Graduate students are paid to attend - they're more like employees than undergraduate students. Why wouldn't a university faced with funding cuts start by not hiring additional people rather than getting rid of current ones?
Maybe because graduate students directly contribute to the university’s mission by teaching undergrads and “producing” research (both of which bring in $$$), while administrators seem to be purely a cost center, many of whom serve no useful purpose?
I mean, the grants that are being cut is the money that graduate students bring in. Less grant money -> fewer graduate students. In theory maybe it's possible to be more efficient like you're suggesting, but it's hard to see how the immediate response could be any different.
