Baylor cuts costs in response to pandemic

WACO—Baylor University will implement a hiring freeze, eliminate some vacant positions and delay construction on most major capital projects as part of an effort to cut costs by up to $80 million in the next fiscal year.

Baylor President Linda Livingstone announced the cost reductions April 14, pointing to the impact of the COVID-19 pandemic on the university’s revenue sources.

“Despite Baylor’s overall strength and resilience, we are now experiencing declines in many essential sources of revenue, which is coupled with an increased need for student financial aid and uncertainty about future enrollment due to COVID-19,” Livingstone said.

“In other words, most of our previously reliable sources of revenue—tuition and fees, fundraising, athletics and income from our investments and endowment—are certain to be significantly affected.”

Baylor already slowed its rate of spending and reduced costs by $16 million through May 31, allowing the university to address credits and refunds to students’ interrupted spring semester and other costs related to COVID-19, she noted.

‘Immediate and difficult decisions’

Looking ahead to the 2020-21 fiscal year, the Baylor President’s Council in concert with the board of regents set a goal of $65 million to $80 million in cost reductions from the university’s projected $750 million budget.

“Simply put, we need to make immediate and difficult decisions to address the serious financial realities we face in the months and, potentially, years ahead,” Livingstone said.

Baylor will implement an immediate hiring freeze and eliminate some vacant faculty and staff positions, reduce the use of adjunct faculty and temporary employees, postpone a decision on merit increases for faculty and staff, and decrease defined contributions to participants in Baylor’s retirement plan.

The university will initiate “a strategic review and reduction of operating, or non-personnel, budgets” in all areas, including administrative divisions and athletics, Livingstone said.

“Construction of the Mark and Paula Hurd Welcome Center and the Baylor Basketball Pavilion will be deferred until economic conditions improve,” she announced. Architectural and planning work will continue on both projects, she noted.

“The renovation of the Tidwell Bible Building will continue, given that the project was fully funded from external sources,” she added.

One year ago, Baylor announced a $15 million lead gift from the Sunderland Foundation of Overland Park, Kan., to renovate and restore the Tidwell Bible Building, built in 1954. At their February meeting, Baylor regents approved the final phase and total budget of $21.2 million for the project.

Other major capital expenditures will be postponed, and the university will make “aggressive efforts” to refinance existing debt at lower interest rates “once market conditions become favorable,” Livingstone said. Major contracts also will be renegotiated for cost savings.

“While these initial budget reductions are all-encompassing, we also recognize that we are in an era of significant financial uncertainty,” Livingstone said. “If the country’s economic climate deteriorates further, or we experience substantial enrollment declines, or there’s a recurrence of COVID-19 in the upcoming fall or winter, the university may be forced to take additional budgetary actions.”

She asked for prayers for the university, its leadership team and its board of regents as they “make difficult decisions not for Baylor to merely survive, but to thrive once the COVID-19 pandemic is completely addressed.”