The typical university has but three to five major streams of revenue*:
1) If it's a state institution, state $'s.
3) If it has a medical school, clinical $'s.
4) Indirect cost $'s from Federal grants.
5) Endowment/donation $'s.
If any one of those is insufficient to cover related costs, the other streams are tapped to make up the difference. They can flow in all directions to account for fluctuations in each stream. Simple, right?
Problem is at least three - often four - of those revenue streams are declining at many universities. And one of those, indirect costs, hasn't pulled its weight for a long time, if ever.
Bit of a problem, eh?
* Yes, I know intellectual property income isn't listed. For the majority of universities that doesn't count as a major source of income.