Federal Funding Uncertainty Halts Construction Projects

Earlier this year the University of North Carolina at Chapel Hill Board of Trustees approved the design of a $228 million research facility that would expand UNC’s work on virology, vaccine development and other areas. But now that project is suddenly on hold.

UNC Chapel Hill is one of several major research universities pausing construction plans due to financial uncertainty provoked by the Trump administration’s efforts to cap federal research funding reimbursement rates.

In recent months multiple federal agencies have announced plans to cap research reimbursement rates at 15 percent. (While such rates typically hover just under 30 percent, some institutions have negotiated reimbursement rates upward of 50 percent.) Though court challenges have halted the rate cuts for now, the uncertainty has prompted some institutions to pause certain construction projects—particularly research labs and related facilities.

Institutions pausing or slowing plans to build new projects include some of the nation’s wealthiest private universities: Yale, Johns Hopkins and Washington U in St. Louis, which posted endowments of $41.4 billion, $13 billion and $11.9 billion, respectively, in the last fiscal year, according to a recent study of endowments. (UNC Chapel Hill is among the nation’s wealthiest public institutions, with a $5.7 billion endowment.)

In some cases, construction on other facilities, like a new residence hall at UNC Chapel Hill, is moving forward while projects such as research labs have been halted.

Projects on Hold

Yale has paused construction on 10 planned projects, according to The New Haven Register.

“We’re riding out a bad period,” Alexandra Daum, Yale’s associate vice president for New Haven affairs and university properties, said at a local Chamber of Commerce event earlier this month.

One of those projects is the planned conversion of a street into a pedestrian and cyclist-only plaza, which officials decided in February to delay, Daum told The New Haven Independent, another local news outlet. Yale has not identified the other nine projects it plans to put off.

Daum pointed to uncertainty about federal funding as the reason for the pause.

“Like many, Yale is tracking federal funding closely and anticipating there will be impact to projects in the planning pipeline,” Daum wrote in an email to Inside Higher Ed. “We don’t know how much of an impact federal decisions will have on these projects, so we are being prudent.”

Construction on projects already underway will reportedly continue.

Johns Hopkins University announced a similar decision in early June. Administrators wrote in a message to campus that the university has experienced “a steady stream of research grant terminations, suspensions, and delays” that created uncertainty, particularly when coupled with the proposals for lower research reimbursement rates. The rate caps could deal the university a loss of more than $300 million a year in federal research funding, officials wrote.

JHU is taking a number of measures to handle budget concerns, including a staff hiring freeze, as well as pulling back on planned construction projects.

“Prudence dictates cutting back our ambitions in the near term, and we have decided to reduce our capital construction and renovation plans by approximately 10-20%,” officials wrote. “Final decisions on these reductions will be made over the summer in consultation with the divisions, with an emphasis on continuing mission-critical projects, essential deferred maintenance, and projects that are already far along in the permitting, demolition, and construction process.”

JHU did not identify what specific projects might be pushed back.

Washington University halted construction of a new arts and sciences building in April; work was expected to begin earlier this year, according to a news release from last fall.

WashU officials also cited federal funding concerns.

“We regret that it’s necessary to take these actions, but in our current climate, it is simply not prudent to continue with these projects as scheduled,” Chancellor Andrew D. Martin said in a news release. “We are always careful stewards of the university’s resources, but at this time, given the uncertainty around federal research funding and other potential government actions, we have to take a careful look at every aspect of our operations. We hope that once we have a clearer sense of the financial picture, we may be able to revisit some of these investments.”

UNC Chapel Hill offered similar reasons for halting construction on the research lab.

“Due to ongoing uncertainty surrounding federal research funding, the University has paused plans for the Translational Research Building. We are currently evaluating our research infrastructure, including our research facilities, and will continue to monitor funding trends. Scenario planning is underway to help us remain prepared for future opportunities,” a UNC Chapel Hill spokesperson told Inside Higher Ed in an emailed statement.

However, the university is moving forward with some projects, including a $93 million residence hall.

In neighboring Virginia, Republican governor Glenn Youngkin rejected $600 million in funding requests for 10 planned renovation and expansion projects at public universities last month, The Virginia Mercury reported. In a letter to state legislators, Youngkin cited economic uncertainty.

“I am optimistic about Virginia’s longer-term prospects for Fiscal Year 2027 and Fiscal Year 2028, and beyond, but there are some short-term risks as President Trump resets both fiscal spending in Washington and trade policies that require us to be prudent and not spend all of the projected surplus before we bank it,” Youngkin wrote to state lawmakers in May.

Some of those planned projects were research-oriented, though many were not.

The Outlook

While a few universities have publicly walked back big projects, that doesn’t appear to be happening en masse, experts say. Planned construction is still happening at many colleges.

“Projects, generally, are moving ahead. There are some larger projects that have been paused. The ones that have been stopped tend to be research-focused projects,” said Chris Purdy, director of higher education at SmithGroup, a design and planning firm that works in the sector.

Other buildings, particularly those that are student-focused or in high-growth areas such as health sciences and STEM, are also moving ahead, he noted. Purdy pointed out that research labs and related facilities are often highly specialized and therefore the most expensive to build.

“They’re primed to be under the most scrutiny just because they’re very expensive buildings,” Purdy said.

He noted that SmithGroup continues to see requests for proposals for campus construction and is optimistic that colleges won’t back off of planned projects throughout the rest of the year. But looking ahead to next summer, or fiscal year 2027, Purdy is less sure about where things will stand, noting the looming economic uncertainty for many institutions.

“At that point they’re going to have a different outlook on funding for capital projects,” Purdy said.