USC’s increasing operating deficit has led to action being taken to reduce expenses in the form of layoffs, hiring freezes and eliminating merit-based pay raises, President Beong-Soo Kim said in a statement on July 14.
Kim said this action was taken because of the Trump administration’s proposed budget cuts to university research funds across the country and a projected decrease in student enrollment, which could lead to an annual revenue loss of $300 million in federally sponsored research funding. He further stated that USC’s “recurring, structural deficit erodes cash reserves, constrains future planning and capital needs, and is simply unsustainable.”
The statement also said USC took action within the last year to reduce their expenses by reducing school budgets and pausing hiring, but the university still ended the 2025 fiscal year with an operating deficit of $200 million, compared to the $158 million deficit in 2024.
To combat this, Kim said there would be no “zero-merit increases” in the 2026 fiscal year, meaning faculty would not see pay increases after performance reviews. Furthermore, Kim said that to resolve these financial issues, the university would sell unused properties and adjust “compensation for the most highly compensated members of our community.”
Kim closed out the statement by talking about USC’s core values, and stating that his goal is to create a sustainable plan of action and “prioritize and protect” the university’s core mission of maintaining a “broad array of academic, professional, extracurricular and athletic programs of the first rank.”
USC is taking financial suggestions from the Trojan community in the form of a virtual suggestion box. At the time of publishing, this website is still under development, but suggestions can still be made using this form.