Dear Colleagues,
Last week, Gov. Gavin Newsom released a preliminary fiscal year (FY) 2025–26 state budget. The budget includes little in the way of additional spending beyond what was agreed to in last year’s two-year budget framework. It continues to include a 7.95% reduction to the University of California and defers a 5% state funding increase negotiated in the compact between the UC and the governor among other changes.
The University of California remains committed to the compact, which is helping to increase access for California students and supporting our efforts to advance student success. These goals align closely with our campuswide priorities in improving retention and graduation rates and closing equity gaps.
As UC President Michael Drake has relayed, we all share a commitment to excellence in California higher education. We will continue to advocate throughout the budget process to attempt to mitigate any harmful budget impacts.
The UC Board of Regents approved the system’s 2025–26 budget plan, recognizing that UC campuses should plan on the possibility of seeing a significant reduction in state support for their core operations. At UC Santa Cruz, more than half of our core funds budget relies on state revenues, so we are particularly vulnerable to reductions in state funding. As shared in past updates, we are working to address a structural deficit in core funds by both increasing revenues and reducing spending. The campus is reducing spending this academic year by an additional $13 million, bringing our budget reductions to roughly $30 million in FY 2024–25.
The campus Budget Advisory Committee (BAC), formed in February 2024, has provided a multiyear framework for closing our structural budget gap that already incorporates the 7.95% state budget reduction for FY 2025–26. It is critical that our deficit-reduction strategy is informed by campus principles and values. To prioritize our teaching, research, and public service mission, and larger strategic aspirations, BAC articulated a set of principles, many of which were explicitly endorsed by the Academic Senate Committee on Planning and Budget (CPB) in their consultation memo about the multiyear framework.
BAC’s recommendations provide a four-year roadmap to bring the core funds budget into balance in FY 2027–28. Over the next three years, we will need to enhance campus revenues and achieve savings across centrally managed funds, costs of instruction, through strategic initiatives, and by budget reductions to our operating divisions. The divisional reductions have been intentionally planned to provide the five academic divisions with the lowest reductions (8 percent), while all other divisions have budget reduction targets ranging from 12 to 19 percent based on distinctive complexities, contexts, and capacities of divisions to achieve reductions while minimizing direct impacts to our mission. Principal officers will be asked to identify the best strategies for meeting these targets across the next three fiscal years (2025–26 through 2027–28).
The multiyear framework includes the continued efforts of campus working groups to identify process improvements, strategic organizational improvements, and revenue augmentation. These working groups have been engaged in thoughtful discussion and planning, informed by many suggestions from members of the campus community. The recommendations from these groups will be shared as they become available, and we expect to receive recommendations from the Revenue Augmentation Committee in the coming weeks. As this is a multiyear process, we continue to welcome your input through the surveys available on the Your Ideas Matter website.
By joining together and working collaboratively, we will manage our work in ways that preserve our core mission while positioning UC Santa Cruz strategically for the future. We anticipate sending a campus budget update toward the end of the spring quarter as the state budget comes into tighter focus and later this month, we will post a second-quarter financial summary to our budget website. We strive to communicate regularly and will continue to share updates on our budget website, in various campus fora and through our regular consultation with the Academic Senate. We will continue to review our progress and adjust our plans when needed, keeping the campus informed at every step along the way.
Thanks for your continued partnership and support, and for all that you do each day for our campus.
Sincerely,
Ed Reiskin
Chief Financial Officer
Vice Chancellor for Finance, Operations, and Administration
