This post was updated May 23 at 12:19 a.m.

The UC Board of Regents investments and finance and capital strategies committees discussed potentially raising tuition in response to state budget cuts.

The board held its bimonthly meeting from May 13 to 15 at UC San Francisco. Both committees reviewed the UC’s financial performance through the third quarter of the 2024-2025 fiscal year and considered potential impacts of federal and state budget cuts to UC finances.

In a revised budget proposal, California Gov. Gavin Newsom reduced the cut to the University from 8% to 3% for the 2025-2026 academic year, minimizing cuts to student support services. The cut is intended to help close state funding deficits and build the state’s discretionary reserve.

[Related: Gov. Gavin Newsom’s May Revision reduces proposed budget cuts to the UC]

“I’m grateful to the governor and to our partners in the state legislature for their ongoing collaboration on the budget compact and the resulting years of stable funding,” UC President Michael Drake said at the meeting.

Drake added at the meeting that this will allow the University to continue providing students with affordable housing.

Nathan Brostrom, the executive vice president and chief financial officer of the UC, said at the meeting the University may need to make other adjustments considering the challenging budget circumstances it is experiencing.

The finance and capital strategies committee considered changing the Tuition Stability Plan approved in 2021, which established that systemwide tuition and fees stay flat for the duration of enrollment for up to six years and cannot increase by more than 5% each year, Brostrom added at the meeting.

“We got burned a little bit by the 5% cap with the inflation that we had over this period,” Brostrom said.

Drake said in the meeting that a 7% cap and an alternative return-to-aid provision, which would increase aid to lower income families, would create a 2% differential for higher income families, reducing the impact of cuts.

This would also help alleviate issues with the Middle Class Scholarship due to federal funding challenges and changes to FAFSA, Student Regent Josiah Beharry said.

Brostrom said FAFSA delays, coupled with a large number of families declining to disclose their immigration statuses due to the current presidential administration’s approach to enforcement, led the state to underestimate the number of families who qualify for the scholarship.

He added that many of the scholarships are currently being funded by the UC itself to prevent students from being cut off during their second semester or third quarter, and the state will reimburse the costs next budget year.

Brostrom introduced several measures he said would help the UC supplement potential federal government funding cuts if approved.

These measures included an education bond, two housing bonds and a science bill that would create a new California Institute for Scientific Research, which Brostrom said would hopefully bridge funding gaps from the federal government.

Brostrom added at the meeting that he expects to generate the UC’s primary funds from state funding, tuition and fees, and asset management and procurement. Brostrom said this would still likely leave the UC with a $466 million gap in funding that needs to be addressed on both a systemwide and campus basis.

The California Legislature must pass a budget by June 15, Brostrom said.

Jagdeep Singh Bachher, the UC’s chief investment officer, said the UC performed strongly in the first half of 2025.

The UC’s finances are better than expected considering current markets, with assets having doubled since 2014, Bachher added. National inflation has decreased and consumer prices are down since the board’s last meeting, he said.

Bachher also said consumer sentiments may differ from what the data is showing. He added that while UC is currently in a good place financially, it may be time to change investment strategies toward focusing on liquidity and taking a “less is more” approach when it comes to the number of choices they allow investors to make, creating a more efficient fee structure.

Chris Tachiki, a UC public equity investment officer, said structural changes around the world make it difficult to make predictions about the financial futures, but the UC can work to have a more diverse, higher-quality portfolio by focusing on companies that have strong profitability.

Bachher said one problem across endowments in the United States is the large amount of private assets that are locked up in illiquid contracts, which cannot be easily exchanged for cash and are therefore difficult to pay back.

“I am surprised that the top schools are putting out portfolios of this size and scale to sell private assets,” Bachher said. “This is a systemic problem across colleges.”

The UC’s Blue and Gold Endowment, which was created in response to the 2008 financial crisis, now has $7 billion in its portfolio, Bachher said.

“That’s the singular reason why we’re not stressed about having a liquidity problem in our endowment,” Bachher said. “I’m going to make a prediction today – the Blue and Gold Endowment pool is going to beat all the smart intelligence sitting here at the desk.”

Miguel Craven, a student observer for the finance and capital strategies committee, said many students are unaware of the financial decisions being made by the UC despite being greatly affected by them. He added that he hopes students will be at the forefront of such decisions.

“I think one of the hardest things of being a student is that we’re so busy with our lives, we don’t get to keep up with all the news of everything that’s happening,” Craven said. “If we can have that transparency, that way students are constantly informed and knowing what’s coming up and how they can get involved in speaking on their campus before decisions are made – it just would prove very beneficial.”