(The Epoch Times)—The University of Southern California (USC) has announced it will lay off staff and embark on other cost-cutting measures as it faces a $200 million deficit, as well as state and federal funding cuts, that interim President Beong-Soo Kim described as creating a “volatile external environment.”
In a July 14 memo sent to faculty and staff, Kim detailed how the decision was made due to considerable shifts in federal funding, as well as a likely decrease in international student enrollment.
“The ultimate impact of these changes is difficult to predict, but for a university of our scale, the potential annual revenue loss in federally sponsored research funding alone could be $300 million or more,” she wrote. “We cannot rely on the hope that federal support will revert to historical levels.”
USC is one of many universities now facing cuts that have historically relied on federal funds for research, hospitals, and student financial aid.
“To deal decisively with our financial challenges, we need to transform our operating model, and that will require layoffs,” wrote Kim, who did not outline how many people might be laid off.
Alongside cuts in federal financing, USC faces a structural deficit in which its revenue has fallen short of expenses, a trend that has gone on for several years.
The university implemented temporary measures in March 2025, including budget reductions and a pause in hiring. USC ended Fiscal Year 2025 facing an operating deficit in excess of $200 million. In Fiscal Year 2024, the university posted a $158 million deficit. The university is home to the USC Marshall School of Business, which is often ranked among the nation’s top business schools.
“Left untamed, this recurring, structural deficit erodes cash reserves, constrains future planning and capital needs, and is simply unsustainable,” Kim stated.
The university has taken other steps to address the deficit, such as ceasing some third-party services, while instituting discretionary spending and travel controls.
Kim says that the school is committed to further cuts, such as selling unused properties, eliminating redundant operations, and lowering compensation for the university’s best-paid employees. USC created a website to pool ideas from students and faculty on how best to tackle its financial challenges.
“While important steps, these measures will not be enough by themselves to reverse our structural deficit and weather the new federal environment,” Kim wrote in the letter. “Nor is it feasible to rely on increased tuition revenue, draw more from our endowment, or take on additional debt.”
USC is one of many schools facing a rapid environmental change in higher education, as federal cuts affect institutions across the country.
Meanwhile, California’s higher education system is not only facing federal cuts. The California state budget for the 2025–2026 fiscal year reduced state spending on the University of California (UC) system by approximately $130 million. The reductions could result in fewer courses and reduced academic support, according to the Legislative Analyst’s Office.
The state says that UC’s spending priorities are higher than available funding, leading UC to make changes to hiring, freezing, and cutting expenditures.
“Though UC does not yet know how it would respond to the deferrals, it would face more disruptive budget adjustments if it increased spending in 2025‑26 and then the deferred payments were eliminated or postponed,” wrote the Legislative Analyst’s Office in February. UC has been directed to increase enrollment without increased state funding.
Mary Croughan, University of California–Davis provost and executive vice chancellor, wrote about the effects the cuts would have on the Northern California campus.
“We have worked diligently for many years to address our core funds structural deficit,” wrote Croughan in March. “We have made progress, but not without real costs for our community. People are tired of doing more with less. Morale has suffered.”
Nonetheless, she wrote that state budget cuts, federal cuts, and increasing campus costs would likely increase the university’s structural core funds deficit.
UC–Davis also instituted a hiring freeze this spring amid funding cuts for the University of California system in the 2025–2026 California state budget.
UC–Davis Chancellor Gary S. May wrote in March about the significant cuts in federal research funding that UC–Davis is facing, specifically addressing a proposed cap on expenses federal funds will cover at the facilities and administration level.
“A proposed 15% cap on NIH reimbursement for facilities and administration costs, or F&A, would be devastating, equating to a loss of $70 million in research funding at UC Davis if the rule were applied to this year,” he stated.
University of California–San Diego Chancellor Pradeep K. Khosla addressed in February the change to federal research funding. He writes that these changes could lead to $150 million less flowing to UC–San Diego annually.
“Given the potential for financial impacts as a result of anticipated federal and state budget cuts, we are creating contingency plans to address potential deficits and taking steps to reduce expenditures,” Khosla wrote.
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Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.