Budget Overview

Revenue Profile for Campus Operations

UC Santa Cruz’s total revenues for the upcoming 2025-26 fiscal year are projected at approximately $1 billion. Approximately 55% of the total revenue is expected to come from Core funds.

Core funds make up about 55% of the all-funds operating budget and primarily support the university’s core missions of teaching, research, and public service. Tuition and fees and the state appropriation account for around 92% of core funds.

General State Appropriation

The state appropriation is the annual funding received from the State of California, which depends on state legislation and revenue levels.

Tuition & Fees

Tuition and fees include tuition and non-resident supplemental tuition (NRST), net of aid; student services fee (SSF); professional degree supplemental tuition (PDST); and summer session fees. Decisions regarding tuition, fees, and enrollment are determined by, or in consultation with, the UC Office of the President (UCOP).

Indirect Cost Recovery

Indirect cost recovery (ICR) funds are generated as a result of research expenditures. They help cover costs for administration, maintenance, utilities, and other research-related costs that cannot be charged directly to grants.

Investments/Interest Income

Investments earnings- All cash balances for the campus are invested in a variety of UCOP-managed investment pools and the resulting investment earnings support campus programs and operations.

Non-Core / Other:

Other non-core funds sources (contracts & grants, private gifts & endowments, auxiliary services, and other miscellaneous revenues) make up about 45% of the university’s total operating budget. Funds from these sources are generally restricted for a specific purpose. Due to their restricted use, non-core resources cannot fully offset the challenges impacting core funds, which remain a critical focus for achieving financial sustainability.

Private Gifts

Private gifts are comprised of gifts and endowments from fundraising efforts. While gifts and endowments support campus programs and priorities, most are not represented in the all-funds operating budget. Instead, they are reported in the financials of entities that manage them (e.g., UCSC Foundation, Office of the President Investment Office). The spendable portion of these gifts and endowment payouts are non-core sources that support various campus operations and initiatives.

Auxiliary, Sales & Services, Other

Auxiliary services like housing, dining, and parking operate on a self-supporting basis, focusing on minimizing cost increases while maintaining quality services for students and the community. Other revenues include tuition from self-supporting degrees provided through University Extension, sales and service operations like the Arboretum and Seymour Center, student fee measures, course fees and other miscellaneous fees that contribute to the cost of running certain programs, and other income from patents, royalties, and sale of surplus property etc.

Contracts & Grants

Contract and grant revenue is a reflection of years of intentional campuswide investments in research infrastructure, faculty, and initiatives. These funds are used to cover direct research expenses, with the Indirect Cost Recovery funds generated by these expenditures used to support campus operations, as described in the Core Funds section.

Structural Deficit Status

As a general principle of fiscal responsibility, total campus revenue in each year should exceed or equal total campus spending. Since 2011, total campus annual revenue and spending have been closely matched, although this varies by operation — with some units building up reserves while others incurring deficits. In Core funds over that same period, spending has exceeded revenues across certain fund types (state, tuition) in some years. Through 2018, the Core funds gap was mostly managed by applying unit and central funds reserve balances. After 2019, the gap could not be fully closed and the annual gap has grown since then.

As ongoing costs have increased and revenues have remained relatively flat in recent years, the campus has developed a structural deficit.

Utilizing the multi-year framework provided by the Budget Advisory Committee to address our structural budget gap, the campus is implementing a four-year plan to achieve a balanced core funds budget by 2027-28. This plan includes enhanced campus revenues and achieving savings through refinement of central funds management strategy, reducing costs of instruction, pursuing strategic initiatives and implementing Core operating budget reductions at the divisional level.

Our divisional reduction strategy aims to achieve reductions while minimizing the direct impact to our core mission. The five academic divisions are assigned the lowest reductions (8%), with all other divisional reduction targets ranging from 12% to 19% based upon their distinct service composition. During this year’s budget development process, 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 campus’s multi-year plan to substantially close the structural budget gap by 2027-28 involves these principal officer reductions (“Division Reductions”) along with other more centrally managed initiatives. For example, new revenue generation (e.g., increasing non-resident enrollments) or transferring expenditures to non-Core funds (“Central Strategies”); adapting instructional delivery (“Instructional Savings”); and other actions including restructuring and process improvement (“Strategic Initiatives”). In 2024-25, while campus advisory committees completed their work and recommendations, each principal officer was asked to identify recurring reductions to their (“FY25 Initial Reductions” and “FY25 Additional Reductions”).

The following graphic illustrates this multi-year plan, providing a sense of scale and timing. The multiyear plan is ambitious as a structural deficit for any duration accumulates into a larger one-time deficit that must be repaid even after the structural gap has been closed.