Quick Take
Despite implementing cost-cutting measures, UC Santa Cruz is projecting another year of deficits: nearly $80 million. Last fiscal year, the university said it was on track to close with a similar deficit.
UC Santa Cruz is on track to run deficits in six of the past seven years, projecting it will be $79.9 million in the red this fiscal year, according to the school’s 2025-26 operating budget documents, a slight drop from an estimated $81 million deficit in the prior fiscal year.
UCSC officials this past year have cut costs, primarily through staff attrition — or not filling vacancies — and have started tightening budgets across all of the university’s five divisions. The university’s goal is to save $170 million in spending annually by the 2027-28 fiscal year. It has managed to cut costs by about $70 million thus far, according to Interim Campus Provost Paul Koch.
Astronomy professor Rebecca Jensen-Clem said she was concerned about how continued spending reductions could affect graduate students.
“As we consider where to best cut costs, I very much hope that we continue to prioritize funding for [teaching-assistant positions],” she said.
One faculty member Lookout spoke to said they expected the deficit to be higher, while others said they were not informed enough to comment on the record.
The university’s budget for 2025-26 is $1 billion, similar to prior years. More than half the budget comes from core funds, or tuition and state funding, while the rest comes from non-core funds like grants and revenue from services such as housing and dining. The deficit is in the core funds budget, which supports the university’s core missions: teaching, learning and public service. The university’s academic and staff salaries are supported by the core funds budget.
In the core funds budget, the university projects to end the current fiscal year with revenue of about $572 million and expenses of about $651.9 million, for a deficit of approximately $79.9 million.
Last spring, the university said it was on track to lower an annual $111 million deficit by about $30 million to around $81 million for the 2024-25 fiscal year that ended in July, primarily due to “one-time revenue sources.”
Campus spokesperson Scott Hernandez-Jason didn’t respond to questions sent by Lookout on Friday afternoon about whether the school managed to hit its $81 million target for the previous fiscal year’s deficit, and how it pays for its deficits. The university hasn’t updated its financial results for the prior fiscal year since the third quarter, which ended in March. Hernandez-Jason previously told Lookout the school plans to release a budget update this week.
In August 2024, in a message to the campus, Chancellor Cindy Larive said that the school had used money in its reserves to ease past deficits but that those funds were diminishing, so the campus had to implement cost-cutting measures.
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