Dive Brief:
- Boston University’s revenue has come up $42 million short of budgeted targets for the year so far, according to the private institution’s CFO, Nicole Tirella.
- Officials pointed to negative pressures on tuition revenue — which makes up around half of BU’s budget — while costs continue to rise, creating the need for structural changes at the university.
- “There is an imbalance here that we need to contend with, and we can’t address it with onetime fixes, such as broad cuts or pausing merit increases,” Tirella said Monday in a university publication. “It’s really about changing on a much broader scale.”
Dive Insight:
BU has already gone through painful cuts as it has looked to shrink expenses. Last year, officials announced plans to lay off 120 staff members while eliminating another 120 vacancies. The cuts were an effort to shave 5% from the university’s budget during the previous fiscal year.
“Our prior cuts were effective in giving us time for thoughtful transformation,” Tirella said Monday.
But officials say those sorts of measures aren’t enough to fix today’s issues. Instead, BU is looking at making “better use” of its facilities, standardizing some operations and reducing duplicating functions, said Chris Sedore, BU’s chief transformation officer.
Manuel Cuevas-Trisán, BU’s senior vice president who oversees HR, suggested the university could upskill and promote employees as it tries to make the most of its resources. “Each vacancy can become an opportunity to think about how the work is done,” he said.
BU officials are also mulling the institution’s offerings. Sedore said some recently launched master’s programs are performing well while others face low enrollment.
The revenue miss for fiscal 2027 follows challenges from the previous year. Last October, BU President Melissa Gilliam and other senior leaders announced a $30 million budget shortfall amid missed revenue and lower-than-expected graduate student enrollment. Leaders at the time sought to address the gap with one-time savings, which Tirella said are no longer enough to address the university’s fiscal challenges.
Those efforts helped shore up the budget overall. With both tuition and grant revenue sliding, BU’s overall fiscal 2026 revenue fell 1.4% year over year to $2.7 billion, but it preserved an operating surplus, according to its fiscal latest financials. However, that net surplus plummeted by 91.6% year over year to $4 million.
Despite fiscal challenges, BU has planned salary increases for employees this fiscal year, as well as spending on deferred maintenance and technology, officials said.
Tirella said BU’s endowment and reserves are providing the university a stable financial foundation. But they cannot fully address operating budget challenges, given restrictions on most endowment funds and fixed spending limits to maintain the endowment’s health over the long run.
“Our balance sheet, including cash reserves and the endowment, cannot sustainably offset ongoing declines in operating margins,” she said.
