Martin. The workforce reductions span both the main campus and the medical center.

The cuts come as the university faces multiple financial pressures, including reduced federal research funding, a rising endowment tax bill, and increasing operational expenses. These changes are expected to save the institution approximately $52 million annually, as reported by Higher Ed Dive.

Layoffs tied to budget sustainability and strategic priorities
Chancellor Martin stated that the job cuts are part of efforts to ensure financial stability and long-term institutional success. He said, as quoted by Higher Ed Dive, “If we want to be great, and not just good, we must focus our resources where they will have the most impact and ensure that we’re positioned for success in the long-term.”

In addition to the layoffs, the university will not offer annual merit raises to employees in fiscal 2026. Martin described this decision as a difficult but necessary step to prioritise institutional stability and investment in the university’s mission. “Please know it is not a reflection of your hard work and contributions,” he said, according to Higher Ed Dive.

Endowment tax and rising costs pressure operations
Washington University is preparing for a significant increase in its endowment tax bill, which is expected to reach roughly $37 million. The higher tax obligation results from the sweeping US tax and budget legislation passed by Republican lawmakers during the summer, as reported by Higher Ed Dive.

At the close of fiscal 2024, the university held $20.5 billion in assets and an endowment valued at $12 billion. Based on data from the National Association of College and University Business Officers and Commonfund, this amounts to approximately $797,600 per student. Despite these high-value assets, financial strain has increased. The university’s operating surplus fell by 58% from fiscal 2022 to fiscal 2024, dropping to $150.3 million. Meanwhile, expenses rose nearly 25% over the same period, totalling $5.1 billion.

Other cost-saving measures already underway
To manage spending, Washington University has also paused new construction projects, including a planned arts and sciences building and green space developments. These actions were part of broader budget planning efforts aimed at balancing the books for fiscal 2025. Martin reported in July that the university broke even for the year through “prudent financial management and thoughtful work,” as quoted by Higher Ed Dive.

Although the current round of layoffs is complete, Martin indicated that additional operational changes may be necessary. He emphasised the importance of evaluating university functions regularly to identify inefficiencies and reduce redundancies.