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Update on campus budget

To: UCSC Faculty and Staff

From: Chancellor Cynthia Larive

August 20, 2024

I am constantly inspired by what we’re achieving through our collective efforts and firmly believe we are on a trajectory that will only increase our impact. Each of you continues to do so much to educate and support our students, advance our research across a range of disciplines, and strengthen the core operations of the campus. 

For all our success, we also have challenges we must confront. As we prepare for the start of the new academic year, I want to share an update on our fiscal year 2025 budget and our continued work to address our structural deficit in core funds. 

The closing of fiscal year 2024 on June 30 revealed that the campus core funds budget had revenue of $546 million and expenses of $654 million, a $107 million deficit. This gap is concerning because it is both significant and higher than our initial Budget Office projection. Our recent deficits have been covered by one-time campus reserves. Those funds are diminishing due to accumulated deficits, which is why we need to take immediate steps to address our core-budget shortfall.

The Budget Office has released an overview of our FY25 “All Sources” Budget with projected revenues of $1.01 billion and projected expenditures of $1.14 billion, reflecting an overall structural deficit of $126 million. As with FY24, the majority of the deficit resides in the core-funds portion of the budget, with budgeted expenses outpacing revenue by $111 million. I announced last month that we would reduce spending by $17 million as the next step, which allowed us to reduce the projected deficit in core funds from what would have been $128 million. 

Campus leaders are moving forward with the necessary actions to implement the FY25 budget, requiring us to reduce some staffing levels. While most staff reductions are being made through attrition and by not filling currently open positions, some currently filled positions are being eliminated, resulting in layoffs. Those decisions are extremely difficult and are being made only after extensive consideration. Transition resources are being provided to support those personally affected.  

To fully address our budget shortfall, we will need to take additional steps this fiscal year, as well as in future years, to further reduce expenditures. We believe this intentional phasing is the best course of action, ensuring the ability of campus to continue to fulfill its mission and sustain operations. Phasing also allows us to reassess projections based on changes in ongoing expenses and revenue. While the hiring slowdown will continue and there may be a limited number of additional layoffs, some hiring will be necessary in selected areas that support the core operations of the university or are key to bringing in additional revenue. 

I remain confident that we will be able to address these challenges while pursuing advancements for the campus longer term. I and other campus leaders will be providing regular communications to keep you apprised. Thank you for all that you do in support of our mission and our campus community.