‘No doubt our work is cut out for us’: Drexel faces budget shortfall citing enrollment drop, exploring staff cuts

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Drexel University is exploring potential cuts to staff as it faces financial shortcomings related to a drop in enrollment and the “flawed rollout” of FAFSA.

On Monday, a letter from the university said it’s “working to solve an approximately 10% structural imbalance” in its operating budget of $1.5 billion. The letter, signed by President Denis O’Brien and Executive Vice Presidents Helen Bowman and Paul Jensen, cites declining enrollments, increased financial aid investments and rising costs. Bowman told the Philadelphia Inquirer that Drexel is facing a total operating loss of $63 million for the 2024 fiscal year.

To solve this, the university is working on a “multi-year financial resiliency plan” to reduce $150 million in costs and has already identified roughly $80 million in cuts, including “budget reductions made for fiscal year 2025 by administrative and academic units.”

“We will continue to pause on nonessential hiring, spending, and travel,” the letter reads. “We will move forward to consolidate and optimize administrative services, systems and space. And we are activating the voluntary retirement incentive plan announced in June.”

“This is a challenging time for Drexel and higher education,” the letter reads. “To help move forward together, we must embrace a culture of candor and organizational transparency. Through this message and future communications, we are aiming to foster a collective understanding of Drexel’s financial challenges and our plans for addressing them.”

Drexel said it’s “on track” to enroll 2,350 new, first-year undergraduate students — still about 500 students less than the original target. The university cites challenges with the “flawed rollout of the new Free Application for Federal Student Aid,” which included more than 40 separate technical issues with the initial rollout, according to the U.S. Government Accountability Office.

However, Drexel recruited 110 more transfer students than last year, including 75 students from the University of the Arts after its abrupt closure.

“Nonetheless, the decline in first-year enrollment has added $22 million to our current operating budget deficit, which we must close as soon as possible,” according to the letter.

It notes that Drexel has “identified” $25 million in additional revenue in the short term and is also “exploring new opportunities for further monetizing our real estate portfolio.”

Drexel’s merger with Salus Universities, which entered its first phase June 30, brought in 1,100 more students and added over 350 staff members to its roster.

Drexel said it will provide a budget update Oct. 10.

“No doubt our work is cut out for us, and our resilience will be tested,” the letter reads. “But this community excels at managing adversity. We remember how you rallied to help pull the University through the sudden closure of Hahnemann Hospital and a devastating pandemic. Drexel emerged from these setbacks stronger because of you.”

The announcement came on President John Fry’s last day at Drexel University. He was named the president of Temple University in June, making him the head of Philadelphia’s largest public university after 15 years at the private institution.