Aligning FY26-27 Budget with Baylor in Deeds

February 24, 2026

Baylor Faculty and Staff:

These are incredibly challenging and uncertain times in higher education as we shared in both the faculty and staff spring meetings several weeks ago. From the looming enrollment cliff to changes emanating from governmental and regulatory entities – and most certainly, inflation overall – colleges and universities across the country currently face significant headwinds at a scale not realized in decades.

I want to stress today that Baylor is not immune from these challenges. Yes, our University is financially healthy and stable, and our Christian mission and status as a Research 1 university certainly offer distinct advantages. But it would not be prudent or strategic to stand by and ignore the headlines and significant market forces impacting all colleges and universities.

Similar to how we strategically faced COVID-19 in 2020, we have a choice as an institution: We can wait for external entities to decide our future, or we can proactively prepare, take action and best steward the resources entrusted to us by the Lord, students and their families, alumni and friends of Baylor.

Today, with concurrence of the President’s Council and the Board of Regents, I want to outline several actions the University will undertake as we prepare for the upcoming fiscal year, which begins June 1, 2026.

Being Good Stewards

One of the four Commitments of the University’s strategic plan Baylor in Deeds calls for Demonstrating Christian Stewardship. We are nearing completion of a comprehensive budget assessment process that examined spending patterns, assessed unit allocations to ensure efficiencies and identified additional revenue sources. Essentially every aspect of the budget was on the table for evaluation.

As a result of this campuswide assessment, we have identified $35 million in budget reductions across the campus to be implemented over the next two years that will reduce administrative costs, better align programmatic resources and streamline operations, while strategically positioning Baylor for future success.

These budget reductions and subsequent reallocations are purposefully aligned with Baylor in Deeds. As such, each unit’s budget will be impacted at different levels, including Athletics. I want to reiterate that there is no new institutional investment in Athletics built into the FY26-27 budget that is impacting tuition and/or the budget assessment process.

Also, I mentioned in both the fall faculty and staff meetings that we are preparing for the Baylor Energy Complex project outlined in Baylor in Deeds. Our current energy system is outdated, environmentally wasteful and limiting our future growth. This is a generational investment – projected to be the largest in Baylor’s history – that will cost hundreds of millions of dollars over the next decade, but it is essential for our present and future campus infrastructure.

Focusing on Students

Baylor has a long legacy of focusing on its students and providing a transformational educational experience for both undergraduates and graduates. One of the Imperatives woven through Baylor in Deeds focuses on Value and Affordability, and we must reduce our operating expenses to slow the rate of tuition and fee increases impacting both current and prospective students and their families.

You likely read that last week the Board of Regents approved a tuition and fee increase for the upcoming academic year at an average net out-of-pocket increase of $1,978 per student, which equates to 6.5%. Without the $35 million in operating reductions over the next two years, Baylor’s tuition and fee increases would have been in excess of 10% annually.

Approximately $3.8 million from this year’s tuition increase will be directed to financial aid for returning students. This is in addition to the more than $100 million raised to date toward future scholarships through the Extend the Line scholarship initiative and the Baylor Benefit Scholarship program, which provides free tuition to selected students and families with a household income of less than $50,000. The Baylor Benefit Scholarship program alone costs the University $10 million annually. Overall, we provide students more than $351 million in institutional merit and need-based financial aid each year.

Through ongoing, strategic budget prioritizations, we pledge to continue to identify ways to ensure a Baylor education remains accessible for our students.

Supporting our Community

Our faculty and staff are the backbone of Baylor, and we will again recognize your efforts with a 3% merit pool for FY26-27. As in the past, this is not an across-the-board compensation increase for each employee, but rather a financial recognition of meritorious work and effort in teaching, research, scholarship and support and dedication to Baylor’s students.

As part of the budget assessment process, the University conducted a comprehensive review of our benefits program for faculty and staff. This analysis confirmed that Baylor’s 10.8% retirement contribution exceeds that of many colleges and universities. Additionally, our retirement program is distinctive in that it requires no employee match and provides full vesting after just one year of employment – an uncommon and meaningful benefit in higher education.

Based on these and other factors, we have decided to reduce the University’s retirement contribution toward faculty and staff to 8%, effective August 1, 2026. Even with this change, Baylor’s retirement package will continue to be highly competitive and among the top overall benefits programs in higher education. 

Please know this decision was not taken lightly, as we realize how impactful this benefit is for our faculty and staff and understand this change will affect all members of our community. Ultimately, we made this decision to save $10.4 million in annual expenses, which will allow us to lower the rate of tuition increases for our students, preserve a 3% merit pool for our deserving faculty and staff and support the long-term financial health of the University. 

Continuing our Momentum

As many of you may recall, Baylor made similar strategic, proactive financial decisions at the early onset of the COVID-19 pandemic in 2020. At the time, I indicated those difficult decisions would allow Baylor to not only survive but thrive in the future. As a result of those decisions, the University accelerated our achievement of Research 1 status, met or exceeded the aspirations outlined in our previous strategic plan, Illuminate, and elevated Baylor’s overall status academically and athletically.

Now is the time for another strategic financial repositioning as Baylor responds to extensive external headwinds and prepares for another season of significant growth and achievement aligned with Baylor in Deeds. Strong, effective organizations undergo such processes on an ongoing basis. Again, these decisions are indeed tough, but we must position Baylor for financial success not only now, but five, 10 and 25 years into the future.

Looking Forward

In the weeks ahead, the Budget Office will work with each organizational unit’s business officer to incorporate the respective budget reductions into the FY26-27 budget. Additionally, Human Resources will share resources to personally assist you in updating your retirement planning.

We will also continue preparing for a higher education that will look quite different in the future due to marketplace demands and other factors. This effort may involve additional, ongoing changes across the university as we all work together to ensure a Christian education in an academically excellent environment remains just as valuable as it is today. 

I expect many of you will have questions, and we will organize follow-up communications sessions in the near future. Let me reiterate that Baylor is financially healthy and stable, and such strategic decisions are necessary for the University’s long-term viability and impact. Similar decisions are also being made by not only other colleges and universities, but by companies, non-profits and governmental entities across the country. 

Thank you in advance for your partnership, and most importantly, for your renewed commitment to Baylor’s mission to educate men and women for worldwide leadership and service by integrating academic excellence and Christian commitment within a caring community.

Sincerely,

Linda A. Livingstone, Ph.D. 
President