FY25 Budget Planning

March 15, 2024
Elizabeth Watkins and Gerry Bomotti
March 15, 2024

Dear UCR Colleagues,

We write to provide you with an update on what we know, and what we don’t know, about the upcoming FY25 budget. 

Most current signs indicate that the University of California will not receive an increase to its allocation from the state this year. According to the latest report from the Legislative Analyst’s Office, the projected state budget deficit may be $73 billion, with financial concerns about FY25 but also FY26 (and beyond).  The State Department of Finance has not issued their updated analysis, but in the end, we will need to await the May revised state budget forecast to have a firm picture about the FY25 budget. You may recall that UCR receives about 45% of its core budget revenue from state sources, with another 50% from student tuition and non-resident tuition.  While we are predicting a modest rise in enrollment for FY25, we have had slightly lower enrollments in both Fall 2022 and Fall 2023 as compared to Fall 2021.

While we likely will have some revenue increase from enrollment and cohort tuition – and we continue our efforts to increase the number of undergraduate nonresident students, as well – it will not come near to compensating for the lack of any state funding increases.

In addition, the Office of the President has plans to change the methodology used to allocate state funds to the campuses. We have not seen financial models based on the proposed changes, so we do not know what the impact will be on our FY25 allocation, but there is a very real possibility that UCR could receive less than our FY24 allocation.

Like the rest of the UC system, we are committed to the 4.2% salary and benefit increases for faculty and non-represented staff and to the planned salary and benefit increases for represented staff per their negotiated contracts for FY25. These salary and benefit increases amount to over $28 million. Other fixed cost increases (utilities, new facilities coming on-line, etc.) bring that total up to approximately $31 million in new core expenses for FY25 on a base of approximately $750 million in FY24.

We are exploring options to redirect unspent funds in our academic and administrative units in order to meet our projected expenditures and to maintain a balanced budget. We will be working closely with the Campus Finance Committee and the Academic Senate to model these options. We realize that this email is awfully vague, but we simply don’t have the information yet to make any decisions, nor are we likely to have all that information before the May revised economic outlook, and the legislative activities immediately following that forecast.   While we hope for better news from the state and UCOP, we need to start planning now for potential scenarios that allow us to balance our core budget, so that we are not caught unaware. 

We wish to remind you that we did already allocate base and one-time funds to maintain current levels of graduate student TA/fellowship costs for FY25, and there are no plans to redirect these funds.  We will also look to consider other one-time fund uses, should they be needed, to support our graduate students. Lastly, we remain committed to funding UCR’s first Campus Interdisciplinary Research Center (CIRC), and we look forward to reviewing the applications this spring.