Baylor University President Linda Livingstone announced a projected budget shortfall of $30 million by the end of fiscal year 2027. Her announcement came in a memo to faculty and staff requesting continued cooperation and stewardship for the good of Baylor. The memo was also posted to the president’s webpage, Nov. 9.
Livingstone pointed out, while $30 million is a small amount relative to the university’s $1.1 billion overall budget, “this budgetary gap is still impactful to our operations.”
“University-wide, we are spending at a rate that exceeds our revenues,” she advised faculty and staff, noting: “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.”
Livingstone praised faculty and staff for their sacrifices in cost-saving measures—totaling $35 million dollars over two years—identified during last year’s budget review, but noted further actions are necessary.
“Under the leadership of Vice President and CFO Curtis Reynolds and with support of President’s Council,” Livingstone said, “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.”
What will be affected
Livingstone explained, specifically this means: hiring will be paused “with limited, approved exceptions by President’s Council;” noncritical construction projects will be deferred; large capital expenditures and equipment purchases will be delayed; and an analysis of the Baylor in Deeds strategic plan” to best align with critical areas” will be initiated.
Additionally, university-wide assessments of programs and services to eliminate duplications 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’” will be undertaken, she added.
Livingstone asserted: “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 [2028 fiscal year] budget process in the spring.”
She advised staff and faculty, “We should all be prepared to continue to recalibrate our programmatic offerings, services and operations for the future.”
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Contributing factors
Livingstone identified factors contributing to the projected deficit. These include: “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.”
She noted while “Baylor’s graduate student enrollment remains strong,” its “undergraduate enrollment is realigning to historic levels now that the two large COVID-era freshman classes have matriculated through the University.”
In an email to Baptist Standard, Baylor Assistant Vice President of Media, Public Relations, Marketing and Communications Lori Fogleman provided additional background.
She explained in the fall semesters of the three years leading up to the pandemic (2017, 2018, and 2019), Baylor’s first-year and undergraduate enrollments were steady. Freshmen enrollment was about 3,300 and undergraduate enrollment ranged between 14,100 and 14,300.
When COVID shut down universities in other states, in fall 2020 and fall 2021, Baylor offered in-person instruction. The university “experienced a huge influx of first-year freshmen coming to Baylor from states where universities were still online,” she said.
For those years, Fogleman noted, “Baylor’s freshman enrollment jumped to classes of 3,731 in 2020 and then 4,271 in 2021.”
She further clarified, “It took four to five years for those classes to matriculate through Baylor to graduation, which is why our enrollment today has returned to more typical levels and that can put pressure on budget.”
In a video interview, Livingstone told Baylor’s student newspaper The Lariat, “Our discount rate was higher this year with our incoming classes than we had, maybe, originally budgeted for,” which she noted is good because it means more financial aid to help students afford college, but it “is an expense on our budget.”
She also said a smaller incoming freshman class had an impact. About halfway through the fiscal year, “expenses are tracking fine,” she observed, “not necessarily higher” than the prior year. But pressures from the discount rate and other revenue stressors make it difficult for revenue to keep up, even without increased expenses, she explained.
In the email, she also pointed out “headwinds that are impacting all higher education.” These 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,” she said.
Livingstone noted coaching decisions and their associated costs were “the liability of Baylor Athletics that will be addressed solely by the department,” and do not contribute to the current fiscal year deficit.
Hard decisions ahead
“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,” Livingstone noted.
But she asserted, “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,” she said, continuing, “However, we cannot operate with old strategies, structures and models in this new era for colleges and universities.”
Livingstone welcomed additional ideas from faculty and staff for cost-saving measures and encouraged them to continue to prioritize making students feel welcome, engaged, and supported—key factors in student retention.
“I am confident we can once again address the challenges of today and strategically prepare the University for the future,” she said.
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