OP here: I think the reason for reducing Ph.D. admissions is very simple and should be understandable to anyone who has ever been responsible for making payroll. We (at universities) have great uncertainty about future "revenue" (grants) with even funding for ongoing contracts/ grants not being guaranteed to come in next fiscal year. So we need to reduce expenses which are placed on the grants, the largest amount of which is paying for our trainees. The vast majority of universities in the US do not have extremely large endowments, and at least at the school I work at, the (very modest) endowment amounts that can be used for ongoing expenses already are.
I, as a PI, am not directly admitting anyone into my group this year to ensure I have enough funding to pay existing group members. We're hunkering down and making sure those we have now will be funded through the rest of their Ph.D. While this article is talking about program-level decisions, there is a bottom-up aspect as well - at my program and many others, we (faculty) directly admit students into our group and are often responsible for their salaries from day one. Many faculty are, at an individual level, making the same decision I am, to reduce or eliminate any admissions offers this year.
Edit: For reference, I am not at UPenn, but at a "typical" state school engineering program.
In theory it is less at risk, but in practice there may be fewer TAships due to general budget shortfalls and also more students competing for those spots.
I am on fellowship, but have already been warned where I am that TAships might be cut. New rules have been put in place for maximum number of years one can teach, whereas it used to be a requirement that we TA a certain amount of time at all because of the high need (not sure if it is, maybe this hasn't been removed, just to emphasize that this is despite a need for TAs).
Completing a PhD typically takes 5-7 years in the US. In my public university, the nominal tuition for that time would be $100-150k for in-state students and $180-250k for others. Then add living costs on top of that. A PhD increases expected lifetime earnings over bachelor's, but not in all fields and definitely not enough to justify such spending.
That is how it works. PhD programs charge tuition. Tuition is typically reimbursed through some working arrangement, but you're welcome to pay out of pocket.
Because a PhD should be thought of a job, not pure education. PhD students are already underpaid, go over a lot of stress, and now some wants them to pay for these? Doesn’t add up at all.
Typically, universities have a pretty hard and clear line between research funds and teaching funds. Teaching funds come from tuition, are under the purview of someone like a provost, and are distributed to the colleges. The colleges then pay tenure track/tenured faculty, associate faculty (teaching), and TAs with these funds. Typically, these TAs get a waiver for their studies -that also comes out of teaching funds.
Research funds come from granting agencies such as NIH, NSF, DoD, DoE, and to a much lesser degree, private partnerships. These funds go directly to the tenure track, or occasionally research-only faculty to pay for their research program. These funds can also be used for RAs (pay graduate students full time so they don't need to teach). TA and RA wages are usually the same, but graduate students working as a TA won't get as much done.
Usually a position such as Vice President of Research exists. That office takes IDCs (15-80% depending on the university negotiation with the granting agency). Both IDC funds (often called F&A funds) and teaching funds pay money to the colleges for some percentage of things like building costs, staff (janitors, safety folks, admin) etc. There are usually intense negotiations between the office of the provost, and office of research, over exactly who must contribute which funds.
Oftentimes, a successful and wise research office will realize that the more graduate students they have doing unencumbered research, the more federal grants they can bring in. So many research offices will sponsor RAs per department/college out of F&A funds. Additionally, they will often pay the tuition waiver to the graduate school out of F&A funds. This can lead to not enough TAs to teach classes though, so again, this is usually negotiated between the teaching and research sides.
Typically, teaching brings in most of the money at a university (outside of the biggest research universities), but teaching revenue is much more stable, so those funds are spoken for immediately, usually on fixed costs and union jobs.
Research funds are lower, and because they are brevet quite guaranteed, many folks that are paid from research funds are on contracts that must be renewed every fiscal year, etc.
It's a different budgetary item. Unlike a household budget where people are given a general income and then asked to decide to spend it on housing, gas, groceries, etc. It's far more like SNAP, where the money given to you is legally bound to very specific things-- you can buy baby food but not diapers for your baby.
I'm certain that has cuts continue, admin will begin to be laid off, but it makes total sense that the first response to grants being rolled back is that the things that are directly funded by grants (NOT ADMIN) are also rolled back.
To continue a SNAP example: it makes total sense that when you have less food money, you buy less food. You may proceed to sell your used video game consoles later but the very first thing you do is reduce your spending on food.
At most public universities, the tenure track faculty, staff, and admin are primarily jobs negotiated through the public union. They are paid for by tuition revenue and state funding. They cannot legally be cut, and almost always are directly related to the teaching aspect of a university.
However, universities do research, and need research infrastructure. This includes administrators, safety people, compliance people, core research facilities, etc. Those are usually on what is called "soft money" - funds from IDCs. Those folks can be eliminated, of course, but there are typically very few of them and they are serving the most essential roles. If you eliminate them, you may need to eliminate your research program altogether. The NIH requires you to meet safety standards, the EPA requires specific waste disposal, etc. The folks that ensure that compliance generally are paid for by IDC funding.
It's even more specific than that. Grants are often specific to a research project and you're not supposed to pay, say, a postdoc that works on X with a grant that's supposed to cover work on Y.
Cutting admin people might mean more paperwork for professors and researches, which can lead to less grants and funding because you can’t do science while doing paperwork. Not that easy to be efficient without losing productivity.
I, as a PI, am not directly admitting anyone into my group this year to ensure I have enough funding to pay existing group members. We're hunkering down and making sure those we have now will be funded through the rest of their Ph.D. While this article is talking about program-level decisions, there is a bottom-up aspect as well - at my program and many others, we (faculty) directly admit students into our group and are often responsible for their salaries from day one. Many faculty are, at an individual level, making the same decision I am, to reduce or eliminate any admissions offers this year.
Edit: For reference, I am not at UPenn, but at a "typical" state school engineering program.