Things are fucked up. The people in charge say things are fucked up. The things which are fucked up are not the things the people in charge say are fucked up. The primary thing that is fucked up is that the people in charge are saying things which are not fucked up are fucked up.
In an ideal world the budget is a best guess as to expenses and revenue for the coming year and a plan on how to spend money such that money will not be lost. Meaning that even if everything were perfect the budget would still not reflect reality.
The reality is that my university makes money. My university system also makes money (individual universities in the system may lose money some years, but those loses are offset by the surpluses elsewhere. That's the whole point of having a system instead of a bunch of isolated universities.)
The budget, every year, says that my university will lose a metric fuckton of money so we need to cut, cut, cut.
Thus the only real problem is that the budget is wrong, consistently, year after year, and always in the same direction.
If the administration didn't say that things were fucked up, nothing would be fucked up. Their saying it is a self fulfilling prophecy.
While the deficits projected by the budgets are imaginary or fictitious (depending on whether you're betting on stupid or evil) the need to balance these budgets creates a very real deficit when it comes to spending money on things like salaries. Since you need to slash spending by enough to make up for the fake deficit, real damage is done to the university. What happens at the end of the fiscal year when actual legal reports need to be filed with non-fictitious numbers? The money goes into the reserves. That's how the reserves got so bloated.
The cuts do have an effect upon revenue. A teacher who isn't at the university can't teach a class and so the university can't make money off the class. So revenue is dropping. It's just that so far it hasn't dropped enough for the university to stop making money.
The need to "fix" the projected-but-never-actual deficits means hard choices about who can stay and who must be let go but here, again, the administration does stupid things. They get rid of profitable people.
Now it's important to remember that profit != value. The university counseling center is of great value, but since the service is free (as it fucking should be) it doesn't make any money (and it's impossible to determine how much it retains by keeping student's we would otherwise lose.)
The reason for the focus on profit is that all of the things that don't pay for themselves need to be paid for, and since the deficits aren't actually real they are in fact being paid for. What pays for them? The things that make a profit.
By cutting profitable things, we have less money left to pay for the non-profitable things. For example one program being slashed returns two dollars for every one dollar put in. That makes for easy math. Pay for one person and you get the money that you paid back, plus enough money to pay for a zero-revenue person with the same salary.
Flip that around and you see that if you get rid of one person in that program, you can afford one less zero-revenue person than you could before.
Now we're still in surplus territory. They can already afford more zero-revenue people than they actually employ. But once there start to be actual deficits the cuts to profitable programs will necessitate cuts to zero-revenue ones.
And that's when things will really go to shit.
The university is suffering enough when the horrific problems we face aren't actually real. Once they are real it's going to get very, very bad.