Strategic Financial Repositioning Webinar (3/24/26)

Moderator, and Vice President for Marketing and Communications, Jason Cook: Well, good afternoon, everyone, and thank you for joining us today. Several weeks ago, President Livingstone shared some important updates about the University’s recent budget assessment process for the upcoming fiscal year.

This incorporated information about a tuition increase, campus-wide budget reductions, as well as a reduction in the retirement contributions for faculty and staff. Our goal today is to have an open conversation with our university leaders about these decisions, why they were made, how they connect to Baylor's long-term financial strategy, and then how we can move forward together.

I’m joined today by President Linda Livingstone, Provost Nancy Brickhouse, and Chief Financial Officer Curtis Reynolds. We’ll spend about the first 40 minutes or so exploring some key questions that we’ve received from many individuals and groups across the campus and then open up for about the final 15 minutes for your questions submitted through the Zoom device. Note that we will post a recording of this video online, along with an FAQ document in the event we’re unable to get to all of your questions. So we’re going to jump right in and go straight for President Livingstone.

And so, Dr. Livingstone, you’ve indicated that Baylor remains financially healthy both at the fall and the spring faculty and staff meetings. You also described that there were significant headwinds in place across higher education. So how do you balance what’s going on today with a very uncertain future for higher education?

President Linda A. Livingstone: Thanks so much, Jason, and it’s wonderful to see so many on today. We look forward to the discussion and answering many of your questions. You know, our focus going into the work that we’re doing on the budget assessment was really to prepare Baylor for success during a time of very significant transformation in higher education. As you noted, and I want to stress again, that Baylor is very strong. We’re strong financially, and we’re strong in so many other ways as well.

But we also know that maintaining that strength is going to be extremely difficult to sustain in the current environment that we’re in, and the status quo is not sustainable over the long run. So we gave tremendous amounts of consideration to the best ways to position us for the future to continue to be really strong as an institution. But we also recognize that in doing that, it could be really difficult for our institution, and that we would probably experience some pain in that process. But our goal was to be very strategic in how that pain was felt, and how it was shared across the broader Baylor community.

I’m going to borrow an analogy from our Vice President of Student Life, Dr. Sharra Hynes. You know, hopefully we’re all going to the doctor every year for our annual checkup. I know I do. I hope each of you does as well. And I know when I go to the doctor, on an annual basis, I go hoping to learn that I’m healthy, but also, if there’s something wrong, I will catch that very early so I can get ahead of it instead of waiting until I have a really big medical emergency. And I think that’s what we’re doing now. And if you think back to what we did in COVID six years ago, it was kind of the same philosophy. We knew there were some huge headwinds then, we did not know what impact they were going to have, but we made some really difficult strategic budget decisions that helped the university to generate really significant momentum that is a large part of why we are in such a strong position today. So, Jason, it really is about preparing Baylor for success during a time of significant transformation in higher education.

Jason Cook: Thank you, President Livingstone, and I’ll bring in Curtis, you know, more specifically on this point.

Both Moody and S&P reaffirmed Baylor’s financial ratings for this year. These ratings are somewhat of a financial report card, if you will, for colleges and universities, as they indicate a level of risk for investors. But more recently, both Moody and S&P’s outlooks for the higher education sector overall has changed significantly.

Can you provide some insight into what’s happening more globally with higher ed financials?

Vice President for Business and Finance, Curtis Reynolds: Thanks, great question. So, as you think about the higher ed sector as a whole, you know, they’re looking across the entire sector – most of the rating agencies like S&P, Mood and Fitch. They saw some of these headwinds coming forward as they looked in the sector, and they initially gave the sector a bifurcated or a deteriorating outlook, and they changed that outlook this year, all of them, to a negative outlook.

And what happens is the agencies are looking across the sector, and they’re looking at things like federal policies, regulation changes that may be impactful. They’re looking at demographic pressures, also trends from other institutions, and just across the sector, that are challenging to those institutions when it comes to revenue growth and operations.

But for Baylor, for us as an institution, understanding that these rating agencies positioned it to be negative. We got a stable rating even in a negative sector outlook, which speaks very strongly regarding some of the same demographic pressures and challenges that they’re looking at, but they look at it as an institutional level. So for us to achieve a stable rating in a negative sector is really a positive comment for the institution.

Jason Cook: Thanks, Curtis. You know, Dr. Brickhouse, you were one of the key architects for Baylor’s strategic plan, Baylor in Deeds, and one of the four commitments is demonstrating Christian stewardship. What does that mean for us here at Baylor as we face the challenges that both the President and CFO have described to us?

Provost Nancy Brickhouse: Thanks, Jason. I really appreciate you referring back to Baylor’s strategic plan. Certainly in times of uncertainty, doubling down on your core mission and the university strategy is really key for navigating uncertain waters.

You mentioned the fourth pillar was about Christian stewardship. The first one was about students. It was about enabling students, equipping students to flourish. And so I would just actually bring those two pillars together and say that what we need to do is we need to steward Baylor’s resources in ways that enable students to flourish. And that means making decisions that prioritize their success at Baylor.

Jason Cook: Thank you, Provost Brickhouse. Dr. Livingstone, in several communications, you’ve emphasized that students were at the center of these financial decisions, whether it’s the tuition strategy, to the budget reductions, to the adjustments in the retirement contributions for faculty and staff.

How did prioritizing students directly shape these decisions in accordance to Baylor in Deeds, as the Provost explained? And what does students first look like in practice, both today and in the years ahead?

President Livingstone: Well, I’m going to add from the strategic plan to what Provost Brickhouse mentioned because one of the imperatives in the strategic plan is affordability and completion for our students, and we know one of the most important things to that is the cost of attendance for our students. And so it is critical for us to slow the rate of tuition increases. That’s just the bottom line for what we need to do, not just in the coming year, but in the years ahead. And I think this is especially important as we look at the landscape that we’re facing with regard to particularly undergraduate enrollment out there.

And I know many of you have heard a lot about this, but we actually had a presentation at President’s Council a week or so ago from Market View, and it’s an organization that we work with. [They pay] a lot of attention to what’s going on in the undergraduate recruitment marketplace. Kind of, three things that they mentioned that I think we’re paying close attention to, and we are not going to be immune to these, but we’re going to do everything we can to buffer the impact that they might have on Baylor.

The first thing that they noted was that the market for students is getting more competitive. We know this. We’ve heard about the demographic cliff for years, and it’s finally upon us. But this is particularly the case with students who have the ability to pay for a private education. There are just simply fewer students in the pipeline that are probably financially capable of going to a private institution without significant financial aid.

The second point that they made that will certainly have an impact on Baylor is that affluent families are choosing public institutions, and they’re choosing public institutions in their home state, so they’re not traveling outside of their state boundaries as much as they have in the past, and, in part, this is because of cost considerations and being concerned about the cost of higher education. These students are also opting for professional-based degrees more than they have in the past, really because of the perception that the opportunities from a career perspective are better out of those degrees. And then the finance, the other impact, and this is one we also heard quite a bit about more recently, is visa restrictions that are having a significant impact on international student applications across the country. We are seeing some of this as well at Baylor, but we are buffered some from that piece of it because we do have a fairly low international enrollment compared to many other institutions.

But we do know that we could actually see a greater impact as we are hearing that many elite institutions with large international undergraduate student populations, most of the time full-pay students, are now beginning to fill their slots with domestic students because there just are not as many international students in the pipeline, even at the undergraduate level. So all of those factors together over the coming years are going to continue to require us to pay very close attention to our tuition increases and to try to really focus on affordability for our students.

Jason Cook: Curtis, I want to continue as we talk about tuition. The Board of Regents approved a 6.5% tuition increase for the upcoming academic year. That was at their meeting in February, and that followed a 9.5% increase in tuition a year ago. Can you walk us through the financial modeling behind this year’s decision and how it connects to the $35 million in budget reductions.

Curtis Reynolds: Yes, yes, thanks. So, our 3-year budget model had a higher tuition increase built into it to make next year’s budget balance.

So, a year or so ago, we started, you know, looking at a 3-year model versus a year-over-year model, and the reason for that is to give us a better trend analysis and projection going forward into the future. We determined that we simply just could not take that high of a gain in tuition in the coming year. So in order to bring the tuition down to the increase, even to the 6.5%, we had to make some adjustments to our expenses. And especially if we make adjustments on the expense side – particularly if we wanted to continue our investments in talent as it relates to a 3% merit pool, additional scholarships to funding continuing students.

And then, in preparation for our capital expense with the Baylor Energy Complex, we are working with an external team to kind of finalize some of those cost projections now. And we’ll have more clarity in the coming months on the Baylor Energy Complex.

But an important thing to keep in mind is a 1% increase in tuition generates about $6 million in revenue. A 1% increase in the merit pool costs approximately $4 million on the expense side.

Jason Cook: Curtis, thanks for that detail there. And, you know, bring in Dr. Brickhouse. You know, for all of us in higher education, it’s often said that colleges and universities, we’re in the talent business. But as an R1 university, research infrastructure, our facilities, can be costly as well. How important is it for the university to continue making investments in our faculty, but then also in our research infrastructure as well?

Provost Brickhouse: We are indeed in the talent business, and the university is continuing to invest new monies into faculty, targeted faculty hiring. We expect about $1.4 million next year for continuing to hire in key areas.

It’s important also to stay competitive in the market for talent. You have to pay attention to compensation. The merit pool is very important. We’re trying to stay up with the market and be able to to offer faculty market-competitive compensation, and as you mentioned, the infrastructure is incredibly important, particularly when you’re hiring in the STEM areas. The question that faculty ask is, “Is this a place where I can do my research? Is this a place that can support me in my research?” And so, you know, the building of the Baylor Sciences Building was transformational to this institution. The BRIC is continuing … is becoming a very key asset for the many new faculty as well. The other place where we’ve gotten behind is in high-performing computing, and so we’ve got to make some investments in terms of our infrastructure here.

As many of you know, the new world is about understanding data. Being able to manage data, data science, computers, the information, and the data that is being used. That is core to the research enterprise right now. It has to be well managed, and so investment in that area is incredibly important. If you’re going to be an R1, you’ve got to have a strong, high-performance computing capacity.

Jason Cook: Thank you, Dr. Brickhouse. President Livingstone, as you might have expected, there’s been a lot of questions and concerns about the reduction of the university’s retirement contribution from 10.8% to 8%. Before we address that directly, I’ve heard you speak about the financial levers available to the university. Can you briefly explain, what are these levers that we talk about?

President Livingstone: Yeah. Well, we certainly understand that concern over the retirement reduction, and as we approach these kinds of questions and try to build out our budget with all the pressures – internal and external – that we’re facing, there are a limited number of levers that we have to work with. The first one that we’ve already talked some about is tuition, and so once you make the determination of what you’re going to do with tuition, you really only have two levers left. And our determination on tuition was to pull it down.

And so then you have … the only levers left have to do with the expenses of your institution. And you have operating expenses, that you can consider, and then you have salaries and benefits. And so, as we made the decision to lower tuition, we then had very hard conversations and hard decisions to make about what do we do with operating expenses? And what do we do with salaries and benefits that will help us address the cost issues we need to keep our tuition low? But also taking into consideration the impact that those decisions are going to have on our faculty, on our staff and on our students. And, they become very difficult decisions because, you know, there’s trade-offs that are going to cause pain in one place or another. And so those are the levers that we had to pull – and that we had to figure out how to best balance – as we looked at the budget for next year, and then for subsequent years after that.

Jason Cook: Curtis, I want to talk … ask you a little bit about those trade-offs. You know, in terms of the retirement contribution, why did the administration decide to pull that lever?

Curtis Reynolds: Well, when you think about the various levers, you know, you begin to look at where that flexibility lies for you to tweak some of that. And when it comes to Baylor’s 10.8% retirement contribution, it was found to be outside of the norm of private institutions around the 8% range. So we made the decision to provide, again, another lever, the 3% merit pool, to address inflationary concerns for faculty and staff. So the cost of the merit pool is about $12 million. The retirement reduction of the 2.8% generated about $10.4 million. So we’re trying to neutralize that additional merit cost with the offset of the retirement reduction.

We also felt that the merit increase was most important to our lowest paid staff given the price changes or increases we’re all experiencing at the grocery store or the gas pump these days. So, if the entire $35 million budget reduction that we were seeking to get to a 6.5% tuition position was absorbed by the colleges, the schools, or the units, that would have caused another higher budget reduction increase into the units, potentially impacting north of 100 positions, overall, if you will.

Jason Cook: Yeah, Curtis. Continuing along that, you know, that $35 million in budget reductions, you know. That includes the $10.4 million in retirement contributions, so the colleges, the schools, the administrative units are being asked to cut approximately $25 million over 2 years. What would have been the impact if the university had decided to simply fund a 3% merit increase and not make any of the corresponding budget reductions?

Curtis Reynolds: Really good [question]. To provide a 3% merit increase with no retirement reductions at all, no budget reductions, and absorb the past year true-up, right? You have to remember that we’re coming out of a year into another year. And then continue the reoccurring investments through Baylor in Deeds, students would have faced approximately an 11% tuition increase.

However, to also balance the FY28 budget, as you mentioned in the second year, we would have had to increase tuition an additional 14% in the coming year alone. Jason, frankly, this was simply a non-starter [in] our discussion as it relates to the Division of Finance and the President’s Council. We knew we could not have those levels of tuition increases, as the President mentioned. So we … we all just need … had to really come to grips with doing our part to assist students and the families. These scenarios involved with very difficult choices.

Jason Cook: You know, Dr. Brickhouse, I understand some faculty see that this retirement benefit is central to Baylor’s competitiveness as a R1 institution. How would you respond to those concerns?

Provost Brickhouse: Well, I’m glad they’re asking that question. How we recruit new faculty, as well as how we retain our faculty, depend on our ability to A support the work that they’re doing. The faculty want to know, in order to be competitive in the research that I’m doing, will I have the support that I need? And so that is a key question that has to be asked by anybody who’s thinking about coming to Baylor. 

The other thing is compensation. Compensation is a very significant driver when people are making a decision about whether to come to Baylor, as well as the benefits package. And I would argue, if you look at our benefits package as a whole, it’s still a very competitive package both for recruiting new faculty as well as retaining the ones that we have. Keep in mind, that includes not just the retirement benefit, but also our healthcare benefit and our tuition remission benefit, which is really quite significant.

I will also say that our mission really attracts faculty as well. We are finding, as we’re becoming a national university, where people know that we are a place where that does significant scholarship. But people want to be here. They want to be a part of what we’re doing. And those are the exact people that we want here. They will flourish here, and we need to make sure that we make that possible for them.

Jason Cook: Good. Dr. Livingstone, the Comprehensive Budget Assessment examined essentially every area of the university. What guiding principles were in place that helped ensure that the core academic functions of teaching and research were protected, and how do we maintain that focus on students?

President Livingstone: Well, when you go through an extensive exercise like this, you do have to have priorities that you focus on, and we’ve already talked about the priority of keeping tuition as low as we could in this particular case. But very soon after that, we said, we’ve really got to think about how do we protect the core of the academic mission of the institution – the research, the teaching mission that we have? And if you think back to COVID, that was certainly a priority we had during COVID. Our administrative units cut their budgets by about 20% during COVID, in anticipation of external forces that we didn’t have complete control over. The colleges and schools at that time were protected in those budget cuts, because we knew it was important that they stay strong in a very difficult time of delivery of our academic mission. So for this budget assessment, the colleges and schools we did not include faculty salaries in the budget reduction calculations that were made.

Given that a very high percentage of the budgets in our academic units is in support of our faculty compensation, the administrative units – whether that’s student life or human resources, public safety – did not have that carve-out because they don’t have faculty positions in those units. So, any percentage cuts that you might be hearing about need to be kind of understood in that context. So, let me give you an example, and I’m going to use round numbers just for simplicity purposes.

If a college or school’s total budget is $100 million, and 50% of that budget is faculty salaries, then the 5, 10, and 12% reduction scenarios were against the $50 million, not against the $100 million. And so then to get to the actual cuts that they were asked to make, they could actually use their full budget to get to those reductions, ultimately. So, again, the entire university was impacted, but we did make a specific decision to do what we could to prioritize and predict the academic enterprise and the faculty – recognizing, of course, that this is still going to be challenging for some of our units to meet the goals that we have. But, [we] felt like this was the right approach to take, given our core business is our academic enterprise.

Jason Cook: You know, Dr. Livingstone, no surprise, I’m going to ask you about athletics, given your role with the Big 12 and the NCAA, which has concluded. But athletics, participation in the budget assessment process, and all the headlines we continue to hear about for NIL, or Name, Image, and Likeness.

President Livingstone: Well, when you talk about the transformation in higher education, there’s probably no area that has transformed quicker or more substantially than college athletics, and it has been a challenge for all of us to navigate this.

So, you really hear about two different buckets of payments to student-athletes. Now, you hear about revenue share. That’s the $20.5 million number you hear that institutions can pay directly to their student-athletes, and that money is coming out of the revenue our athletics department makes off of our TV and multimedia contracts. You hear also about the headlines for NIL contracts, and some of those are the really big, significant numbers that you hear out in the multi-million dollar range. Those typically involve external Name, Image, and Likeness money that is coming from outside of the university’s budget.

External NIL does not factor into the budget assessment process. It’s not factoring into our budget for next year because it comes from outside resources like companies, brands, and multimedia rights partners. Of course, that’s assuming that you’re following the rules the way that you’re supposed to, which we are certainly trying to do at Baylor. I’m not going to speak for anyone else.

There is no significant new investment in athletics that’s actually built into the university budget in the coming year, and it has not impacted the budget assessment process this year in terms of the investments we’ve made in athletics. And then I will also say our athletics department has engaged in the budget reduction process, just as the other units on our campus have as well, and they are contributing their part to this, as all the other units are.

Jason Cook: Thank you very much. Dr. Brickhouse, I know this is a lot of information to absorb. We’ve shared lots of numbers, and you know, for those of us in the President’s Council, we’ve been discussing, you know, the systematic approach to our first-ever budget assessment process, gosh, since this time last year, in fact. Then we’ve been grappling with some of the outcomes of the assessment and how we can work to bring down tuition in earnest since mid-January. How do you envision we can move forward working in conjunction with the deans, the faculty, and other groups around campus?

Provost Brickhouse: So, we are currently, meeting with, with each of the deans. The vice provosts are making … the vice presidents are making their plans for what kinds of … how they will actually make the reductions. Both the vice presidents and the deans have a great deal of flexibility in terms of how they take these reductions. And I’ve been very impressed with the creativity of both our vice presidents and our deans in terms of making decisions that, again, prioritize the success of our students and being strategic in terms of making decisions about things that we can stop doing, things that we can, that we can, reduce. I should also say, because we’ve been having these discussions for a while, we’ve drawn … we’ve tremendously reduced new hiring. On the faculty side, we hired about only half the number of faculty this year that we did last. That means we have a lot of vacant faculty positions. Some of those could be used to help meet these budget reductions. Same on the staff side as well. Whenever vice presidents or deans had the opportunity to pause on a staff backfill, many of them did so. And this gives us the ability to focus more on vacant positions than on filled positions.

Another strategic way in which people have managed these changes is to move as many expenses as possible onto non-operating funds using donor money well. Donors give to Baylor because they want us to do certain things with that money. So, good stewardship of those donor dollars means me spending that money well. We don’t need to be a bank account for a donor. They had intentions when they gave that money, and we need to spend that money very, very well. And so I’ve seen a lot of change across the institution in terms of how we spend those monies in ways that are consistent with donor intentions. And so, the vice presidents and the deans are all working very collaboratively to come up with ways of addressing these financial challenges in a way that prioritize our students, that prioritize our mission.

Curtis and I have both met with the Faculty Senate Executive Committee several times, as well as other groups on campus, and we’re available to continue those conversations, and to also … we’re also very open to coming up with new ways that we can work together concertedly and earlier in the process to improve communication early on.

Jason Cook: Dr. Livingstone, you’ve emphasized that these decisions are not in response to any kind of financial crisis, and they’re not just about what’s going on at Baylor today, but it’s really about positioning the university for success 5, 10, and even 25 years from now. What opportunity … opportunities do you see that these changes create for Baylor’s long-term trajectory?

President Livingstone: I think anytime you take a really deep look at how you’re spending your money and how you’re allocating your resources, it gives you the opportunity to really focus more particularly on the things that matter the most for your organization or your institution. You have to make really difficult decisions about what matters the most, what drives the mission the most, and where you need to invest going forward. And then, what are the things that we’re doing that are nice to do but may not be as core to our mission as we need them to be, given some more constraint in resources. And so I think it gives you a great opportunity to streamline, become more efficient and more effective, and to be more focused on the work that you do.

And, you know, if you read much about – in the media – about what’s going on in higher education, it’s really obvious that there are just so many pressures on higher ed. We’re seeing closings and budget reductions across higher education, and we’re seeing that particularly at private institutions because we don’t have the support of state funds to help us in any significant way. This is affecting small private colleges. I was looking at a report recently, 89 private colleges and universities have either closed or merged since COVID. 40 of those were Christian colleges. And we even see larger private institutions being impacted. Those typically come from some of the impacts on research funding at some of the more prestigious private research universities, but we’re also seeing the impact of international visa issues and impacting their enrollment in significant ways.

So, it’s really clear that no institution is immune from the financial realities that we’re facing across the industry, unfortunately. So, as I kind of look across the landscape we face, I think it’s an inflection point for higher education, and it’s really requiring the industry as a whole to transform to a different place. Now, what that’s going to look like in the next few years, I don’t know. But I think it also then has implications for us as individual universities in … within that higher education landscape, that we can’t really stand on the past or on the status quo. We’ve really got to think about how, in this new landscape, we are going to function in a way that’s going to help us to be strong for the long run. I was reflecting back on the words of our founders when Baylor was founded in 1845, and I think they’re actually quite appropriate for us to think about, given the world that we’re in today.

And, I think we have to continue to be, to quote our founders, fully susceptible to enlargement and development to meet the needs of all the ages to come. And that’s what we’re really trying to position ourselves to do, and to do it on behalf of the students and the research and the work that we’re going to do in many years in advance of where we are today.

Jason Cook: That’s a great summation, President Livingstone, and along those lines, a question for Curtis and Dr. Brickhouse both. In a challenging period for higher education across the country, what gives you confidence in Baylor’s position, not just to endure, but to thrive. We’ll start with you, Curtis.

Curtis Reynolds: Okay. Hey, so I … what gives me confidence, Jason, are the people. Over my career in higher ed, I’ve found nothing really important and valuable to an institution really gets done without the collective union of the people itself. And so, for Baylor to have a stable rating in a downgraded market speaks volumes about this institution’s financial stability.

And then for the people to join together and take these inward looks at ourselves from an expense or operational perspective, and go through these assessments, and make the hard decisions to right or flex ourselves so we can be more sustainable for the future. It gives me great confidence that we can do this going forward as well.

Jason Cook: And Dr. Brickhouse.

Provost Brickhouse: So, I’m going to be a little bit redundant with what Curtis just said. I think that the unique culture at Baylor that is grounded in our Christian commitments make us a very special place. And I think we can do hard things because we believe in what we’re doing. We believe in what Baylor is doing, and we want to be a part of something that’s bigger than ourselves. So, we believe that the world needs a Baylor, and we need Baylor to do God’s work in the world, and we’re committed to doing that work. That makes it easier to do the hard things.

Jason Cook: Thank you very much. A great conversation that we’ve had so far, and we have some time for some questions, and thank you, everyone, for submitting them through Zoom. You can please continue submitting those questions through the Q&A function. We’re going to try to group similar questions so we can address as many themes as possible during our remaining time together. But again, if there’s some questions we are unable to address today, we’ll be posting an FAQ along with a recording of this webinar for on-demand viewing in the days ahead. So, Dr. Livingstone, we’ll start off with you. You mentioned Christian stewardship. Dr. Brickhouse mentioned that as well. How do you balance Christian stewardship with that of generosity, which is also a Christian value?

President Livingstone: Yeah, Tiffany and I actually love that question. And it’s actually really relevant because I’m actually giving a talk at Harvard on Friday, and I talk about that in the remarks that I’m making on Friday. And I talk about the difficult world that we’re in in higher education, and that we have these really hard trade-offs to make, and I talk about the need to be generous as Christians, but also the need to be prudent as well. And I think those are really hard conversations, but the point I make in that, those remarks, is that we can’t be generous if we’re not strong financially as an institution, and one of the first things we have to make sure we do to make sure that we actually exist to maintain our mission over time is to ensure the financial integrity of the institution.

Now, you don’t do that at the expense of your mission, but the stronger we stay from a financial perspective, even if it takes some pain in the short run, the more generous we will be able to be over the long run, and the longer we will be able to sustain and exist as an institution. When you think about those 40 Christian institutions that didn’t last, it wasn’t because they didn’t have a great mission, or that they didn’t want to be generous, it was because they did not sustain themselves financially. And so, at the end of the day, it is that balance. But you do have to be strong financially in order to be able to do the other things you want to do to sustain your mission.

Jason Cook: Thank you, Dr. Livingstone. A question for Curtis. And Curtis, I think you hit on this in some of your responses, but this might be worth reiterating. You know, the question is, how was the $35 million in budget savings calculated? And how was that decision made?

Curtis Reynolds: Yeah, so it’s kind of like I accounted like backwards math, if you will. We knew the answer going in – that we wanted to lower tuition. And where was that tuition point that we felt was marketable going forward? And when you determine that 6.5% tuition is where you want to land, then you kind of go backwards from there, and you look at the different levers that you can pull. So, in order to get to 6.5%, it equates, really, to about $35 million, and savings, or whatever the case may be, reductions, if you will, to get to that point. And so, from there, we just work backwards, having all the conversations with the various units, through the budget assessment process, and how those units could contribute to the effort. Meaning, that’s what I said earlier, the people can contribute to that $35 million. We actually could only get from the operational side about $24.6 [million]. And then you have to figure out how you’re going to get the other $10.4 [million], or whatever that number comes to be, and that’s when we begin to look at another lever, and that’s landing on the retirement component.

Jason Cook: Alright, Curtis, another question for you, since I’ve got you on the hot mic. In terms of the financial, the salary protection for, for faculties, you know. The president talked about that being kind of a carve-out, if you will, given the budget structure of the colleges and schools. You know, staff members, should staff prepare themselves for any reductions in salary, in their current salaries, or, you know, for their position to be eliminated?

Curtis Reynolds: No, so I appreciate Dr. Livingstone’s, example on the carve-out on the faculty salary component. We also, when we did the budget assessment, you know … To implement a 3% merit pool signals the safety of the staff salary component, you know, without saying it. But that’s the signal that staff should hear if we’re going to do a 3% merit pool. We are protecting the longevity and the consistency of the competitive marketplace on staff salaries as well.

President Livingstone: Can I add to that, Jason? I think the other thing … I think this was sort of mentioned as we talked. One of the things – for any position reductions – the goal is to first look at positions that are currently unfilled, and to focus first on if we need to reduce staff headcount. We focus first on staff positions that are unfilled, so they do not have an impact on individuals that are in those positions. That will not be possible in 100% of the cases, but it will absolutely minimize the impact that there could be, depending on the choices that units make in terms of staff reduction that actually impact people in positions.

Jason Cook: Thank you, Dr. Livingstone. A question for Dr. Brickhouse. Our instruction remains a significantly high cost to the university and a large driver of our fixed costs. Have we exposed teaching expenses to reductions, or conducted analysis of those costs recently to ensure that we’re keeping the main thing the main thing?

Provost Brickhouse: First of all, I want to agree that you have to go all the way down to the course level to really understand your instructional costs. So it is a very detailed analysis that needs to be done, and that we are currently doing on a regular basis. We look at under-enrolled courses, for example. And every semester, we look at those to see if they can be fully justified or if there are ways in which we can eliminate them. We are work … I’m currently working with the deans and the vice provosts as we speak to do a more systematic approach to those instructional costs so that we can make sure that we are spending our resources well, in terms of, the delivery of instruction. I will say, overall, we’re a 14 to 1 faculty-to-student ratio at Baylor. That’s higher than some of our peers, so we’re not overstaffed in terms of faculty. But whether or not we’re using them in the best ways possible is a great question, and it’s one of the things that we’re going to be doing over the summer – to think seriously in terms of how we can use those resources to best benefit our students.

Jason Cook: Dr. Brickhouse, a very similar question to what you just explained to us. Has the university evaluated program offerings in relation to enrollment and cost to deliver? You know, is there an opportunity to be a little bit more strategic in, from a program offering, while identifying areas for cost savings?

Provost Brickhouse: Absolutely, and the process that I just described, where you focus first on low-enrolled courses, what that oftentimes does is it brings to light areas where you may have concentrations or minors or programs that are also under-enrolled and probably aren’t serving the university well. We should always be asking, what is it we can stop doing? And those are some of the areas where we’re, we’re embarking on a process of looking at what are the areas where we can make meaningful reductions. But again, redirect resources to areas of greatest need.

Jason Cook: There was some conversation about the levers that are available to us to pull, and one that we did not touch on was … would be, new revenue streams. Start with Curtis on this, but President Livingstone may want to chime in on this one as well. Curtis, would you be able to share any thoughts on potential future income sources that Baylor’s hoping to explore, capitalize upon, and how could we, as staff and faculty, help support this?

Curtis Reynolds: I was muted. During the budget assessments, a number of the units had potentially new revenue opportunities and ideas that they were exploring, and we were supportive of that. Some of those revenue potentials would be particularly solely on a unit basis versus on an institutional basis, if you will. So, some of the things that we’re exploring going forward is how to incentivize the entrepreneurial mindset that some of the units have when it comes to new revenue. So we’re exploring those potentials now.

President Livingstone: Now, the other thing I would add, because the other revenue source that’s significant, and frankly, the most … The wealthiest institutions cover a tremendous amount of their budget through their endowment, and our endowment has grown tremendously, depending on what the market’s doing. So, it’s been up to about $2.5 billion. It may not quite be that high right now because of the market, but our fundraiser has done a tremendous job raising funds for the endowment. In fact, I believe this year may be one of the largest years ever in terms of people giving to our endowment. So, the other really long-term strategy – and this is not one that’s going to affect next year’s budget or the budget the year after that as other things we can do to potentially grow revenue or manage expenses – is to grow our endowment. The more we have larger endowment per student, the more affordable we can make it, the more we are less dependent on tuition revenue to drive the institution. And right now, only about 10% of our budget is funded by the endowment. So that is another important area for us that our Office of Investments is working hard on, and they do a tremendous job, one of the best producing offices in the country and our fundraisers are doing a great job as well. So, we’re really working on all of these levers that actually will help increase revenue over time, some more short-term, some over the longer run.

Jason Cook: Dr. Livingstone, a clarification on the endowment. It’s not a savings account like you have with your bank. You just can’t go and withdraw from the endowment.

President Livingstone: Nope.

Jason Cook: To help in times like this.

President Livingstone: No, and a significant portion of the endowment is dedicated to particular activities and events on our campus, whether it’s a program, or an endowed chair, or scholarships. But, as you know, one of the things we’re doing right now is we’re in the middle of the Extend the Line campaign, which is solely focused on raising endowment for scholarships, and that is really one of our highest priorities. The more scholarship money we can raise, the more we can use that to fund students and not have to use our tuition dollars to help fund students that are in need.

Jason Cook: Provost Brickhouse talked about, you know, the many advantages of working at Baylor and recruiting faculty to the university, and this is going to be a question for Curtis, but the provost mentioned this, the tuition remission, program. You know, Curtis, are there any plans to pull the tuition remission lever anytime soon?

Curtis Reynolds: Not that I’m aware of. As we went through the budget assessment process, it was really focused on operational expenses and that lever. We haven’t discussed anything as it relates to making adjustments to the remissions of the institution. You know, as we grow as an institution on the staff or the faculty side, we can anticipate that tuition remissions will increase proportionately as those units increase, so… but no immediate plans.

Jason Cook: We’ve got about 5 minutes left in our time, so that’s going to give us about 2 questions, and again, we’ll capture questions we were unable to address in a FAQ online later this week. But Dr. Brickhouse, you talked about how Baylor aims to be attractive to researchers for faculty recruitment. What assurances can be offered to current faculty that they can maintain a high-level research agenda in the face of operational costs?

Provost Brickhouse: Well, you know, a lot of the same elements that attract new faculty to come to Baylor are also exactly the ones that you need to retain the great faculty that you have. And so, we’re continuing to invest, again, in our research infrastructure so that faculty … I mentioned the high-performing computer, but there are other areas as well that we’re … where we’re making some investments.

And you know, keeping our compensation strong, taking care of our staff as well. I don’t think that we’ve said enough about the importance of our staff to the core mission of the institution. It’s also core. They’re also incredibly important for our research enterprise as well. So, it’s part of our core mission. It’s part of who we are, and we’ll continue to bring to campus, you know, new faculty to collaborate with current faculty, so that we continue to grow the research enterprise.

Jason Cook: Thank you, Dr. Brickhouse. Curtis, a question for you. The President talked about athletics participation in the budget assessment process, but are their reductions across all Baylor schools and campuses, such as the nursing school in Dallas, the law school, and other units as well?

Curtis Reynolds: Oh, are you asking me, was everyone all in? Yes, athletics, law school, nursing, there were … there was no unit, school, college, or department that was not supportive of the budget assessment process and that received reductions to help meet our goals on tuition that we were driving for.

Jason Cook: This will be, maybe for you, Curtis or Dr. Brickhouse. What are the best ways for faculty and staff to communicate some innovative or maybe unconventional ideas to the university leadership? Because they’re in the buildings every day, they’re in our classrooms, they’re collaborating and talking with each other. What’s the best way to send some ideas forward for consideration?

Curtis Reynolds: I’ll go first, Nancy, if you want me to. I want to hear it all. I mean, if you … You got my email, send the emails. Talk to your directors, or your supervisors, or deans, or whatever the case may be. Share those ideas, because I agree, Jason, you know, our best support, like I mentioned, and my confidence is relying on the people of this institution to help with this process. And if it’s a village, I’m certain that we could definitely get there, so I’m interested in hearing all ideas and thoughts.

Provost Brickhouse: And I will just add that the vice provosts and the deans and I have been talking about this for about the last month. What are some new ideas for ways in which we can save costs, ways in which we can generate new revenue? And they would love to hear from you. We would love to include you in that conversation as well. If you’re in a large college, I would say start with your department chair. You can always just email the dean or myself, you know, if you’ve got an idea. We’d love to hear from you.

And we’re, you know, we’re very creative people, and we’re a collaborative people, and we all need to be a part of what it is we’re doing here. And feel like our ideas are valued, and when they are, in fact, valued, they’re heard, and they’re acted upon.

Jason Cook: Thank you, thank you very much. Well, our time has drawn to a close, but I learned early in my career to always let the President have the final word. So Dr. Livingstone, anything you want to leave us with, with the webinar as … and as we move forward?

President Livingstone: Oh, thank you, and really grateful to … We have a wonderful turnout today for this. I know many folks will watch this online later, so we’re grateful for the interest. I’m also just deeply grateful to, certainly, my leadership team, the President’s Council, that has really worked so diligently to try to come to terms with how best to approach the budget assessment. And then the deans, the department chairs, all the staff members and others that have been involved in this process, it’s not easy. We have to make really hard decisions, and we’re grateful to you for your commitment to this and your deep care and concern for Baylor. And I just have great confidence in who we are at Baylor. We have amazing people. We have a very unique mission and a unique positioning in higher education, and we will continue to deliver on that each and every day through our faculty and staff, to our students, and then to the broader communities outside of Baylor. So thank you all so much for being with us today.

Jason Cook: Thank you, Dr. Livingstone, Provost Brickhouse, CFO Reynolds, for joining us today and answering questions. Thank you to all of you who took the time to join us for today’s webinar, and most importantly, we sincerely appreciate your dedication, your service, and your love for Baylor University.

Thank you, and good afternoon.

NOTE: Due to time constraints, the questions below were not addressed during the University Strategic Financial Repositioning webinar. The answers are provided here, but you are strongly encouraged to watch the full webinar or review the complete transcript.

General

1. How do you balance Christian stewardship with that of generosity and retaining talented faculty and staff, which are also Christian values?

   To be a good steward of the resources entrusted to us by students and their families through tuition dollars – including how we manage personnel – Baylor must be prudent. Organizations of all types must be vigilant to ensure they have the right individuals in the right positions across the institution to meet the challenges of the future. At times, this vigilance requires reorganizations that lead to staff reductions that, though extraordinarily difficult, are necessary. Ultimately the stronger Baylor is financially, the more generous the University can be over the long term.

2. What is the University’s approach to this type of decision-making process, and who is involved?

   The Budget Assessment Process was a campuswide effort that included the Vice Presidents and Deans and their respective leadership structures as well as the Budget Office. Earlier this year, these groups were instructed to prepare budget scenarios based on reductions of 5%, 10% and 12%. Following presentations of these scenarios, recommendations were made to the President’s Council for approval. The Board of Regents approved the tuition increase at its February meeting and will approve the University’s FY26-27 budget at its May meeting.

3. What role does Baylor’s endowment play in the budget?

   It is important to note that the endowment is not a savings account. A significant portion of Baylor’s endowment is directed by donors to particular activities and events across campus, whether it’s a program, an endowed chair or student scholarships. The University’s highest priority is the Extend the Line initiative, which is solely focused on raising $250 million for scholarships. The more scholarship funds we have, the less the University must use tuition dollars to support students.

4. There have been reports that the actual cost of higher education is going down although the “sticker price” continues to go up. Does that indicate tuition prices are inflated, and if so, is that possibility being considered?

   Given the sourcing of these reports was not provided, the University’s experience has been that higher ed costs continue to rise in key areas such as compensation, regulatory changes, utilities, contracts for goods and services, and overall inflation. Note that not every student pays the tuition “sticker price.” In fact, Baylor’s median out-of-pocket price for students and families with a household income of $300,000 or less has essentially remained constant or decreased for this income group annually since 2019. Additionally, $3.8 million of next year’s tuition increase is allocated to scholarships for returning students with demonstrated financial hardship.

Comprehensive Budget Assessment Process

1. Did all units, including Law School, Truett Seminary and Louise Herrington School of  Nursing in Dallas, participate in the Budget Assessment Process?

   All units, schools, colleges and departments, including Athletics, participated in the Budget Assessment Process and are managing reductions to help meet the University’s budget goals.

2. A common observation in the higher ed sector is “administrative bloat.” Were costs associated with growing numbers of administrators taken into consideration?

   All aspects of unit budgets were included in the budget review, and some units are undertaking the difficult and daunting and task of staff reductions, which may include administrative positions. 

3. How was the $35 million in budget savings calculated?

   The University’s initial three-year budget model had a higher tuition increase built into it to make next year’s budget balance. The goal at the beginning of the Budget Assessment Process was to identify enough savings to lower the tuition increase from initial projections. From conversations with units and through the Budget Assessment Process, operational savings of about $24.6 million were identified. The remaining $10.4 million came from a reduction in the employee retirement contribution from 10.8% to 8%.

   To provide a 3% merit pool with no retirement reduction, no budget reductions, absorb past-year true-ups, and continue recurring Baylor in Deeds investments, students would have faced a 10.9% increase in tuition. However, to also balance the fiscal year 2027-28 budget, the University would have had to increase tuition 14.02% in the upcoming year alone.

4. Why was the new budget so much higher than the previous budget?

   The budget that will be presented to the Board of Regents in May is expected to only be marginally higher than the last fiscal year, due in part to the 6.5% tuition increase and the $35 million in reductions. Any increase in fiscal year 2026-27 is expected to be from inflationary costs beyond our control for core campus services like increases in contracts for vendors, food, utilities, etc.

5. Why are units that are essential for supporting the academic enterprise and are already extremely lean not being protected in this process?

   All units were involved in the budget review, and each unit was asked to identify its savings with a priority on maintaining student services and support. Reductions are not the same across campus, but rather specific to the unit.

6. How does it work for programs with large enrollments versus small enrollments?

   All units were involved in the budget review, and each unit was asked to identify its savings. Reductions are not the same across campus, but rather specific to the unit.

7. Do you anticipate further budget reductions in the next fiscal year?

   The $35 million in budget reductions will be implemented over the next two years to reduce administrative costs, better align programmatic resources and streamline operations, while strategically positioning Baylor for future success. Additional budgetary guidance for fiscal year 2027-28 has not been made at this time.

8. What new sources of revenue is Baylor exploring?

   During the Budget Assessment Process, several units identified potential new revenue opportunities and ideas, which are being taken into consideration by President’s Council and many individual units. The long-term strategy is to continue to grow Baylor’s endowment. The investment earnings derived from the endowment are transferred to the University as a budgetary revenue stream on an annual basis. While the wealthiest institutions cover much of their budget through their endowment, only about 10% of Baylor’s budget is funded by endowment. A larger endowment per student will increase affordability and reduce the dependence on tuition revenue to drive the institution.

Campus Experience and Operations

1. Are any physical property concerns being addressed in the budget?

   Our current energy system is outdated, environmentally wasteful and limiting our future growth. The Baylor Energy Complex 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. We are working with a team of external experts to identify the best financing model for the energy complex that is in the best interest of the broader priorities of the University. We will have more clarity on this in the months ahead, but we must start preparing financially now.

   Additional facility needs are being addresses on a case-by-case basis using existing budget dollars and the availability of funds.

2. What impact does Athletics have on the university budget?

   There has been no significant new investment in Athletics built into the University budget in the coming year. Baylor Athletics has engaged in the Budget Assessment Process, just like all other units, and they have contributed their part to this effort, along with other units.

   National financial conversations around athletics  focus on two different buckets of payments to student-athletes. Revenue Share, which is the $20.5 million in revenue from TV and multimedia contracts that institutions can pay directly to their student-athletes. Name, Image and Likeness (NIL) endorsement funds do not come from the University’s budget but from outside resources, like companies, brands and multimedia rights partners. External NIL did not factor into the Budget Assessment Process nor does external NIL factor into the University’s budget for next year.

3. Will Baylor decide we cannot compete with the major athletic programs and pull back?

   Alongside our Christian mission, academic excellence and dynamic on-campus student engagement, our participation in college athletics at the highest level is an invaluable component of our ability to attract and retain outstanding students and to serve the community and the surrounding world. Athletics also is a huge area of pride for the Baylor Family that provides opportunities for gathering, engagement and philanthropy. It remains a foundational pillar in Baylor in Deeds and is expected to be so into the future.

4. Have we considered selling alcohol at sporting events/games?

   No, there have not been any formal proposals or discussions regarding selling alcohol at Baylor Athletics events or games.

Academic Enterprise

1. Instruction remains a significantly high cost and a large driver of Baylor’s fixed costs. Have we exposed teaching expenses to reductions, or conducted an analysis of those costs recently, to ensure we are keeping the main thing the main thing?

   Each semester, the Provost, Vice Provosts and Deans conduct a detailed analysis to understand instructional costs at the course level, focusing first on under-enrolled courses, as well as under-enrolled concentrations, minors and programs. They are working on a more systematic approach to ensure the University is spending its resources well in the delivery of instruction, including determining areas for meaningful reductions while redirecting resources to areas of greatest need. Baylor’s 14:1 student-to-faculty ratio is higher than some of the University’s peers, so Baylor is not necessarily overstaffed in terms of the overall number of faculty.

2. What assurances can be offered to current faculty that they can maintain a high-level research agenda in the face of budget reductions?

   The University’s commitment as a Christian Research 1 institution is non-negotiable. Baylor will continue its strategic investments in several areas, including its research infrastructure, faculty hiring and compensation, and appropriate staff support.

Benefits, Compensation and Employment

1. Will there be salary or position reductions for staff?

   To implement a 3% merit pool signals the position security of many – though unfortunately not all – staff. It is possible that some units will undertake the difficult and daunting task of reducing its staffing numbers to better position its budgetary resources for the future. With any position reductions, the goal is to first look at positions that are currently unfilled so the impact on individuals is eliminated. That will not be possible in 100% of the cases, but it will minimize the impact.

2. How many positions have been/will be eliminated during this process?

   To address budget reductions, it is possible that some units will reduce staffing numbers in terms of open positions and actual people. These decisions are being made at the unit level and at different time intervals over the next two years. The University does not anticipate an overall reduction in force at a specific time.

3. When will program and staff reductions, and the impact of those decisions, be communicated?

   Those decisions will be communicated at the discretion of the unit’s leadership and not during a specific timeframe. The overall $35 million budget reduction process covers a two-year period. The impact of any reductions will most likely be felt for some time, and each unit is expected to navigate those changes as appropriate within the unit and collaboratively where appropriate.

4. Are there any plans to alter the tuition remission benefit to faculty and staff?

   The Budget Assessment Process focused primarily on operational expenses. There have been no discussions regarding adjustments to tuition remission.

5. Have there been any discussions about increasing non-monetary benefits such as flexible hours or increased leave time?

   Baylor already has a robust compensation and benefits package available for faculty and staff that includes a range of benefits and advantages. Given the need to address budgetary concerns, only financial considerations were discussed during the Budget Assessment Process.

6. Did you consider a dollar amount for the merit pool pay increase as opposed to a percentage increase to take into consideration wide variances in pay?

   The merit pool has historically been determined on a percentage basis that is then allocated to the individual units. Some units allocate and communicate merit pay in terms of percentages, while others do so in dollar amounts.

7. Has there been any consideration of offering greater flexibility in selecting benefits?

   Baylor already has a robust benefits and advantages package available for faculty and staff that offers great flexibility. However, benefits like tuition remission and retirement contributions are provided consistently for all eligible faculty and staff.

8. Given the broad range of salaries across the institution, did you consider structuring merit increases differently?

   No, there were no discussions regarding restructuring merit increases during the Budget Assessment Process. While the University allocates an overall merit pool, specific merit processes and determinations are made at the unit and supervisor levels.

9. Why was the retirement contribution reduction permanent, rather than only two years?

   The retirement reduction from 10.8% to 8% generates about $10.4 million in revenue on an annual basis. Baylor will need this and other cost savings on a permanent basis to slow the rate of tuition increases impacting both current and prospective students and their families. Additionally, the University is not responding to a short-term financial crisis but rather preparing for an uncertain future of higher education.

10. Were voluntary separation incentives discussed?

    No, voluntary separation incentives were not discussed during the Budget Assessment Process.