An arbitrator ordered Portland State University to reinstate 10 nontenure-track faculty members laid off in June, a ruling the university is resisting on contractual grounds and signaling potential legal escalation. The dispute centers on whether the arbitrator exceeded authority in ordering reappointments; the faculty union says the ruling is a standard remedy for contract violations and is preparing follow-up legal action. The ruling comes as multiple colleges brace for additional budget tightening and possible layoffs amid enrollment pressures and new federal policies that could affect revenues. Several prominent institutions signaled further program and staff reductions as they prepare 2026 budgets, and faculty governance bodies warned that repeated cuts risk losing institutional expertise and accelerating departures. Higher-education leaders will need to balance legal, labor and financial strategies: honoring collective-bargaining obligations, preserving academic capacity, and communicating transparently to retain faculty and program quality.