Grants paying for PhD students- sure, those cannot be shifted to pay for admin; that makes sense.
Are administrators line items in the state budget? Then this would make more sense.
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.
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.