The Key — Penn Is Keeping Its Options Open
“When the pressure is on, the odds are long, and the stakes are high — adapting creatively can make a huge difference,” President Larry Jameson said in his 2025 commencement address. That quote also opens Penn’s FY2025 Annual Financial Report and signals the report’s central theme: adaptability.
Penn’s FY2025 financial statements, covering July 2024 through June 2025, were released months ago. The newly published Annual Financial Report brings roughly twenty pages of leadership commentary and explanations. Executive Vice President Mark Dingfield highlights the report’s effort to “Illuminate the Endowment,” explaining how it works and why it cannot overcompensate for overspending. Yet beyond that explanation lies a clear strategic priority. Flexibility, not growth or cuts, now anchors Penn’s financial approach.
Dingfield emphasizes that Penn delivered strong financial results despite rising uncertainty. Rather than committing to permanent program cuts (like at Harvard), widespread layoffs (like at Johns Hopkins), or sweeping structural changes (like at UChicago), Penn focused on preserving room to maneuver. The university deferred non-essential capital-intensive projects, implemented a staff hiring freeze, reduced non-compensation expenses by 5%, and underscored through the Annual Financial Report the importance of diversified revenue streams.
These operational choices were paired with deliberate moves to strengthen liquidity. Penn increased liquid assets held outside the endowment by approximately $300 million, bringing the total to about $3 billion. Bonds and notes payable rose by roughly $463 million to $4.7 billion, reinforcing access to capital markets and preserving borrowing capacity. Penn’s leaders also reiterated their commitment to maintaining a strong AA+ credit rating. Together, these steps suggest that resilience, not rapid expansion or retrenchment, is the governing priority.
Cash functions as Penn’s shock absorber. The endowment is built for long-term sustainability and is largely restricted, but liquidity allows immediate flexibility. It lets Penn absorb funding disruptions, sustain core operations, and respond to emerging challenges without making irreversible decisions.
Penn is not alone in its strategy. Across peer institutions, FY2025 commentary reflects a shared backdrop: heightened federal funding volatility (especially around research grants); looming endowment tax increases; persistent cost growth outpacing revenues; and a desire to preserve strategic flexibility without locking in permanent changes.
Harvard, for example, ended FY2025 with an operating deficit and issued $1.2 billion in long-term debt to increase liquidity and support capital investments, describing the move as providing “strategic flexibility.” As insurance against funding cuts and preparation for an increased endowment tax, Brown secured a $300 million loan, froze hiring, and implemented expense controls. In this broader context, Penn’s emphasis on liquidity and optionality appears as part of a wider shift among elite universities seeking adaptability in an unsettled environment to preserve continuity in operations, upholding academic excellence
Still, optionality is itself a choice. Preserving flexibility means accepting tradeoffs, including slower growth and deferred investments and commitments. The open question is how long flexibility can serve as strategy. At what point does preserving every option require selecting one? For now, Penn’s FY2025 report suggests the university is engaging in risk-aware governance: it’s betting that in uncertain times, the best option is to keep its options open.
The Almanac
Curated highlights from this week’s Penn news
Philly lawmakers urge Penn to reach deal with graduate student union before February 17th strike deadline
GET-UP was established in the spring of 2023 and has been in negotiations with Penn for its first contract since October of 2024. According to Penn’s website discussing the negotiations, the two parties still haven’t reached agreements on provisions about academic issues, funding including stipends, medical payments, and union dues, and some stipulations for international graduate students.
If no agreement is reached by next Tuesday, thousands of graduate students could stop work, including teaching, grading, and research. Penn’s administration has been clear: academics and research will continue, even during a work stoppage.
So what? In recent months, Penn has instructed faculty and staff on contingency plans to keep classes and research running if a strike happens. A work stoppage could disrupt classes and research in the short term, but the dispute touches on academic authority and impacts Penn’s financial operations. Any final agreement will need to balance compensation concerns with Penn’s responsibility to preserve academic standards, institutional oversight, and financial sustainability.
Appeals court upholds Trump administration’s authority to impose anti-DEI conditions on federal funding
In the first few days of President Trump’s (W ‘68) second term, he issued two executive orders to curb DEI initiatives at federally-funded institutions. The first eliminated DEI-focused grants, and the second instructed federal agencies to include provisions in new grants barring recipients from conducting “illegal” DEI initiatives or programs.
The orders prompted rapid rollbacks across higher education and backlash from opponents, often through legal action. One lawsuit, brought by plaintiffs including the American Association of University Professors (AAUP), National Association of Diversity Officers in Higher Education, and Baltimore's mayor and City Council, argued the orders were unconstitutional. They noted a provision directing the U.S. Attorney General Pamela Bondi to create a report on curbing DEI and instructing DEI-related grant termination.
Last week, the 4th Circuit Federal Court of Appeals ruled the plaintiffs lacked standing to challenge the report provision (as the report had already been submitted months ago) and held that setting funding priorities and attaching conditions to federal grants falls within the Trump administration's purview. As the court put it, “whether that’s sound policy or not isn’t our call.”
So what? After the January 2025 executive orders, Penn began renaming and dismantling its DEI institutions, drawing pushback from some Penn faculty and student groups. But this court decision signals that if Penn wants to maintain its over $1 billion in yearly federal funding, it has a strong incentive to comply with the administration’s legal funding conditions.
US universities received over $5 billion in foreign funding in 2025
On Wednesday, the U.S. Department of Education (ED) reported that American universities received $5.2 billion in foreign funding through 8,300 contracts and gifts in 2025. Qatar was the largest source by far, providing more than $1 billion. The UK followed with $633 million, and China with $528 million.
The largest recipients were Carnegie Mellon and MIT, each receiving nearly $1 billion in foreign funding, followed by Stanford at $775 million and Harvard at $324 million. Although Penn was not among the top recipients last year, it ranks fifth in total foreign funding since 2019, with $2.8 billion. That figure is mainly driven by Germany at $1.9 billion, largely due to scientific licensing agreements.
So what? The ED reported that $2 billion of the $5.2 billion total was disclosed late, indicating potential violations of federal requirements. In January 2025, the ED opened an investigation into Penn regarding alleged inaccurate and delayed foreign funding disclosures. This renewed scrutiny signals an increased federal focus on monitoring and enforcing transparency around foreign involvement in American higher education.
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