Systemwide Budget Plans for Salary Increase, State Compact Continuation and Core Funds Deficit

Though the calendar still says 2023, the UC Board of Regents recently launched the university’s 2024-25 budget process by approving their systemwide budget plan. Here’s what the UC Davis community needs to know about our university’s budget and the next steps in our annual budget process — including rising employment costs, the five-year state compact, our campus core funds deficit and other aspects of the UC Davis budget framework.

“Our campus budget process starts later in the fiscal year and is informed by the actions of the regents and the governor,” said Sarah Mangum, associate vice chancellor of Budget and Institutional Analysis.

“Now is a great time in particular for all of our faculty and staff members to get an insider’s look at how the UC Davis budget works and learn about the process,” Mangum said.

In January, Gov. Gavin Newsom is expected to issue his proposed state budget, and then the campus budget process continues in February when the budget framework is communicated.

Expecting salary increases and other rising employee costs

Like many universities, UC Davis is people-driven. This is reflected in our costs — with salaries and benefits for both faculty and staff generally accounting for about 75% of total operating expenditures.

The regents’ budget calls for a 4.2% salary increase for faculty and non-represented staff, in addition to the standard faculty merit program for ladder-rank faculty members. (Represented employees have salary increases as stipulated in their bargaining agreements.) Costs for health care benefits also increased this year, with UC further subsidizing premium costs.

Maintaining a competitive edge and supporting employees is critical to being a top employer. Some of those increases also put additional pressure on UC Davis core funds.

Planning for state compact to continue

The regents’ budget assumes continuation of the 5% annual funding increase from the state of California, based on the five-year compact between UC and Gov. Newsom that was first announced in May 2022.

“The five-year compact gives us some consistency in what we can expect from the state, and the 5% increase is more than we received from the state in recent years prior to the compact,” Mangum said.

If continued by Gov. Newsom and California’s Legislature, the 5% state funding increase to the UC system is contingent on increasing enrollment of California resident students and meeting other goals noted in the compact, including addressing student success and affordability.

What else to notice about the Regents proposed budget

The UC Regents are also requesting $1.2 billion in capital funding from the state for campus building projects that support facilities renewal, enrollment growth and clean energy — including about $139 million for UC Davis campus projects.

"While the UC Davis campus has not received state capital funding for many years, we remain hopeful that state support will be come available to help our campus,” said Clare Shinnerl, vice chancellor of Finance, Operations and Administration. “One of our requests of the state is to support energy efficiency projects, including phase 3 of the Big Shift.”    

The regents’ budget also includes a request to fund three new programs based on UC PRIME, a successful training model first launched in 2007 that focused on meeting the needs of California’s underserved populations with medical programs on multiple campuses. The newly proposed programs would include DVM-SERVE, which would aim to address California’s shortage of veterinarians throughout the state and would include a student cohort at the UC Davis School of Veterinary Medicine.

One other interesting detail to notice is that the proposed UC budget plan includes more total expenditures than total revenue. Similar to last year’s version, the regents’ budget plan includes a line at the end labeled, “Add'l cost savings/revenues required,” which for 2024-25 is planned as $69.9 million systemwide. Mangum explained that UC Davis is typically about 11% of the systemwide budget, so we would expect our campus to be required to identify at least $7-8 million in core fund savings or revenue for the next fiscal year.

What comes next

Gov. Newsom’s office is expected to issue the governor’s state budget proposal on Jan. 10, which would include a potential preview of state funding assistance to the UC system.

Then back at UC Davis, the budget process usually gets started in February when Provost Mary Croughan issues the UC Davis budget framework letter to provide context and guidance for campus units to begin their budget planning processes. This leads to a series of discussions that will eventually yield final budget plans in July, after the state budget is finalized.

When it comes to UC Davis’ ongoing core funds deficit, progress continues in meeting savings targets as this is the fifth year in a multi-year process to identify $79 million in savings. Central funds have already been restructured to identify $25 million in savings, though some of the actual savings are still accruing. Individual units have also met their annual goals. Last year’s budget process also included mitigating over $60 million in one-time debt, by redirecting some central funds and about $46 million in carryforward funds from administrative units.

Campus leaders and committees also continue to pursue progress toward transformative changes that could make a difference in revenues, savings and the budget framework — including:

• IDEA$ at Work: Initial investments are expected to be announced soon in response to the nearly 2,000 ideas submitted earlier this year by UC Davis employees for improvements, efficiencies and revenue opportunities through the IDEA$ at Work campaign. The Revenue Generation and Institutional Savings Task Force issued a report that analyzed all of the ideas and identified some potential priorities.

• Sustaining Teaching and Research Task Force, or START: Charged by the provost, START is developing initiatives and action plans to transform how the campus fulfills its education, research and service missions. Its recommendations also will include new operating models that are financially sustainable and maintain or increase the campus’s commitment to excellence while attaining our goals.
• The Student Success and Equitable Outcomes Task Force is focusing on strategies and developing initiatives that will meet the needs of UC Davis students. While the task force is focused on undergraduate student success, when applicable, it will also propose strategies that may also benefit graduate students.

 

More Info:

• Executive Summary of UC Systemwide 2024-25 Budget Plan (PDF)
• UC 2024-25 Budget Plan for Current Operations (1 page PDF)
• Compact between UC and Gov. Gavin Newsom (PDF)
• UC Davis Budget Planning Cycle