Understanding UC Santa Barbara’s Budget
The campus is facing budgetary challenges, and we are taking strategic action to address our structural imbalance to ensure long term financial stability.
Explore this page to learn more about the context, the steps we’ve taken so far, and how you can contribute. We’re facing important budget decisions—and we’d like your input.
NEW 2026-2027 Governor's Budget, published on January 9, 2026: The Proposed Budget Summary outlines the Governor’s goals, priorities, and initiatives for the forthcoming year. UCSB is currently reviewing this information and will continue to keep our campus community informed.
Budget Overview
A fundamental principle of responsible university budgeting is to align recurring revenues with recurring expenses on an annual basis. The budget should also aim to generate a modest, planned operating surplus so the campus can reinvest in strategic priorities, manage risk, and maintain financial strength. Each month, we assess the balance between revenues and expenses by reviewing actual expenditures to date and projecting costs through the end of the fiscal year. Historically, prudent financial management has resulted in actual expenses coming in below budget, producing positive year-end balances.
Since the onset of the COVID-19 pandemic, all of the UC campuses have faced a growing gap between budgeted revenues and actual expenses. Increases in state funding and tuition have not kept pace with rising salary and benefits costs—or with the rate of inflation.
An increasing portion of UC Santa Barbara’s revenue is now restricted (pre-designated) for specific purposes, such as deferred maintenance projects or targeted student support services. These restrictions reduce the pool of unrestricted funds available to absorb rising expenses, and because funds must be spent on their designated purposes, they cannot be redirected to cover shortfalls elsewhere.
Our budget is further strained by two factors: (1) new mandatory costs that are not accompanied by additional funding and (2) a multi-year series of earmarks that either draw from our existing resources or are applied first to any new resources.
What is the core budget deficit?
Our core budget is the primary source of funding for the University’s mission of teaching, research, and public service. Core funds come primarily from student tuition and fees, as well as state general funds. Like other UC campuses, we supplement those core funds with additional unrestricted sources, such as investment income and indirect cost recovery. We refer to these combined discretionary sources as “Extended Core Funds”—and they are used to support core activities.
For fiscal year 2024-25, annual expenses at UC Santa Barbara were approximately $1.5 billion. When we isolate the core and extended core portions of our budget, expenses total just over $1.04 billion. However, revenues supporting core and extended core activities were only about $932 million, resulting in a significant annual deficit that needs to be addressed. To bridge this gap, the campus has relied on carry-forward reserve balances (saved funds from prior years). While this has helped address shortfalls in the short term, it is not a sustainable long-term solution.
Despite earlier actions to reduce the deficit, more decisive efforts are now needed to reverse this trend and restore the campus to long-term financial stability.
How did we get here?
State Funding Reductions
From 2014 to 2019, state funding per student declined, even as the costs to support instruction and research continued to rise. The COVID-19 pandemic had a global economic impact, and the UC has been experiencing a slow financial recovery. Overall, the UC has been working through a shift of reliable funding to a mix of funding deferrals, one-time allocations, and funding increases that haven’t kept pace with costs and enrollment expectations. As the economy began to improve, we anticipated an increase in state revenue support. Instead, California’s tax revenues declined, and the catastrophic Southern California wildfires placed further pressure on the state's budget.
Salary and Benefit Increases
Approximately 68% of UC Santa Barbara’s core operating expenditures go toward employee salaries and benefits. These expenditures continue to grow due to mandated salary program increases, which include collective bargaining agreements, and rising benefits costs—particularly for health insurance.
Enrollment Growth Constraints
Our ability to expand student enrollment has been limited by campus capacity constraints, which restrict opportunities to increase tuition revenue. In addition, nonresident student enrollment—which generates higher tuition rates—has not fully recovered from pandemic-era declines.
Outstanding Commitments and Obligations
The campus continues to face significant financial obligations, and long-standing deferred maintenance needs also place ongoing pressure on UC Santa Barbara’s core fund resources.
How will we address the deficit? What actions have we already implemented?
In the past, we avoided budget reductions by using growth in unrestricted revenue to offset the imbalance. By late 2019, it became clear that more significant action would be needed. However, the uncertainty and immediate public health and operational impacts of the pandemic delayed further efforts.
More recently, we have managed the deficit on a year-to-year basis through a series of one-time measures. These include pulling back core fund carry-forward balances, increasing assessments on non-state funds to help cover shared costs, and more closely managing funds tied to vacant positions. Throughout, the priority was avoiding permanent budget reductions for campus units.
Recognizing that one-time measures alone would not resolve the structural deficit, we began planning for longer-term solutions. In Spring 2025, UC Santa Barbara launched a joint Senate-Administration Budget Advisory Committee to assess the depth of the budget challenges and evaluate proposed reduction strategies. Comprised of faculty, staff, and administrative leaders, the committee ensures broad consultation and shared governance in developing a multiyear strategy for financial stability—aligned with the university’s mission and priorities.
As an early step, UC Santa Barbara implemented a Vacancy Management Program (VMP) to help manage staffing costs and support more strategic hiring decisions. Temporary and permanent funds allocated to unfilled vacant positions are being pooled centrally and used to help offset the existing and growing budget deficit.
To begin addressing the structural deficit more directly, UC Santa Barbara is implementing permanent reductions designed to better align recurring expenses with recurring revenues. In order to protect the university’s academic mission, Academic Affairs and the Office of Research have been asked to target a 10% reduction. All other administrative and support divisions have been asked to plan for a 12.95% reduction. These reductions represent a necessary step toward rebuilding long-term financial resilience, while sustaining the university’s excellence in research, teaching, and public service.
Committees
Our campus has formed several committees to focus on specific elements of the financial stability planning.
Joint Senate-Administrative Strategic Planning and Financial Stability Committee
- David Marshall, Executive Vice Chancellor and Provost
- Rita Raley, Academic Senate Chair
- Dave Valentine, Academic Senate Vice Chair
- Francesco Bullo, Advisor to Executive Vice Chancellor
- Barry Giesbrecht, Chair of the Council on Planning and Budget
- Dana Mastro, Vice Provost of Academic Affairs
- Kerry Bierman, Interim Vice Chancellor and Chief Financial Officer
- Michael McGrogan, Budget Director
- Special Advisors: Nancy Hamill, Chief Campus Counsel; Ann Marie Musto, Chief Human Resources Officer
Revenue Generation Working Group
- Dave Valentine, Co-Chair; Distinguished Professor, Earth Science & College of Creative Studies
- Umesh Mishra, Co-Chair; Dean, Robert Mehrabian College of Engineering
- Christine Beckman, Professor, Technology Management Program
- Denis Couturier, Dean, Professional and Continuing Development
- Nestor Covarrubias, Senior Executive Director, Auxiliary Services
- James Ford, Director, Summer Sessions
- Ben Halpern, Professor, Bren School of Environmental Science & Management; Director, NCEAS
- Janine Jones, Associate Vice Chancellor for Graduate Affairs and Anne and Michael Towbes Graduate Dean
- Tal Margalith, Executive Director, Strategic Initiatives & Operations, CNSI; OASIS startup incubator
- Michael McGrogan, Budget Director, Budget and Planning
- James McNamara, Professor, Film and Media Studies
- Leticia Porter, Assistant Dean, Bren School of Environmental Science & Management
- Rita Raley, Academic Senate Chair
- Peter Rupert, Professor, Economics
- Dorothy Satomi, Assistant Vice Chancellor for Finance and Administration, Academic Affairs
- Christian Treitler, Chief Financial Officer, UC Santa Barbara Foundation
- Winddance Twine, Professor; Sociology
- Ty Vernon, Professor, GGSE, Directo; Koegel Autism Center
Strategic Organizational Improvement Sub-Committee - pending
Operational Efficiency Sub-Committee - pending
Frequently Asked Questions
In addition to the factors outlined above, the pandemic significantly shifted the labor market. In response, the UC made efforts to retain employees and remain competitive by moderately increasing salaries for staff and faculty. However, rising compensation and instructional costs were not matched by new or ongoing revenue—resulting in a recurring deficit in our annual operating budget.
In some cases, yes—but not in ways that cover our rising costs. While the university has received additional state funding over the years, those increases have often been sporadic, delayed, or not tied to the specific increases in salary and benefit costs. For example, in fiscal year 2025-26, the campus did not receive an increase in base state funding, and 3% of our allocation has been deferred to the following year.
Tuition revenue does increase slightly when each new class of students enters under a higher tuition rate; however, those increases only apply to new undergraduate students, not to continuing or graduate students. As a result, tuition increases yield relatively modest year-over-year gains and do not come close to matching the rate of cost growth.
While we had hoped the post-pandemic economy would improve and bring increased revenue, the reality has been the opposite. Although the university has not received a direct reduction in state funding, operating costs continue to rise. We face ongoing increases in the cost of goods and services, employee salaries and benefits, and other essential expenses.
These year-over-year cost increases create a growing structural deficit. It is now essential to take permanent action to stabilize our core budget and ensure financial sustainability for the future.
We want your input!
We have centered shared governance in this process from the start. Now, we invite all members of our campus community to contribute ideas.
Every member of the UC Santa Barbara community has a role to play in addressing our current budget challenges. We welcome your input on ways to reduce costs, generate revenue, or improve resource stewardship.
Have a suggestion? We want to hear from you.
