With the State of California budget now finalized, we write to provide an update on the University's permanent 2026-27 operating budget, including the impact of state appropriations, tuition revenues, employee compensation programs, and other significant fixed cost increases that will shape campus financial planning for the coming year. While the final state budget provides important clarity for this fiscal year, the campus continues to evaluate its long-term financial position to ensure that revenues are being spent in alignment with campus priorities.
State Budget. The 2026-27 budget provides the University of California with $5.5 billion, reflecting a 7% increase ($350.6 million) in ongoing base budget funding from the 2025-26 year as well as a 3% ongoing restoration ($129.7 million) of the 2025-26 budget deferral. UCOP modified some aspects of its allocation methodology (e.g., eliminated some earmarks that had previously supported campus initiatives) and postponed implementation of other modifications (e.g., delayed by another year the plan to change the weighting for undergraduates from under-resourced high schools from 1.15 to 1.5). For UCR, the state allocation for 2026-27 is $34.36 million greater than it was in 2025-26.
Tuition Revenue. Due to the cohort tuition increase for new students and our growth in enrollment, tuition revenue to the campus is estimated to increase by approximately $6.30 million. Of this amount, approximately $1.75 million is available to cover new central campus expenses (see chart below). The other $4.55 million goes directly to the instructional units (schools and colleges) and to financial aid for students.
Employee Salary Program. As announced on June 29th, represented employees will receive negotiated salary increases, while eligible non-represented staff and faculty will receive salary adjustments of 4% consistent with the University's approved salary program for FY 2026-27. In addition, the campus provided a 3% increase to the faculty off-scale component and above-scale salaries and a 1% equity adjustment for eligible policy-covered staff. Our total estimated costs for salary and benefit increases are approximately $39.39 million for FY 2026-27. The systemwide salary program and the additional amounts from the campus for faculty and policy-covered staff represent an important investment in our people, which remains a campus priority.
Fixed Cost Increases. In addition to the increases in salaries and benefits discussed above, there are significant inflationary increases in fixed operating expenses, such as utilities and hazardous waste removal, and other new costs, such as the operational expenses for the Undergraduate Teaching and Learning Facility (UTLF) opening in Fall 2026. These non-salary costs total approximately $3.78 million and are supported through a combination of state appropriations, enrollment-related tuition growth, and investment income.
What does this all mean for the central campus budget? As you can see from the chart below, our net increase in expenditures exceeds our net increase in revenues by approximately $6.67 million. To fill this gap, each organization will cover 19% of their salary and benefit increases (exclusive of faculty salary increases from merit and promotion advancements); the central campus will cover the rest.
The financial challenges we face are similar to those at our sister UC campuses and at other public universities around the country. Looking ahead, we are working to strengthen our long-term financial position through several initiatives already underway, including a review of our Academic Budget Allocation model, refinement of the Campus Operating Model, enhanced financial reporting and forecasting, and the identification of organizational efficiencies to allow us to direct resources to our highest strategic priorities. As we did in 2025-26, we will hold budget review meetings in the winter at which each organization can present its financial position and its strategic priorities to the chancellor and provost.
Thank you for your continued dedication to our mission and your careful stewardship of our resources.