Dear UCR Colleagues,

 We are writing to give you an update on the final outcome of the fiscal year 2023-24 UC Riverside operating budget. As usual, we have a lot of information to share, which makes for a long email! For those of you who are interested in learning more about the overall campus budget process and operations, Stephanie Flores, Executive Director of Financial Planning & Analysis, and Gerry Bomotti, CFO, will hold a Zoom town hall presentation on Wednesday, November 1. Please register here.

 REVENUES

 The Governor of California continued to support the “compact” with the University of California, which is primarily based on enrollment growth, even though the University did not meet its targets. The state provided the University with a 5% increase to our state funding, which translates into an approximate 2.3% increase in our core budget at UCR. We also received a total of $6.3M as our share of the state funded enrollment growth dollars, based on a two-year allocation from the state of $67.8M through the FY23 operating budget (intended for both FY23 and FY24 enrollment growth). Tuition revenue, which is the second largest source after state funds in our core budget, did not see growth, because we had to adjust for an overestimate of tuition and non-resident tuition growth from the previous fiscal year (resulting from flat enrollments from FY23 to FY24). We did receive a third installment of UCOP adjustments made for UCR (and UCSC and UCSB) to ensure all campuses are within 95% of the average of state funding per student. 

 Effective for FY24, the UC system has revised the enrollment-based allocation formula for distributing state funds to each UC campus (known in the past as “rebenching”). One of the adjustments to this formula is now to weight the undergraduate FTE for students from disadvantaged backgrounds (i.e., students who attended a LCFF+ high school) at 1.13, up from 1.0. The UC goal is to increase this weight to 1.5 by FY27. UCOP expects to use these formula changes to phase out the “95%” adjustments (mentioned above) that were phased in over the past three years.

 The chart below lists these and other revenue increments that comprise our FY24 core budget growth:

 *Cohort/nonresident tuition increment: $45K; remainder from lottery funds $360K; UCOP distribution of saved funds from retirement system support: $243K; updated FY23 allocation of state cost adjustment from UCOP: $777K

 **Savings from performance of Consolidated Benefit Rate pool of funds for UCR.

 This total represents a 5.2% overall increase in our core budget compared with FY23.

 UCR also received permanent allocations from some specific additional restricted state investments:

 The state also allocated an additional $1.5M to UCOP to support students with disabilities. Although UCOP has not yet finalized allocations to the campuses, UCR will receive some portion of these new funds.

 There was some good news for our capital budget. You may recall that last year UCR received $51.5M toward a new undergraduate teaching and learning facility (UTLF) with legislative intent to provide another $51.5M in the following next two years. In the most recent legislative session, the state withdrew these cash funds, and instead provided all the debt financing needed to fully fund this $154.5M facility for UCR. This allows us to proceed with the planning and construction of the UTLF! We hope to begin construction next spring and to open the building in fall 2026. The UTLF will help us address our classroom and class-lab shortages. In addition, the new School of Business Building (scheduled to open in fall 2024) will provide 570 new classroom seats, and we will make some use of the classrooms in the new SOM Education II building to support campus needs, starting in winter 2024.

 More good news for capital expansion: UCR, in partnership with the Riverside Community College District, was awarded $126M from an intersegmental state student housing grant application to build a new student housing project, North District Phase II.  The Board of Regents approved this capital project at their September 2023 meeting, site work will begin this fall, and the building is scheduled to open for occupancy for fall quarter 2025.

 Unfortunately, there was no state investment in deferred maintenance this past year, but the campus is moving ahead on the initiative in our strategic plan to upgrade at least two teaching labs per year to improve the instructional infrastructure for our students.

 INVESTMENTS

 As is the case in most years, our major new investments for FY24 went toward salaries and benefits. We also invested $7M in new permanent funding to support the new TA salary scales and graduate student fellowships. Together, this $33.5M accounts for 86% of all new core revenue and a 5.9% increase over those costs in FY23. We again faced annual fixed cost increases (e.g., utilities) of $1.8M, and we allocated $772K in permanent funds to the Student Disabilities Resource Center. The remaining new monies were used to make an investment in central Human Resources ($2.25M), per the recommendation of the Campus Finance Committee.

 FINAL THOUGHTS

 We have high hopes that a General Obligation bond will be put on the November 2024 ballot. This bond would provide the university with sorely needed funds for capital investments. Our capital priorities at UCR, determined in consultation with the Campus Finance Committee, are deferred maintenance needs, seismic upgrades, student housing, teaching/learning space, and research space. Our first and second priorities for new buildings are a computer science and engineering building and a natural sciences instruction and research building.

 The members of the Campus Finance Committee are expected to review their recommendations with their constituencies via regular communications. You can find your committee representative here, and you can see the minutes of the monthly CFC meetings here. We hope to see you at the Town Hall on November 1.