FY27 University Budget Update

Baylor Faculty and Staff:

What a wonderful Homecoming celebration we experienced over the weekend alongside our students, alumni, parents and friends. Everything we love about Baylor – the Christian hospitality, traditions, pageantry and, of course, winning a football game – was on full display as we enjoyed the cool, fall weather together. Like all of you, I believe such experiences are worth not only preserving, but also enhancing for future generations of the Baylor Family.

Over the past two years, you have heard me mention frequently the headwinds that are impacting all higher education. These headwinds include changing demographics of high school graduates, increasing competition for students, financial and budgetary pressures and the growing influence of artificial intelligence. I want to reiterate that Baylor University is not immune to these current and future challenges. 

I sincerely appreciate the sacrifices so many of you made following last year’s budget assessment, which identified $35 million in operational cost savings over two years to mitigate a significant tuition increase that would have impacted our students and their families. I am writing today to request your continued assistance. As faithful Christian stewards, we must work together to prepare Baylor to succeed in a very uncertain future for colleges and universities that is likely to look quite different than the past.

We currently stand at the midpoint of the fiscal year, which runs from June 1, 2026, through May 31, 2027. At the recent Board of Regents meeting, we provided a financial update that based on our budget projections, the University faces an approximate $30 million deficit at the end of FY27. While a small percentage of Baylor’s overall $1.1 billion budget, this budgetary gap is still impactful to our operations. 

Several factors are contributing to the projected deficit, including increased price sensitivity among families, greater tuition discounting as a recruitment tool by competing institutions, rising expenditures across campus, increasing volatility in forecasting budgets in an uncertain financial environment and overall inflationary impacts. Baylor’s graduate student enrollment remains strong, but our undergraduate enrollment is realigning to historic levels now that the two large COVID-era freshman classes have matriculated through the University.

University-wide, we are spending at a rate that exceeds our revenues. I need your assistance in taking meaningful, proactive cost-reduction measures that will slow spending to address this year’s operating deficit while also strategically repositioning the University for current economic conditions and future stability.

Under the leadership of Vice President and CFO Curtis Reynolds and with support of President’s Council, we are taking the following immediate actions:

• Slowing spending across all budget categories;
• Strengthening collaboration with Vice Presidents, Deans and Business Officers to streamline spending plans; and 
• Maximizing remaining revenue potential in the current fiscal year and in the future.

More specifically, we have made the difficult decision to pause hiring for both faculty and staff with limited, approved exceptions by President’s Council, defer non-critical construction projects and renovations, delay large capital and equipment purchases and initiate an analysis of the Baylor in Deeds strategic plan to best align with critical areas, among other measures. Additionally, we are assessing programs and services University-wide to eliminate duplication and ensure alignment with Baylor’s core mission “to educate men and women for worldwide leadership and service by integrating academic excellence and Christian commitment within a caring community.”

I must also note that costs associated with the football coaching transition is a liability of Baylor Athletics that will be addressed solely by the department. This is a one-time expense that is not part of the current fiscal year deficit.

This calculated approach will allow us to address our budget situation in the current fiscal year, while also best positioning the University for financial adjustments that may be necessary as we look to the FY28 budget process in the spring. We should all be prepared to continue to recalibrate our programmatic offerings, services and operations for the future.

The higher education marketplace has changed dramatically over the past several years. For Baylor, as a private university that’s highly dependent on student tuition dollars, this means we must be more intentional about our institutional priorities and investments. We must continue to live out our Christian mission, lean even more into the transformational student experience that is the hallmark of a Baylor education, and maintain our status as a Research 1 institution. To accomplish these goals, hard decisions will be made in the months ahead not only in the areas of financial and personnel resources, but potentially in structural changes that will best position Baylor to meet the needs of the changing higher education landscape.

I understand this update may be difficult, but I want to state clearly that Baylor is not in a financial crisis. In fact, just last week one of the leading financial rating agencies noted “Baylor’s strong financial and liquidity position” and reaffirmed our current ratings. However, we cannot operate with old strategies, structures and models in this new era for colleges and universities. 

In addition to the immediate measures outlined above, I am open to any cost-reduction, revenue-generating and organization-enhancing ideas you may have. You are welcome to email your ideas to budget_ideas@baylor.edu. Our President’s Council pledges to review and consider each one.

Perhaps most importantly, however, I am asking every faculty and staff member to help welcome, engage and recruit new students, as well as support and retain our current students. This is the most important strategy – and a responsibility that each of us must actively share – for the long-term financial health of the University. The competition for students is fierce. We know that nearly 40% of students who visit the Baylor campus ultimately enroll. This speaks to the tremendous influence personal interactions have in shaping a student’s decision to attend Baylor and a family’s perception of the University’s value.

Every faculty or staff interaction with a prospective student, or family, is critical and contributes to their overall impression of the University and demonstrates what their experience as a Baylor student may be like. The same holds true for our current students, whose daily experiences and relationships across campus influence their decision to stay at Baylor.

Thank you in advance for your understanding and assistance as we navigate these headwinds together. Throughout its 181-year history, Baylor has proven to be strong and resilient, and I am confident we can once again address the challenges of today and strategically prepare the University for the future.

Sincerely, 

Linda A. Livingstone, Ph.D.
President