A growing gap must be addressed, as funds that the university receives from state appropriations and tuition routinely fall short of expenses traditionally supported by these "core funds."
In January 2020, the campus identified the need to reduce ongoing reliance on state funds and tuition revenue (core funds) by $80–100 million by 2025 and to fundamentally change the way we operate to sustain a balanced budget and maintain a responsible central reserve. These actions will allow UC Davis to invest in strategic priorities, build a responsible central reserve and meet future challenges. To meet this goal and achieve financial sustainability, campus units must make fundamental, long-term changes in business practices and fund management strategies across all facets of UC Davis.
With the onset of the COVID-19 pandemic, additional financial challenges emerged. The state budget reduction, flat tuition rates and lower-than-expected enrollment intensified pressures on our core fund structural deficit. We now estimate that, without action, the structural deficit could reach $80–$112 million by 2025–26, after we have reduced expenditures on core funds by the $70 million Phase I Savings Targets, allocated beginning in fiscal year 2020–21. While the state has restored the university's 2020–21 budget, significant challenges remain. If not addressed aggressively, these challenges could threaten our operations and core mission.
– Mary S. Croughan, Provost and Executive Vice Chancellor
Only a multi-faceted approach to this challenge will be successful in an organization as complex and varied as UC Davis. We must critically evaluate and innovate our practices around resource generation and utilization by:
- Looking for opportunities to grow net revenue from new sources
- Striving for improved processes to achieve operational efficiencies
- Aligning our expenditures with our priorities and leveraging all sources to support our mission
All parts of campus must work together to rebalance the budget for core funds
A Budget Framework Advisory Committee, with leaders representing several different types of campus constituencies, has been established to inform the budget process.
- Our commitment to students' success and experience will not be compromised.
- The good of the university as a whole drives the discussion of resource allocation adjustments.
- Administration and faculty have shared responsibility and accountability to support responsible financial management.
Throughout this process, we will hold firm to our principles and primary mission by:
- Continuing to make progress on the strategic plan goals identified in “To Boldly Go.”
- Continuing to invest in infrastructure needs.
- Leveraging and diversifying our activities appropriately across all fund sources and strategically growing fund sources to support our mission and goals.
- Enabling all employees to work smarter and direct their effort toward the most benefit for the university.
- Using benchmarks and data in decision-making.
- Weighing long-term risks and return on investments.