The CSU is funded by two main sources: the state General Fund and student tuition and fees. State dollars fund 60% of the CSU’s operating costs, and tuition and fees make up the difference.

The state budget process includes three cycles: Proposed budget (January), revised budget (May), final budget (July). The campus level budget process depends on projected budget allocations and cannot be finalized until the final state budget has been passed.

In the January draft of the state budget, the Governor proposed a 7.95%, or $375 million, cut to the CSU for fiscal year 2025-26 and announced planned compact funding deferrals. Thankfully, the Budget Act of 2025 included full funding for the CSU, however it deferred 3% of the budget to 2026-27, with compact funds deferred to the next three fiscal years. As such, we expect our allocation from the CSU for this fiscal year will include a 3% cut, which may be restored in 2026-27.

In addition to these cuts, Sacramento State is facing significant inflationary, salary and benefit cost increases that are not covered by our budget allocation from the CSU. For example, in the 2024-25 fiscal year, Sacramento State covered 70%, or $12.3 million, of the union-negotiated compensation increases from our general fund.

Though the tuition increase will generate $9.9 million for Sacramento State, only $6.6 million can be used to cover expenses, as the remaining $3.3 million is earmarked for financial aid for students (State University Grants). Unfortunately, $6.6 million is not enough to cover rising operational costs, insurance premiums, health benefits, and union-negotiated compensation increases, which have not been funded by the state to the CSU. In the 2024-25 fiscal year, the University covered 70%, or $12.3 million, of the union-negotiated compensation increase from our own permanent base funding (general fund).

The campus budget goes through a shared governance process, with the final allocations for each division decided by the president. The University’s Budget Advisory Committee (UBAC), which is comprised of students, faculty, staff and administrators, makes recommendations to the president. Each division vice president also offers a proposed budget to UBAC and to the president. Final budget allocations and other budget documents are regularly updated and are shared by Budget Planning and Administration on their website.

The University now faces an estimated $23.5 million shortfall for the coming 2025-26 fiscal year, with an additional shortfall the following year. This is a significant funding gap for our campus.

Upon the recommendation of the University Budget Advisory Committee (UBAC), we are now engaging in longer-term budget planning rather than year-by-year planning only. To that end, we will implement cuts in the upcoming fiscal year that will help us to create a balanced budget for the next two fiscal years.

We are achieving these reductions by:

• Implementing reductions to each division’s baseline budget from their 2024-25 allotment
• Reducing the number of administrative positions by cutting or merging vacant positions, engaging in a “hiring chill” and eliminating some positions. Sacramento State’s total number of management positions is down 8.7% from last year at this time
• Cutting travel and professional development budgets by at least 50% across all divisions

The UBAC (which is comprised of students, faculty, staff and administrators) will present me with its final recommendations about how to close the budget shortfall in the coming weeks.

As part of efforts to reduce the structural budget deficit, Sacramento State offered an Early Exit Program to eligible faculty as an incentive to voluntarily separate with severance. This one-time program is now closed.

To diminish the impact on staff, faculty, and students, administrative positions (MPPs) have already been reduced.

Should layoffs for staff and faculty become necessary, we will follow all processes outlined in the applicable collective bargaining agreement(s).

As Provost Cameron shared in her April 17 message to faculty, deans and chairs, the University's significant budget deficit along with the loss of one-time funding from reserves that has been used to support additional course offerings means that all colleges must reduce current course sections. The course schedule for Fall 2025 is available online. An additional $3 million was allocated for course sections in June. A determination about adding additional sections can be made when we receive the final budget from the Chancellor's Office. Students with questions should contact their academic advisor.

At the end of the Spring 2025 semester, students voted to reject a referendum to adopt a Student Success Fee to support increased class sections, supplemental instruction, and other academic resources. Because the proposed fee failed, it will not go into effect for the upcoming academic year. During the process, we heard constructive feedback on how the fee proposal can be strengthened and brought back for a vote in the fall.

In the fall of 2024, several new fees were adopted after an extensive consultation process with students. These fee dollars can only be used as outlined in the Student Fee Advisory Committee process. Those fees will fund additional services in Student Health, Wellness and Counseling; additional resources for our Cultural and Academic Resource Centers; additional funding for Instructionally Related Activities; funding for student recreation and club sports teams; and funding for athletic facilities for club, recreation, and NCAA athletics. The stadium is being funded with funds that are earmarked for student athletic facilities. These dollars cannot be spent on anything other than athletic facilities and are regularly audited for compliance.

Funding for the stadium will not come from general fund dollars.

On May 13-14, students voted on a referendum to adopt a Student Success Fee to support increased class sections, supplemental instruction, and other academic resources. The proposed fee failed and therefore will not go into effect for the upcoming academic year. During the process, we heard constructive feedback on how the fee proposal can be strengthened and brought back for a vote in the fall.

Compact funds refer to an agreement announced in May 2022 between the governor and the CSU chancellor. The compact aimed to provide the CSU with a 5% annual increase in state general fund support from 2022-23 through 2026-27 in exchange for a commitment by the CSU to increase enrollment and student success.

However, the compact is not legally binding, and recent state budgets have not provided that increase. While CSU received increases above 5% in the first two years of the compact, the increase dropped to 2.5% in 2024-25.

The Budget Act of 2025 includes a deferral of the compact funding ($252.3 million), with restoration to happen over three fiscal years. It is important to note that while campuses will not receive these funds, we will still be expected to meet enrollment and student success goals.