How does your university handle funding deficits?

[Kron3007]

I just wanted to get a sense of how this is generally handled in other universities and agencies, or if this is a problem more specific to my location. 

Where I am (Canada), most of our funding is tied to industry money.  Generally, if a company puts in funds, we can leverage those funds through government grants.  Usually, if a company is willing to put in $1, the granting agency will put in $2.

This all sounds great, but presents some real financial risk.  For example, I have had situations where the company signs on, and we then successfully obtain a government grant.  With these funds, we hire grad students, postdocs, or whatever was proposed in the budget. 

The problem arises when a company cant or wont meet their financial obligations, which often happens part way through a project after the team is hired and operating.  In this case, the funding agency often also pulls funding, leaving the PI with a group of students and staff, but no funds to pay them.  For employees, the answer is fairly easy, although not ideal.  However, graduate students are different as we have committed to them for the entire program and you cant and shouldn't just let them go.

As a naive PI, I suppose I had always assumed that funding agencies (that want/require us to train students) and/or the university (who want/require us to train grad students) would have some sort of support in place for this type of situation.  However, what I have learned is that they dont.  Faculty can do everything right and end up in really tough financial situations.  Statistically, if you are working with companies, this will inevitably happen from time to time at no fault of the PI.

So, I just thought I would see how common this is and if other universities actually support faculty in tough positions like this.       

[pgher]

US, so things are different. But still, there is always the problem of students outlasting their funding, projects going bust, etc. No, we don't have any sort of back-stop. It's something that comes up periodically, but nobody has a good solution. Occasionally, the department or college or some other office will have some funds to get you through a short time, but not always.

I had a situation where the funding agency's rules on foreign nationals changed, so my postdoc had to be terminated. They were able to get another job, but it took a couple of months. Fortunately, the dean had some flexible funding to take care of it.

[Ruralguy]

Similar to the financial aid situation situation we have for undergrads, we just try to shuffle around funding to cover what we need to cover, but sometimes there are no more shells for the shell-game.