Budget Stability Plan

Updated November 9, 2022

What is the Budget Stability Plan?

A multi-year planning process was launched in August 2022. Every operating unit with core funds is developing a multi-year plan to outline steps they expect to take to contribute to closing the projected funding gap. Plans are due 10/31/2022 and will address two scenarios:

  1. Actions expected to realize savings or generate new revenues sufficient to cover the announced reductions in ongoing base resources to date, plus an estimated additional 2.5% for FY24 (low cut scenario);
  2. Additional actions if the FY24 reduction is 5% (high cut scenario).

Frequently Asked Questions

During this time, we knew about a growing structural deficit; however, reserve levels enabled us to focus on the COVID-19 emergency. Now that safety measures are operationalized and reserves are beginning to drop, it is time to address the fiscal challenges.

Most UC campuses are implementing (or already have implemented) reductions. Savings and new revenue targets are on a similar size and scale systemwide.

State appropriation, tuition, non-resident tuition, student services fee, UC general funds, and various other unrestricted sources such as investment income, ground lease revenues, and assessments to self-supporting activities. Core funds make up 24% of the total university sources that fund UCI’s expenditures.

Based on FY2021-22 financials, Core funds comprise $1.02B, so 3% is ($30M).

Yes. The 3% across-the-board reductions apply to all administrative, support, and academic units. The following exclusions were applied: undergraduate and graduate University Scholarship Aid Program-USAP funds (this includes the Ph.D./MFA Block), indirect cost recovery distribution, Professional Degree Supplemental Tuition, Summer Session funds, and the Medical Center state allocation. These represent Core funds that are either distributed by formula or are restricted to a particular purpose.

The salary increases announced earlier this year were implemented on July 1 for staff and will be implemented for faculty effective October 1 with no intention of reducing individual compensation levels. The across-the-board reductions are to the overall amount of core funds allocated to each unit. The multi-year plans due at the end of October will address what types of budget actions will be implemented at the unit level to achieve the 3% budget reduction (e.g., consolidation of services and other efficiencies, reduction of expenses, potential new revenues, etc.).

No, an additional 2.5-5% in further savings or new revenues are expected to be needed to resolve the structural deficit. As mentioned in a September 2022 update, the campus is engaging in a multi-year budget stability planning exercise in fall 2022 to identify necessary actions and define innovative mitigation measures. Some solutions are expected to take more than one year to implement.

The drivers include state budget cuts in 2021 (while restored in 2022, the unfunded cost increases for one year have a compounding impact), flat enrollment, a lack of tuition increases for all but one year from 2012-2022, and the four-year implementation timeframe to fully benefit from cohort-based tuition rate increases. More recently, the pandemic continues to affect some auxiliary revenues, COVID-related expenses continue, investment income has declined, and inflation is a pervasive factor (as reflected in the salary plan, recruitment and retention pressures, and costs of supplies, services, and construction). Some notable financial trends are highlighted here:

  • Between 2019 and 2022, recurring expenses grew by $153M or 5.5% annually, while sources of recurring revenue grew by $45M or 1.5% annually. Growth in recurring expenses is expected to continue to outpace recurring revenue growth in the coming years.
  • Faster than expected increases in academic and staff salaries and benefits (including growth of 68 ladder rank faculty FTE in 2020 but flat in subsequent years, increased costs associated with approved salary plans, and contractual obligations from bargaining agreements).
  • Student aid growth consistent with Ph.D./MFA growth goals and targeted aid plans intended to increase diversity, access, and inclusion.
  • Revenue projections that treated a temporary increase in enrollment as a permanent base of support. In fall of 2016 and 2017, undergraduate enrollment was unexpectedly high. As the large classes matriculated through, total enrollment in 2020 and 2021 exceeded levels projected in the campus long range development plan. Enrollments were adjusted to align with long range goals. However, the smaller incoming classes were not correctly captured in financial modeling, which instead assumed that historical growth levels and revenue trends would continue. Financial modeling assumptions are now closely aligned with enrollment modeling updates.