UC Santa Cruz — at every level — has been reeling from a structural budget deficit. The effects trickle down to students in many aspects of their education such as larger class sizes and less accessible campus services. 

Despite significant effects beginning to materialize, many community members remain in the dark on the specifics of the deficit and how it is impacting the community at large. 

As City on a Hill Press investigates the implications of the budget deficit on the UCSC campus, we sought to create a cohesive breakdown for community members to reference. 

What is a budget deficit? 

For universities, a structural budget deficit occurs when the costs to operate the university exceeds all the money that the university brings in. Simply put, UCSC is spending more than they’re making.

UCSC is short of $111 million in core funds for 2025 — this is after the university implemented $17 million in spending cuts last July.  

Here are the core funds that UCSC brought in and what it spent in 2024-25.

Source: The University Budget Fiscal Year 2024-25. These numbers were gathered from the core Funds breakdown of the Operational Budget. These do not include funds labeled “non-core.” 

Core funds come from:

State Funds   49% – Education funding from the California State Legislature is sent to the UCSC campus. These are public dollars from state taxes. 

Tuition and Supplemental Tuition   37% – Tuition is the base amount of money that students pay to attend the university, supplemental tuition is additional dollars paid by out-of-state and international students. 

Student Fees   5% – These are primarily set by the UC Regents but can also be instituted by student vote. 

Additional money from grants, interest earnings and $2.3 million from the California State Lottery, are allocated to core funds as well, but make up less than 9% of core funds. 

Core funds are used for:

Payroll – Faculty, lecturers, TA’s and administrative employees are paid using core funds.

Student Services – Advising, tutoring, disability and counseling resources are examples of student services. 

Infrastructure – Core funds are used to maintain costs of operating electrical, water and internet services. 

Here’s how payroll and workforce amounts have grown since 2021. Keep in mind that percent payroll growth is relative to the individual salary of each position. 

Source: 11/22/24 Academic Senate Meeting Minutes. These numbers were provided in a table in the November Academic Senate Meeting. During this three-year time frame, total enrollment increased by 5 percent.

Why is this happening at UCSC? 

UCSC states that, “the current structural deficit in core funds began in 2020 as the campus worked to protect jobs during the pandemic.”

55 percent of the operational budget of the university comes from the core fund, which can change year-to-year based on factors such as:

  • State funds that are influenced by shifting priorities of the California government.
  • Tuition and student fees that change yearly alongside enrollment. 
  • Federal grants that are used for specific resources, and face  threats  under a presidential administration that continues to undermine federal research contributions. 

In other words, UCSC’s heavy dependence on these fluctuating sources of income has made it vulnerable to the problems it experiences now. Not all UC schools are in the same situation; UC Los Angeles derives only 22 percent of its budget from core funds and does not face the same financial insecurity that UCSC does to date. 

How has budget management been criticized? 

Students, faculty and community members have criticized the administration’s handling of its expenses, claiming the administration has prioritized saving money over quality education. 

The implementation of the Fresh Academic Instructional Resources (AIR) model by campus provost and executive vice chancellor (CP/EVC) Lori Kletzer changed the allocation of academic funds, centralizing budget control into the hands of higher administration rather than department deans. 

Prior to the model, departments held control over their own general funds and money saved from previous years. Now, senior management, rather than department deans, hold control over the budget and decisions related to it.

In interviews with City on a Hill Press, department chairs expressed frustration that those now in charge of departmental budgets are far removed from the programs and resources benefiting students, choosing which programs to cut to save money instead of prioritizing student experience. 

This sentiment was compounded by a perceived lack of transparency surrounding the budget. It’s not made clear where money is spent, and who exactly makes those decisions. 

“We’ve never had a transparent budget on our campus, ever. We’re a public university, but I have never been able to find answers to any single budget question that I’ve had in 20 years,” said a faculty source who chose to remain anonymous. “They say ‘oh we follow this budget model.’ Okay, but what is that model really? If it’s a bad model why do we have to [follow it]?”

What impacts are we already seeing?

Tutors for the writing program have been cut and are no longer available to support students in a class series required for all undergraduates. Layoffs have begun in various campus departments, such as tech services.

What should you expect going forward? 

The budget deficit at UCSC is not expected to improve in the foreseeable future. A budget deficit of this size will have significant implications on the student experience. $16.6 million in state funding cuts will slash campus revenue further for 2026. Looking forward, increasingly diminished student services will likely persist.

Budget Term Glossary 

The university uses some pretty arcane jargon in their budget communications that can make deciphering their websites or messages a challenge. City on a Hill Press created this glossary to help you decode some of their terms. 

Happy sleuthing! 

Terms and definitions:

Fresh AIR model: A budget model implemented by CP/EVC Lori Kletzer in 2024 that takes budget control away from individual departments and puts it in the hands of administrators who then determine how funds can be spent. 

Carry-forward money: Money saved from the previous year. 

Fiscal year (FY): 12-month period used for financial reports, starting in July and ending in June.

Structural deficit: The University spends more than it makes due to the way their budget is set up structurally, particularly their reliance on fluctuating revenue sources. 

Core funds: Main financial resources of the University that make up 55 percent of income and expenses. Salaries and benefits are paid through core funds.