Baylor budget reductions related to COVID-19
Dear Baylor Faculty and Staff:
The COVID-19 pandemic continues to touch every aspect of our daily lives, from our families, churches and schools to healthcare, government and the economy. COVID-19’s impact on higher education and at Baylor University is apparent, as we have transitioned the spring and summer semesters online, moved faculty and staff to telework status and canceled events campus-wide.
Even if we see progress in the decreases in cases or deaths related to the coronavirus, both the short- and long-term financial prognoses for the economy – and specifically higher education – appear challenging. 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. 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.
On March 25, the President’s Council and I asked the University community to help us conserve our current financial resources and slow the rate of spending through the end of Fiscal Year 2019-20. We sincerely appreciate how you aggressively answered this call by helping the University reduce costs by $16 million through May 31, which will allow us to address the credits and refunds provided for our students’ interrupted spring semester and many other unplanned costs related to COVID-19. For these sacrificial efforts, we thank you.
Now is the time for us to focus on the upcoming fiscal year, which begins June 1, to ensure that when Baylor emerges from this global crisis, we will be differentially ahead and continue moving toward Tier 1/Research 1 status as the preeminent Christian research university. 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.
The President’s Council – with counsel and support of the Baylor University Board of Regents – has carefully and prayerfully evaluated several revenue models and financial plans over the past two weeks to establish a goal of $65 million to $80 million in cost reductions from our projected $750 million budget University-wide for FY20-21, much of which is tied to compensation, utilities and other contractually binding obligations. We recognize these budget cuts will be difficult and will touch every aspect of the University, including academics, administration, operations and support services, and athletics.
I want to take this opportunity to outline how these budget reductions will affect you personally, as well as in your professional capacities as we move forward:
Compensation and Benefits:
- A decision regarding merit increases for FY20-21 for faculty and staff – which includes the administration – has been postponed until January, as announced on March 25.
- Baylor’s defined contribution to the Baylor Retirement Plan for eligible participants will decrease from 10.8% to 8%, which is comparable with other institutions of higher education nationwide.
- An immediate hiring freeze will be implemented in which we will either defer or eliminate vacant faculty and staff positions. There will be limited exceptions, and such decisions will be made at the President’s Council level.
- A strategic position review will be initiated to eliminate non-essential staff positions.
- The utilization of temporary employees will be significantly reduced.
- Overtime will be eliminated, excluding for members of the Division of Public Safety and the Baylor University Police Department.
- The employment of adjunct faculty across all colleges and schools will be reduced.
- A strategic review and reduction of operating, or non-personnel, budgets will be initiated across all colleges, schools and units, including all administrative divisions and athletics.
- Aggressive efforts to refinance the University’s existing debt at lower interest rates will continue once market conditions become favorable.
- Construction of the Mark and Paula Hurd Welcome Center and the Baylor Basketball Pavilion will be deferred until economic conditions improve. However, architectural and planning work will continue on both projects. The renovation of the Tidwell Bible Building will continue, given that the project was fully funded from external sources.
- All other major capital expenditures will be postponed.
Business Practices and Operations:
- A reduction of costs will be implemented University-wide in the categories of travel, entertainment, meals and supplies.
- Information technology purchasing and asset management will be transformed to enhance cost savings.
- Major contracts will be renegotiated for cost savings, and strategic sourcing will be implemented.
- Transactional reductions will be realized as a result of the implementation of Ignite.
While these initial budget reductions are all-encompassing, we also recognize that we are in an era of significant financial uncertainty. 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.
I suspect this news is difficult to absorb and understand, particularly as many of you face personal hardships relating to financial situations, caring for loved ones, working from home and your overall mental health as we all deal with the impacts of COVID-19. Others may be asking what you can do to assist our University during this time of need.
First and foremost, please keep Baylor, our leadership team and our Board of Regents in your prayers as we make difficult decisions not for Baylor to merely survive, but to thrive once the COVID-19 pandemic is completely addressed. Second, please continue to support and love our students, either through your work in the online classroom or through initiatives like the new Bear Care student outreach program. It’s imperative that we do everything we can to encourage and enable both returning and prospective students to enroll at Baylor for the summer and fall semesters, as tuition remains our top source of revenue.
Over the past month, I have witnessed the Baylor Family come together in so many creative, loving and supportive ways. You truly have been the “hands and feet of Christ” during this unprecedented time of great uncertainty and need. For this, I am deeply grateful. I am confident that this spirit will lead Baylor to even greater strength and resilience in the challenging months ahead as we serve in our distinct Christian mission for higher education.
“May the Lord bless and keep you; May the Lord make his face to shine upon you and be gracious to you; May the Lord lift up his countenance upon you and give you peace.” – Numbers 6:24-26.
Linda A. Livingstone, Ph.D. President