Quick Take
The chief financial officer at UC Santa Cruz says the university has tough decisions to make as it addresses a $100 million shortfall. In an interview with Lookout, Ed Reiskin said the budget office will likely have to implement layoffs.
UC Santa Cruz is facing a challenging budget year and will potentially have to announce layoffs in the coming weeks as rising employee costs, drying out pandemic-era funds and stagnant revenue – partially due to its limits to growing enrollment in housing-challenged Santa Cruz – caused a more than $100 million deficit for fiscal year 2024.
UCSC chief financial officer Ed Reiskin said he and the budget office are finalizing plans for a $17 million reduction to the school’s fiscal year 2024-25 budget.
Part of that $17 million will come from finding different funding sources to cover some staff positions. But ultimately, an undetermined number of positions at UC Santa Cruz will likely need to be eliminated. Reiskin said he thinks the university’s budget office will know how many layoffs they’ll have to make in a week or so.
“I think in the end, it is likely there will be some [layoffs],” he told Lookout on Monday, adding he didn’t yet know how many there would be, how they would be distributed or when exactly affected workers would be without jobs.
While the university has sent out at least two public messages to the campus community since February about budget challenges, Reiskin said his acknowledgement Monday of the potential for layoffs was the first time the university openly discussed the possibility. Reiskin said the university doesn’t want to “freak people out,” is not in a “major crisis situation” and wants to inform its community of budget cuts in a “thoughtful way.”
“I’m hesitating a little bit because we haven’t shared explicitly with the campus that there will be layoffs. I think we have kind of indicated that that’s possible. We have not communicated that yet. I think in the end, it is likely there will be some,” he said. “So I’m just concerned about people reading, in the Lookout, about those layoffs, and people freaking out before we can share that in a kind of thoughtful way ourselves. But yeah, the short answer is, honestly, yes, I believe there will be some.”
UCSC’s budget challenges come amid the state’s efforts to address a $46.8 billion deficit, rising employee costs, the phasing out of pandemic-era funds and the small coastal campus’ limitations to increasing enrollment. Tuition is a major contributor to its budget. Other University of California campuses, including UC Berkeley, are also facing deficits. UC Berkeley estimates a deficit of $79 million for fiscal year 2025, the San Francisco Chronicle reported. The university has a $3.6 billion budget and a $7 billion endowment, and has a much larger undergraduate population of 45,000 students.
UCSC’s budget is just over $1 billion for the upcoming fiscal year and it had about 17,800 undergraduate students this past fall. University officials expect enrollment will be around the same this fall.
Reiskin said “almost everyone” across the UC campuses is experiencing similar budget challenges.
“I meet with my counterparts from the other UCs, and I think everyone is dealing with some level of structural deficit,” he said. “Some actually started doing the work we’re doing now a few years back, as theirs were manifesting earlier.”
Reiskin said enrollment of international and out-of-state students declined during the pandemic, and could take years to return to pre-pandemic levels. That and the limited availability of student housing, he added, affect enrollment growth and revenue.
Expense growth has been driven by employee salaries and benefits, which represent three-quarters of the university’s core funds budget. The core funds budget is about 50% of the university’s resources and comes from state funds, tuition and other sources. The other 50% (non-core funds) comes from revenue from housing and dining, grant funds and awards.
The university expects benefits costs — including health insurance — to increase 16.4% for both fiscal years 2024 and 2025. It’s also seeing increases in costs in areas such as utilities and insurance.
To address the needed cuts, Reiskin said UC Santa Cruz asked administrators from its five divisions to give the budget office scenarios of what varying levels of cuts could look like: at 5%, 10% and 15%. A budget advisory committee reviewed the divisions’ proposals and made recommendations to Chancellor Cynthia Larive.
“Then she took all that and made the final decisions, so it could have theoretically been anywhere from zero to 15%,” Reiskin said. “We didn’t want to be prescriptive. We thought it would be better at first, at least, to give the division leads the ability to kind of prioritize.”
In a news release July 2, Larive said that “as a result of this process, I am authorizing core fund expenditure reductions for fiscal year 2024–25 on the order of $17 million, as a first step toward closing the gap.”
Reiskin said he didn’t have a breakdown of how the cuts are affecting services, programs or staff.
“I don’t have any easy way to kind of characterize the nature of the cuts, because it was very widespread and just different in different places,” he said.
As for when impacted employees could potentially be without jobs, Reiskin said that wasn’t clear either, as it depends on if the worker is part of a union and what their contracts require. He said roughly half of the university’s staff is represented by a union.
“We don’t want anyone to have to lose their job, but we also have to be realistic about ultimately what we can afford,” he said.
UC Santa Cruz formed a Revenue Augmentation Committee earlier this year to help mitigate the need for expense cuts, but Reiskin said he isn’t sure if it has made recommendations yet on how the university can increase revenue.
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