Quick Take
In a Tuesday statement, UC Santa Cruz Chancellor Cynthia Larive said the 2024 fiscal year deficit was larger than officials initially projected. University officials said the campus will have to move forward with staff reductions but they didn’t provide details on how many or when.
UC Santa Cruz Chancellor Cynthia Larive on Tuesday said in a campus message that fiscal year 2024 closed with a larger deficit than expected, at $107 million, and that university officials are expecting another large deficit this year.
“To fully address our budget shortfall, we will need to take additional steps this fiscal year, as well as in future years, to further reduce expenditures,” she wrote in the statement.
The university has used money in its reserves to ease past deficits, but because those reserves are now diminishing, Larive said campus officials will have to slow down hiring, not fill vacancies and implement layoffs, among other cost-cutting measures.
“Campus leaders are moving forward with the necessary actions to implement the FY25 budget, requiring us to reduce some staffing levels,” she wrote. “While most staff reductions are being made through attrition and by not filling currently open positions, some currently filled positions are being eliminated, resulting in layoffs. Those decisions are extremely difficult and are being made only after extensive consideration.”
After Chief Financial Officer Ed Reiskin told Lookout earlier this month that layoffs were likely, Lookout learned this week that layoffs have already affected Information Technology Services. UCSC spokesperson Scott Hernandez-Jason didn’t respond to questions regarding how many layoffs were implemented there or if any were issued in other departments.
“We do not yet have final counts of staffing reductions,” he wrote via email to Lookout. “We are seeking to keep the number as low as possible, and it’s one of the reasons we’re taking a phased approach. Phasing allows us to reassess projections based on actual changes in ongoing expenses and revenues.”
UCSC’s budget is about $1.01 billion for the current fiscal year, while its projected expenditures are $1.14 billion, Larive wrote Wednesday, leaving an overall deficit of $126 million. The budget is split 50-50 between core funds and non-core funds. The core funds budget comes from state funds, tuition and other sources. The other 50% comes from revenue from housing and dining, grant funds and awards.
Larive wrote that similar to last fiscal year, this current fiscal year is showing that the majority of the deficit is coming from the core funds section of the budget. The shortfall there is about $111 million. Expenses in that budget, including employee salaries and benefits, are outpacing revenue.
“I announced last month that we would reduce spending by $17 million as the next step, which allowed us to reduce the projected deficit in core funds from what would have been $128 million,” she wrote.
Larive said the university is choosing to take a phased approach to budget cuts in order to make assessments and projections over time.
“While the hiring slowdown will continue and there may be a limited number of additional layoffs, some hiring will be necessary in selected areas that support the core operations of the university or are key to bringing in additional revenue,” she wrote. “I remain confident that we will be able to address these challenges while pursuing advancements for the campus longer term. I and other campus leaders will be providing regular communications to keep you apprised.”
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