Introduction to the Fiscal Crisis at USC

The University of Southern California has issued layoff notices to more than 900 employees since July amid a fiscal crisis that has battered morale and strained resources. The cuts, detailed in a Monday letter to the USC community by interim President Beong-Soo Kim, are central to an effort to erase a budget deficit that ballooned to more than $200 million. The layoffs have included employees across the university and its health system, including student academic advisers.

The Impact of Layoffs

But Kim, who succeeded former President Carol Folt on July 1, wrote that as many 200 of those who received layoff notices could remain with the university in new positions. And he noted that the job cuts are nearly complete. “The layoffs, of course, fall most heavily on those losing their jobs, but everyone else in our community also feels their impact — through the emotional strain of losing colleagues and friends, the resulting stresses on departments and units, and the challenge of doing more with fewer resources,” Kim wrote.

USC Interim President Beong-Soo Kim

USC interim President Beong-Soo Kim, who assumed the top job at the university July 1.
(Gus Ruelas/SC Photo/Gus Ruelas)

Causes of the Fiscal Crisis

USC’s deficit grew dramatically during the final year of Folt’s tenure, mushrooming from $158 million to upwards of $200 million — an increase of more than 26%. The private university, traditionally known for its wealth, embarked on several pricey projects in recent years, among them the opening of a campus in Washington, D.C., that included buying a building there for about $49 million. In 2021, USC agreed to pay $1.1 billion in settlements to former patients of university gynecologist George Tyndall — the largest sex abuse payout in the history of higher education.

Austerity Measures

USC had announced a spate of austerity measures in March, including a hiring freeze, a reassessment of capital spending projects and restrictions on discretionary spending. Now, with the layoffs, Kim said that USC is “on track to eliminate our long-term deficit” by the end of the fiscal year that concludes in June. “Notwithstanding this encouraging news, we cannot afford the luxury of complacency,” Kim wrote in the letter. “First, our fiscal progress must be monitored carefully to ensure we reach our budgetary goals for this fiscal year and can sustainably generate positive margins in the future.”

External Pressures

The USC actions come at a time of unprecedented threats against universities by the Trump administration, which has slashed billions of dollars in funding at campuses across the country. On Oct. 16, USC rejected President Trump’s education compact, which offers priority research funding to universities in exchange for following Trump’s conservative vision. At the time, Kim wrote that tying research benefits to signing the compact “would, over time, undermine the same values of free inquiry and academic excellence that [it] seeks to promote.” Kim’s latest letter obliquely referenced a chaotic year for universities amid Trump’s effort to remake higher education. He noted the presence of “significant stresses,” “uncertainty” and “scrutiny” in higher education, adding, “More disruptions are coming, even if we can’t predict their timing or form.”

Navigating Volatile Times

“During these volatile times, it’s important to be agile, remain open to different perspectives and ideas, and never lose sight of our long-term mission and values,” Kim said. The layoffs have come as USC has steadily raised tuition and fees to become one of the most expensive colleges in the U.S. The university — which has been buffeted by controversy in recent years, including scandals involving Tyndall and former medical school dean Carmen A. Puliafito — projects the cost of undergraduate attendance for the upcoming academic year to be $99,139, including housing.

Historical Context of Layoffs at USC

Historically, layoffs at USC have been rare. The 1990s, marked by a recession brought on by the collapse of the region’s aerospace industry, saw two notable rounds of job cuts. In 1992, USC laid off 58 people and eliminated 31 vacant positions to pare down a $15-million deficit. Three years later, at least 100 faculty members at the medical school took pay cuts and an undisclosed number were dismissed as part of a plan to address an $11-million deficit.

Conclusion

The fiscal crisis at USC, marked by significant layoffs and austerity measures, reflects both internal challenges and external pressures. As the university navigates these difficult times, it must balance the need for financial sustainability with its commitment to academic excellence and community well-being. The path forward will require careful planning, adaptability, and a steadfast commitment to the university’s core values.

FAQs

1. How many employees have been laid off at USC since July?
   • More than 900 employees have received layoff notices.
2. What is the primary reason for the layoffs?
   • The layoffs are part of an effort to address a budget deficit that has grown to over $200 million.
3. Have there been any austerity measures implemented by USC?
   • Yes, USC has implemented a hiring freeze, reassessed capital spending projects, and restricted discretionary spending.
4. How does the current situation compare to historical layoffs at USC?
   • Layoffs have been rare at USC, with notable instances in the 1990s due to a recession.
5. What is the projected cost of undergraduate attendance at USC for the upcoming academic year?
   • The projected cost, including housing, is $99,139.