Gov. Gavin Newsom and the California State Legislature reached a final state budget agreement June 24 that will not reduce UC funding for the 2025-26 fiscal year.

The final budget, which amounted to $321 billion, allocated over $4.7 billion to the UC system, instead of the reduced $4.6 billion proposed. It also directed the UC Regents to “implement measures to reduce the university’s cost structure.”

Newsom conditionally signed the bill into law Friday after several months of back-and-forth between him and the Legislature, threatening to reject the budget if legislators did not roll back the California Environmental Quality Act, a law intended to reduce pollution and protect waterways. The law also creates obstacles to building affordable housing, according to the New York Times.

The state budget deferred the proposed $129.7 million cut to the UC’s base funding until July 1 next year. The budget also delayed a planned $240.8 million general funding increase for the UC, pushing the payment to 2027-28.

Additionally, the budget deferred a $31 million allocation to support a plan to replace nonresident undergraduates with California residents to the 2027-28 fiscal year. However, UCLA, UC Berkeley and UC San Diego are still expected to meet the yearly enrollment quota of replacing 902 out-of-state students with in-state students for the Plan to Limit Nonresident Enrollment.

The budget also outlines program-specific funding to UCLA, including ongoing funding for the UCLA Labor Center, the Ralph J. Bunche Center for African American Studies and the UCLA Anderson School of Management to study the economic impact of climate change in California.

UCLA will also receive a one-time $750,000 allocation to research social media.

UC President Michael Drake expressed his gratitude to Newsom and the Legislature for allocating “critical funding” to the University in a June 28 statement. He acknowledged in the statement that the 2025-26 academic year has been especially for the UC due to rising costs and cuts to federal funding.

“State support is crucial during this challenging moment for higher education,” President Drake said in the statement. “UC campuses are feeling the impacts of rising operational costs and significant cuts in federal funding, while facing the prospect of even more federal cuts in the future.”

President Drake added that – even though $130 million of UC funding is set to be cut next fiscal year – this revision is a marked improvement from the initial cuts proposed to the UC system.

Newsom initially proposed a 7.95% cut – amounting to about $396.6 million – to the UC’s yearly base funding. This cut would have impaired enrollment, student services and degree affordability for students, UC Provost and Executive Vice President of Academic Affairs Katherine Newman said at an April 22 subcommittee hearing on education finance.

In the May Revision of California’s budget, Gov. Newsom limited the proposed reduction for the UC’s base funding to 3%, amounting to $129.7 million. The Legislature rejected this reduction in June, and Gov. Newsom agreed to not cut the UC’s base funding in the final budget.

[Related: California State Legislature rejects Gov. Gavin Newsom’s proposed UC funding cuts]

Rafael Jaime, the president of United Auto Workers Local 4811 – which represents academic student employees, graduate student researchers and academic and postdoctoral researchers across the UC – said that UC academic workers’ advocacy with legislators helped achieve the revised budget.

“When the budget was originally forecast, it included a nearly 8% reduction to the University of California’s funding,” said Jaime in a press release. “By working with lawmakers in Sacramento, UC academic workers have helped close the budget gap from 8% to 3% and secured a commitment to closing it completely by July 2026.”

Union members have been fighting for financial stability from the UC, Jaime added in the statement. He said that UAW Local 4811 plans to hold lawmakers accountable and ensure they follow through with their commitment to funding the UC.

Revisions can still be made to the final budget in the form of “trailer bills,” which can make legal changes to state law as needed to implement policies in the budget. These bills are based on a majority vote within the legislature and are effective with the governor’s signature.

However, there are no pending bills related to the UC at this time. The Legislature said in the budget summary that they hope to avoid any cuts to California’s university systems.

California will be facing a significant budget deficit, according to the Legislative Analyst’s Office – a team of policy analysts who review the governor’s budget and make recommendations. Newsom’s administration predicts an additional $12 billion deficit in 2025-26, according to CalMatters.

Jesse Gabriel, the Assembly Budget Committee chair who authored the budget report, noted that anticipated rollbacks in federal funding will significantly affect the state, and the Legislature may need to hold a special session addressing any changes in federal funding to California.

“Anticipated significant federal funding changes in the coming weeks will affect the state government and budget, as well as local governments, public schools, universities, businesses and households, in significant ways,” Gabriel said in the budget report.