Advisor miscalculated the personnel budget for research grant
Is it possible for them to “demote” me to a lower level, part time, or similar?


In my experience, it is much less complicated (legally and bureaucratically) to transfer the required money from other sections of the grant such as travel or publication costs.


  How should I go about dealing with this?


There are usually many culprits in such a situation (and you are not amongst them):


The funding organisation should have noticed that the alloted personal costs do not suffice for a PhD student (assuming that 100 % is the standard for PhDs in your field).

In fact, I have heard that some funding agencies explicitly fund a PhD position with a certain part-time level or full-time (depending on the field) for a certain period of time – as opposed to funding a certain amount of money that exactly suffices for this.
This way, the detailed sums (which not only depend on your level, but on many other factors such as location and similar) are left to the bureaucrats to determine and to move and scientific personnel (such as your supervisor) should never have to worry about this.
When issuing your contract, your university’s administration should have checked that they have the required funds to pay your salary for the duration of your contract.
Your supervisor may or may not have had the responsibility to check this.


So, even if your supervisor made a mistake, so did the others.
However in contrast to your supervisor, those are trained bureaucrats whose job only exist to do things like these and who do this on a daily basis. Hence, I suggest to try to unite against these with your supervisor. Not only do they have no real power over you (not being members of your “boys’ club”), but they also have access to general funds to cover for such mistakes¹.




¹ I witnessed a case where a PhD student got paid too much over a year due to being assigned to the wrong level (i.e., a situation similar to yours) and they did not have to pay back more than legally required (the past few months) nor was this money deduced from the grant that paid them.