Update Regarding the 2024-25 Campus Budget

Update Regarding the 2024-25 Campus Budget

Dear Colleagues,

We write to provide some updates about our budget for fiscal year 2024-25. As you may be aware, the annual budget letter was distributed on April 3, and it includes important information we want to share with you.  

Let us start with good news: the University of California is planning a 4.2 percent salary increase for policy-covered staff and academic appointees in the coming year. As announced by UC President Drake on April 4, this salary increase is contingent upon the outcome of the state budget allocation. We believe these increases represent an important recognition of your hard work and will help ease the burden employees are experiencing due to rising prices, including health insurance premiums. Employees covered by bargaining agreements will receive increases per their contracts.

Unfortunately, not all of the news is good. As noted in the budget letter, we are all weary from years of digging deep to identify savings. Although we uphold the promise of our tripartite mission—high-impact teaching, world-class research, and life-changing service—the magnitude of doing this work against the backdrop of ongoing budgetary constraints is challenging. 

While the 2024-25 state budget is not yet finalized, there is a projected shortfall in the state’s revenue, and the Governor’s budget recommends postponing this year’s funding increase to the University of California system. Practically speaking, the prospect of rising costs and flat funding from the state leaves us facing the difficult reality of identifying how to reduce the shortfall in our core funds. To that end, we are taking a multi-pronged approach, as outlined below:

  • We are asking each campus administrative and academic unit to identify base budget reductions, which will decrease campus expenditures by approximately $20 million. 
  • We have notified each unit that we will be unable to provide new central campus funding unless previously agreed upon. Moreover, central campus funding will not be provided for new faculty startups for 2024-25, which will further reduce core fund expenditures for next year by approximately $10 million. Units are encouraged to use their own carryforward funds for their priorities and startup packages. 
  • We will implement a single General Overhead Assessment that consolidates existing assessments and reflects increased costs for UC systemwide and campus charges. These costs are largely mandatory (insurance premiums, UC Path, etc.) and they are expected to exceed $95 million in the coming fiscal year, which is $24 million more than last year. More information on these assessment costs will be forthcoming from Budget and Institutional Analysis.  

Central campus is also taking several actions to reduce costs and the structural deficit, including the following:

These collective actions will help address some of the campus’s deficit for 2024-25 while offsetting rising costs. We invite you to learn more about the campus budget process and ongoing structural core deficit by visiting the Budget Framework website, which includes a brief overview video.  

Despite these challenges, we remain hopeful. We are relatively well positioned because we began addressing our core funds structural deficit several years ago. Together, we have made significant progress, which has been critical to both the short-term and long-term financial stability of UC Davis. We also have dedicated faculty and staff actively engaged in initiatives such as IDEA$ At Work to identify new revenue sources, as well as the Sustaining Teaching and Research Task Force (START). START’s charge includes recommending operating models that are financially sustainable and maintain or increase the campus’s commitment to excellence while attaining our goals. Members of START’s committees and working groups are meeting regularly and are energized by their conversations and activity. We look forward to sharing their recommendations in the months to come. 

We are grateful for your perseverance as we navigate this difficult budgetary landscape. We look forward to better days ahead. In the meantime, we thank you for all that you do for our students, for one another, and for the people of California. 

Gary May

Mary Croughan
Provost and Executive Vice Chancellor

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