Presenters briefed the Finance and Capital Strategies Committee on the final 2025 state budget act and on preliminary recommendations from a systemwide budget management work group focused on campus fiscal practices.
Committee members were told that Governor Newsom signed SB101 and AB102 on June 27 as part of the 2025 budget act. The presentation said the state budget totals about $321,000,000,000 in expenditures with roughly $228,000,000,000 in state general fund spending; the state was reported to hold about $16,000,000,000 in reserves.
Presenters said the university’s state general fund allocation for 2025–26 is $4,900,000,000, roughly the same base level as the prior year. The presentation tracked a proposed 8% cut in the governor’s January budget that was reduced to a 3% reduction in the May revision; an additional 3% was deferred to July 2026. The presentation said the campus system faces roughly a $500,000,000 shortfall in core funds if deferred compact payments are not received.
Officials also said the final budget includes $45,000,000 in one‑time funding for the university and that compact payments and the nonresident swap were deferred into later years. The presenters noted the state offered a 0% loan to cover the immediate 3% deferral through July 2026 and cautioned campuses to use such borrowing only for one‑time costs.
Kajin, who the chancellor introduced as the leader of the systemwide budget management work group, outlined preliminary recommendations including: allowing chancellors discretion over unrestricted investment returns, calibrating financial dashboards to separate core and noncore funds, using a credit‑line approach for faculty startup and retention packages, and regular reviews of nonacademic programs with potential sunset clauses. The work group said a full report with more than 30 recommendations is expected this fall.
The committee did not take an action vote on the budget item; the presentation was received as discussion and staff said they will finalize the work group report and continue campus engagement on recommendations.