Dear Members of the Yale Community,
Earlier today, Congress passed legislation that includes an endowment tax of 8% on universities like Yale—a dramatic increase from the current 1.4% tax.
Although the endowment tax is lower than what the House passed originally, it still means that Yale will pay an estimated $280 million in the first year it is in effect, and likely more in subsequent years. This is money that would otherwise support our students, faculty, staff, and local partnerships with the city of New Haven.
The impact of this tax will also be felt far beyond our campus and our hometown. Taxing universities undermines the education and research that fuel life-saving medical breakthroughs, life-changing innovations, and economic growth in communities across the country and around the globe.
For decades, the federal government has supported scholarship and research at universities like Yale—not out of charity, but because it recognized the power of higher education to advance the public good. We must keep making the case for higher education to lawmakers and the American people as we prepare for many challenges ahead.
The endowment tax is just one way Yale and our peers are facing threats to the resources that advance our mission. The administration has also proposed deep cuts to the National Institutes of Health and the National Science Foundation and the complete elimination of the National Endowment for the Arts and National Endowment for the Humanities—all critical Yale partners. Even as we continue to advocate for these and other programs, we must be prepared for additional funding cuts.
Meanwhile, other changes to federal support are looming. While some proposed cuts for essential services for research through facilities and administrative costs have been blocked by courts thus far, Congress has asked universities to help reform and reshape the system. That means Yale will likely shoulder more of these research costs in the future.
In the face of such uncertainty, we will continue to plan carefully, spend responsibly, and implement measures to ensure we can continue to advance Yale’s mission. For instance, this spring, all departments and units across campus engaged in contingency planning for the new fiscal year. These contingency budgets were reviewed and approved by the university’s budget advisory committee—led by Provost Scott Strobel and composed of faculty members and staff leaders across Yale. On Monday, we announced a 90-day hiring pause, a 5% reduction in non-salary annual budgets, and other actions. This begins to address, but does not fully cover, the budget shortfall we anticipate we are going to experience. We have more decisions to make based on the contingency plans. We will share more information once those decisions have been made and as the federal picture becomes clearer.
I’m deeply grateful for the outpouring of support from faculty, students, staff, and alumni in response to the message I sent in May. Alongside our fellow universities, we advocated for the research and teaching mission of universities. Now we must continue to speak for higher education while preparing for additional challenges.
In the coming months, we will face difficult choices that will require careful thought and consideration to maintain resources for our mission and support for faculty, students, and staff. But Yale has been tested many times throughout our more than three centuries of history. And at every point, we’ve responded with unity and resilience. We’ve not only endured but evolved to meet the needs of our community and to contribute knowledge and innovation to the nation and the world.
This moment is no different, and we will meet it together.
Sincerely,
Maurie McInnis
President
Professor of the History of Art