Dear Colleagues, 

As we near the conclusion of fiscal year 2025, I want to provide an update on Temple University’s current budget and financial challenges going forward. 

As I shared in April, we began fiscal year 2025 with a projected deficit of approximately $85 million. We reinstated a hiring and travel review process for all staff, and we continue to carefully monitor all discretionary spending. Thanks to the thoughtful and diligent efforts of teams across the university, we have reduced the deficit to approximately $19 million for the fiscal year.  

While some of the reductions in this fiscal year were permanent, others were temporary or one-time reductions. In an initial draft of the budget for fiscal year 2026, we are projecting a $60 million structural deficit. For the previous years that we had a structural deficit, university reserves were used to cover expenses, which is not a sustainable practice. We must work toward achieving a structurally balanced budget where our expenses do not exceed revenues going forward. 

Revenue and expenses 
The university’s primary sources of revenue are (1) tuition and fees and (2) the Commonwealth appropriation. Together they account for 84% of our operating budget (71% from tuition and fees; 13% from the appropriation). The decline of nearly 10,000 students since fall 2017 has reduced gross tuition revenue by approximately $200 million. Additionally, our appropriation has remained flat for the past six years.   

During that same period, operating costs, such as utilities, salary and benefits and insurance, have significantly increased. The largest portion of the budget is salary and benefits, which account for 62% of the university’s overall operating expenses.  

For this fall, we are seeing positive indicators in relation to the incoming Class of 2029 and are on track for a second consecutive year of increased first-year student enrollment. Please remember, however, that we have graduated very large classes during the past several years, so it will take several years for us to see a substantial improvement in the university’s overall enrollment.  

While we are building back enrollment, our expenses—specifically salaries, benefits and financial aid—are increasing at a much faster pace. For this reason, fiscal year 2026—and the next two years—will continue to be challenging until we significantly grow overall enrollment and identify new revenue sources. In short, we have some difficult but necessary decisions to make over the next three fiscal years.  

Funding for capital projects 
I have been asked how the university can continue to invest in major capital projects like Paley Hall and the Caroline Kimmel Pavilion for the Arts and Communication during a time of fiscal constraint. Capital projects like these are primarily funded through support from the Commonwealth of Pennsylvania, which provides funding that is specifically designated for major facility and infrastructure projects and cannot be used for other purposes. Additional support for capital projects comes through philanthropy that is directed specifically toward the project. We are grateful to the Commonwealth and generous donors for their support. 

Fiscal year 2026 planning 
Over the last month, we have held conferences with schools, colleges and various administrative units to review their budget priorities as we look ahead to fiscal year 2026. Since salaries and benefits account for the most significant portion of the operating budget, deans and vice presidents were asked to develop plans to decrease the annual compensation spend of their unit by 5%. These plans are currently being reviewed to ensure they are reasonable and equitable and also align with Temple’s overall priorities. Unfortunately, this will result in the elimination of some positions.  

Our employees play a vital role in supporting our students and fulfilling Temple’s mission. We are working to find the balance between navigating budgetary challenges while also rewarding the hard work of our employees. In early July, we will propose a budget to the Board of Trustees that will include a 1.5% merit pool for base increases plus a 1.5% merit pool for non-base payments for non-bargaining employees. Compensation for members of labor unions remains subject to their respective contracts. Additionally, all university officers and deans will forgo salary increases and non-base payments this year. 

Moving forward, we will remain steadfast in our commitment to identifying strategies that will allow Temple to thrive, as financial stability cannot be achieved through cuts alone. We need to make academic investments and pursue initiatives that will spur enrollment and revenue growth. We are developing new initiatives as part of our strategic plan update, and we hope to grow enrollment through new programs and flexible online degree pathways. I am confident in our ability to overcome these challenges, and we are already making good progress. 

As we move forward together, I will be in regular communication with our community, and I want to direct you to these FAQs that include additional information on the state of our operating budget. I thank you all for your commitment and assistance as we navigate these challenging times together. 

Sincerely,     

John Fry  
President