Gov. Gavin Newsom’s May 14 revision of the state budget reduced proposed funding cuts to the UC.

While Newsom’s initial January budget proposed that the state cut $396.6 million of the UC’s funding, his revised May budget would cut only $129.7 million. UC President Michael Drake said in a May 14 statement that he is grateful to Newsom for proposing a budget reduction of 8% to 3% from the UC’s state funding, given that the state is financially strained.

“This is a challenging budget year for California, and our state leaders are facing very tough choices,” Drake said in the statement. “The Governor has reduced the University’s cut from 8 percent to 3 percent, demonstrating his strong commitment to California’s students.”

A spokesperson for State Assemblymember David Alvarez, who reviewed the initial proposal and offered his suggestions for the May Revision, said he appreciates Newsom’s reduction as it is important to invest in California’s education system.

“While this remains a difficult position for our universities, it is a marked improvement from earlier this year,” the spokesperson said in a written statement. “Investing in education is investing in California’s future.”

UC Provost and Executive Vice President of Academic Affairs Katherine Newman said at an April 22 meeting of the assembly’s subcommittee on education and finance that the initial funding proposal would lead to students having reduced course options and larger class sizes.

“This will result in real impacts on students, such as fewer lecturers and course options, increased wait times for key courses, increased class size and lengthening time to degree,” Newman said at the hearing. “This will adversely impact our efforts to make certain that a UC degree remains affordable.”

While many other state agencies’ budgets were cut by almost 8% last year, lawmakers pushed Newsom to delay similar cuts to the UC and the California State University system for a year, according to CalMatters.

The budget proposed in the May Revision would increase aid for certain scholarships – including a $1.8 million increase to support foster youth services, a $300 million increase in Cal Grants — financial aid provided to UC students — and a one-time $77 million increase in Middle Class Scholarships, which provide aid to middle class California residents.

Ian Klein, a senior fiscal and policy analyst at the California Legislative Analyst’s Office, added that he projects a greater than $20 billion deficit in 2026-2027, greater than $25 billion in 2027-2028 and nearly $30 billion in 2028-2029.

The Legislative Analyst’s Office annually reviews the governor’s budget proposals and makes recommendations based on the state’s financial situation, Klein said. He added that his team advised state legislators to cut spending.

“Given the state budget condition, it will be hard for UC to expect the state to provide the resources that UC is anticipating,” Klein said. “We don’t believe it’s likely that the state will have the budget capacity to provide that funding.”

Klein said the UC was anticipating a $240.8 million increase in ongoing funding starting this year to support increased enrollment, operational costs and employee compensation. However, Newsom proposed deferring the budget augmentation for two years.

“UC was anticipating base augmentations being provided upwards of 5% to address operational cost increases,” Klein said. “Given the fiscal condition of the state, what we’ve indicated is that the legislature should send a more realistic budget signal to UC.”

The UC will be raising tuition as a part of its multiyear tuition stability plan. The Legislative Analyst’s Office said the planned tuition increases for 2025-2026 – a $498 increase for new in-state students and a $3,402 increase for nonresidents – will generate an estimated $225 million in additional revenue.

[Related: UC Board of Regents recommends tuition increase for out-of-state students]

UCLA is a part of the nonresident enrollment reduction plan, a University directive implemented in 2022 to cap nonresident undergraduate enrollment at no more than 18% of the total at UC campuses. High-demand campuses like UCLA, UC Berkeley and UC San Diego are currently above the 18% cap, and 20.6% of UCLA’s undergraduate students are nonresidents.

Over the past five years, UC has expanded in-state undergraduate enrollment by 16,000 – aided by an annual $30 million increase in state funding to increase in-state student admissions, according to CalMatters.

However, Newsom proposed deferring another $31 million for nonresident-to-resident undergraduate replacement funding. Newman said at the Assembly budget subcommittee meeting in April – when the proposed budget reduction was $396.6 million – that the University would have to reduce enrollment for the fall 2026 admission cycle in response to the cuts.

Klein said the UC has the most control over its personnel budget, specifically by adjusting staff salaries and benefits. The UC has previously managed a reduced budget by cutting employee compensation and benefits, he added.

The UC currently has flexibility in where to apply budget reductions across each campus, Klein said. He added that while final decisions have not yet been made, UC indicated to his office before the May Revision that they will likely reduce staffing and continue hiring freezes to adapt to budget cuts.

[Related: UC implements systemwide hiring freeze following federal, state threats to budget]

“If the campus sizes are increasing, but the individuals that are providing the services are decreasing, you’re going to see consequences that are either larger class sizes, fewer course offerings, larger wait times for students,” Klein said.

Legislators will review the May Revision over the next four weeks and propose final changes. They must pass a budget by midnight June 15.

“UC is going to have to make their decisions accordingly, and it will have impacts on both the staff personnel that work there and the students that go to those institutions,” Klein said. “​​UC will have to make the decisions as to how it will best allocate its resources given the state’s fiscal condition.”