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Financial Stabilization

Overview

UC Merced is engaged in a multi-year financial stabilization plan to ensure long-term financial sustainability. This effort reflects broader challenges facing higher education nationally, including shifting enrollment patterns, rising operational costs, and uncertainty in federal and state funding.

As part of the University of California system, UC Merced is committed to managing this plan with transparency, care, and strategic foresight. Our goal is to align permanent revenue sources with expenditures while preserving the core academic and research missions that define our campus. This work is guided by our values as a student-centered research university.

This page provides an overview of budget context and financial stabilization planning, as well as frequently asked questions, and will be updated regularly. We invite all members of the campus community to stay engaged, ask questions, and share ideas as we move forward together.

Understanding the Budget Challenge

Higher Education Landscape

UC Merced’s financial stabilization planning is taking place within a broader national context of change and complexity in higher education. Institutions across the country are facing a convergence of challenges that are reshaping how they operate, plan, and sustain their missions. According to the National Association of College and University Business Officers (NACUBO), the Top 5 Business Issues of 2025 include:

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  1. Managing Unreliable Funding Sources
    Institutions are facing increased volatility in federal and state funding, requiring new strategies for financial resilience.
  2. Amplifying the Value of Higher Education
    Colleges and universities must demonstrate the tangible value of a degree amid growing public skepticism and shifting workforce demands.
  3. Navigating Political and Policy Disruptions
    Higher education is increasingly impacted by political dynamics and regulatory changes that affect institutional autonomy and operations.
  4. Supporting and Maintaining the Workforce
    Rising labor costs and workforce expectations are prompting institutions to rethink staffing models and employee support structures.
  5. Meeting Rising Operational Costs
    Institutions are contending with escalating costs across infrastructure, compliance, and service delivery, challenging traditional budget models.

These issues reflect the broader environment in which UC Merced is operating and provide essential context for understanding the campus’s budget financial stabilization planning.

UC System Leadership and Fiscal Outlook

As part of the University of California system, we are proud to contribute to a long legacy of excellence in public education, research, and innovation. In President Milliken’s opening remarks at the UC Regents November 19 Meeting, he reaffirmed the unique strengths of the University of California while acknowledging the fiscal challenges ahead, including rising operational costs and potential reductions in federal and state funding. His message underscores the seriousness of the financial pressures facing the University of California and the importance of proactive planning across all UC campuses. While each campus faces unique circumstances, the systemwide commitment to academic excellence, access, and research remains strong.

UC Merced’s financial stabilization strategy aligns with this broader UCOP guidance. As the newest UC campus, we are especially vulnerable to shifts in funding and enrollment trends. Our multi-year financial glide path reflects both local realities and systemwide priorities—ensuring that we remain a resilient and mission-driven institution.

Current State of UC Merced

UC Merced is currently facing a significant structural deficit, estimated at $38 million for FY25. A structural deficit occurs when the campus’s permanent budget allocations exceed the actual revenue generated, primarily from state funding and tuition. This imbalance has been exacerbated by flat enrollment trends and rising operational costs, including labor expenses.

Historically, the campus has relied on one-time funding from the University of California Office of the President (UCOP) to bridge this gap. However, with that support set to expire at the end of FY26, campus leadership determined that immediate action was necessary. Despite the Governor’s budget offering a smaller-than-expected reduction to UC Merced’s state allocation for FY26, the campus has proceeded with a 5% budget reduction across divisions.

In this context, references to “central” funding typically mean campus-wide financial resources managed centrally—such as reserves or incremental state general funds. These funds are increasingly constrained, making each allocation a strategic decision that balances immediate needs with long-term sustainability.

Strategic Response and Planning

The overarching goal of UC Merced’s financial stabilization plan is to align permanent revenues with expenditures. This alignment is essential to preserving the university’s core operations and academic excellence, including its R1 research designation and commitment to social mobility.

To achieve this, the campus has adopted a multi-year financial glide path. This approach is grounded in long-term forecasting and strategic planning, allowing the university to adjust dynamically to changes in enrollment, funding, and cost structures. The strategy is built around the “3 E’s” of fiscal sustainability: Evaluation, Efficiency, and Enrollment. These principles guide decisions about resource allocation, organizational structure, and future growth.

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Financial stabilization planning began in FY25 and is expected to continue through at least FY27. While the campus hopes to conclude the plan within three years, current trends suggest that reductions may extend further. For FY27, divisional leads have been advised to anticipate reductions similar in scale to those implemented in FY26. 

Measures that the campus has taken to address our structural deficit include:

  • For FY26, the campus has implemented an across-the-board 5% Budget Reduction in core funds for each division on campus. The reduction is based on the division’s permanent budget in these funds.
  • The campus utilizes a 5% Salary Savings requirement from each division to ensure that a portion of vacancy savings that accrue at the divisional level support the campus’ structural deficit.
  • The campus has implemented a staff and academic position control process for all positions funded on core funds to ensure that divisions are evaluating replacement needs and prioritizing mission-critical workforce needs.
  • All unspent divisional state general and tuition funds are returned to the central campus budget at the end of the fiscal year. The campus has established a limited carry forward request process.
  • Faculty hiring has focused on hires associated with the new programs offered under the ACE (Accelerating Campus’ Evolution) Initiative as well as our developing Medical Education program.
  • Divisional leadership has been encouraged to be prudent with their allocation of discretionary spending with a target of reducing these expenditures.
  • The Division of Finance and Administration (DFA) has developed a multi-year budget balancing model to address the campus’ structural deficit that can dynamically respond to changes in enrollment and external factors (e.g., state and federal funding, labor costs).
  • The Extended Cabinet and Dean’s Council are working collaboratively on ideas around revenue generation, evaluating overlapping support structures and areas of efficiency that will improve our financial position while minimizing the impact they will have in support of our teaching and research mission.

Decision-Making and Implementation

Budget decisions at UC Merced are made through a structured and consultative process. The Chancellor holds final fiduciary authority, supported by the Vice Chancellor for Planning and Budget/Chief Financial Officer (VCPB/CFO) and the Executive Vice Chancellor and Provost (EVC/P). These leaders collaborate to ensure that financial, academic, and research perspectives are integrated into all recommendations.

Consultation is broad and inclusive, involving the Extended Cabinet, Deans Council, Academic Senate, Staff Assembly, Associated Students of UC Merced (ASUCM), Graduate Student Association (GSA), and Non-Senate Academics Council (NSAC). This ensures that diverse campus voices inform the decision-making process.

Planning began in November 2024, with each division developing and implementing a strategy to reduce its core budget (state allocation and tuition funds). These plans were reviewed and approved by the Chancellor and are now in effect. For FY26, 5% budget reductions were applied across the board, and Vice Chancellors have been given ongoing autonomy to determine how best to meet their targets, allowing for strategic flexibility throughout this multi-year plan.

Given the focus on reductions, the annual Budget Call process has been suspended. All efforts are now concentrated on multi-year financial stabilization planning, with decisions guided by data, collaboration, and commitment to the university’s long-term success.


FY26 Budget Planning Outcome

In November 2024, each division developed and implemented a strategy to reduce its core budget (state allocation and tuition funds) by 5% for fiscal year 2026 (July 2025 –June 2026). These plans were reviewed and approved by the Chancellor and are now in effect. 

This milestone was achieved through collaboration, transparency, and a shared commitment to preserving our teaching, research, and public service mission. We are grateful for the thoughtful planning and collegiality that made this possible.


Financial Stabilization Plan

The goal of the multi-year Financial Stabilization Plan is to provide fiscal planning predictability and long-term sustainability amid continued enrollment and funding pressures. Census enrollment declined by 143 students, and state and federal uncertainties persist. These realities necessitate cautionary budget strategies. Should our financial condition improve, either through increased enrollment or improved budget conditions, we are committed to revisiting future year targets (FY28 and FY29). We recognize that these multi-year budget reductions will be challenging, and we deeply appreciate your resilience and partnership as we work toward a more abundant future.

The multi-year campus Financial Stabilization Plan will be implemented over the next three years, beginning with budget reductions of 7% in fiscal year 2027 (FY27), followed by a 5% reduction in FY28 and 3% in FY29.  The reductions implemented in each division will be determined through the same consultative process used last year, guided by our focus on prioritizing student success and the UC’s mission of excellence in teaching, research and public service.


Frequently Asked Questions

Overview

Q: What is the purpose and intended outcome of the financial stabilization plan?

The purpose of the financial stabilization plan is to align the campus’ permanent revenue sources with our expenditure streams.  By doing so, we aim to preserve and strengthen core operations and academic excellence that support our Carnegie designations of distinction and position us for continued success as a leading research university.

Q: How is the campus working to address our structural deficit?

The campus’ fiscal sustainability has been a long-term commitment of the campus leadership as we recognize our role as an anchor employer within the region and an engine for regional fiscal growth and development.  Recently, our campus has focused on the 3 E’s of fiscal sustainability to support the reduction of our structural deficit: (1) Evaluation, (2) Efficiency, and (3) Enrollment.

The campus is asked to Evaluate how our current resources are being allocated and determine whether they are allocated in a manner that best supports the campus’ Strategic Plan or if changes to allocations are needed through reorganization. As part of the campus’ evaluation of resources, leadership is asked to develop measures of Efficiency that can inform their resource allocation decisions, measure how effective they are using their financial resources, and guide future resource allocations.

Our focus on Evaluation and Efficiency targets reducing our costs of operating, while Enrollment, the last E of fiscal sustainability, focuses on enrollment growth for the campus. Over the past four years our enrollment growth has been flat, which has significantly impacted our financial resources.  Focusing on future enrollment growth will increase our revenue base in the future and reduce the fiscal conservation measures needed to address our structural deficit.

Additional measures that the campus has taken to address our structural deficit include:

  • The campus has implemented an across-the-board 5% Budget Reduction in core funds for each division on campus for FY26. The reduction is based on the division’s permanent budget in these funds.
  • The campus utilizes a 5% Salary Savings requirement from each division to ensure that a portion of vacancy savings that accrue at the divisional level support the campus’ structural deficit.
  • The campus has implemented a position control process for all positions funded on core funds to ensure that divisions are properly evaluating replacement needs and to prioritize mission-critical workforce needs.
  • All unspent divisional state general and tuition funds are returned to the central campus budget at the end of the fiscal year.  The campus has established a very limited carry forward request process.
  • Faculty hiring has focused on hires associated with the new programs offered under the ACE (Accelerating Campus’ Evolution) Initiative as well as our developing Medical Education program.
  • Divisional leadership has been encouraged to be prudent with their allocation of discretionary spending with a target of reducing these expenditures.
  • The Division of Finance and Administration (DFA) has developed a multi-year budget balancing model to address the campus’ structural deficit that can dynamically respond to changes in enrollment and external factors (e.g., state and federal funding, labor costs).
  • The Extended Cabinet and Dean’s council are working collaboratively on ideas around revenue generation, evaluating overlapping support structures and areas of efficiency that will improve our financial position while minimizing the impact they will have in support of our teaching and research mission.

Q: What is a structural deficit? And, how large is it at UC Merced?

A structural deficit occurs when campus expenditures exceeds  its revenues to cover these expenses, more specifically, structural deficit term is used when permanent allocation revenue (campus Budget) vs. revenue that is generated.   We traditionally measure our structural deficit  on core funds, which consist of our state allocation, tuition and indirect cost returns on contract and grants.   This is because these are the core permanent funds used to support the campus’ operations and they consist of nearly 90%  of our operating funds, not including auxiliary revenues and contract and grants, that the campus receives.

In recent years, our structural deficit had been managed using one-time funding provided by the University of California Office of the President (UCOP) under our existing Memorandum of Understanding (MOU).   This support helped bridge the growing gap in expenses, which grew substantially following the completion of the 2020 Project. 

Due to flat enrollment over the past four years and rising operating costs, the campus’  structural deficit has increased to an estimated $38M for FY25.  Currently, campus is using $13M in one-time MOU funding to cover this shortfall, but these funds are not sufficient close the gap and are set to expire at the end of FY26.

Q: Why did the campus choose to start addressing the structural deficit at this time?

Over the past five years, the campus has significantly advanced our budgeting practices to support long-term fiscal sustainability.  Efforts include increasing campus-wide fiscal transparency, implementing new budget management tools, developing  strategic budget models, and launching an annualized budget call process.  All of these measures have been designed to ensure that resource allocations, both existing and new, are aligned with our campus Strategic Plan.

As part of this effort, the campus has advanced our financial forecasting capacity and ability to manage  long-term budget management practices. Based on our long-term financial projections, combined with flat enrollment, rising operational costs (such as salary increases), potential reductions in state and federal funding, and the upcoming expiration of the Memorandum of Understanding (MOU) with the University of California Office of the President (UCOP), campus leadership has determined that now is the prudent time to establish a multi-year financial glide path. This approach is intended to eliminate our structural deficit and strengthen the campus’s financial foundation.

Q: Who is involved in making decisions about where and how reductions are applied?

The decision-making process for financial stabilization at UC Merced involves a structured and consultative approach, centered around key campus leadership and stakeholder groups:

  • Chancellor: Holds final fiduciary authority.
  • Vice Chancellor for Planning and Budget / Chief Financial Officer (VCPB/CFO): Chancellor’s primary advisor on campus budget.
  • Executive Vice Chancellor and Provost (EVC/P): Chancellor’s primary advisor on academic enterprise priorities and implications.

These two leaders (VCPB/CFO and EVC/P) collaboratively develop recommendations for the Chancellor, ensuring that financial, academic and research perspectives are considered.

Consultation Process

To inform these recommendations, a broad consultation process is undertaken with varying levels of engagement:

  • Extended Cabinet
  • Dean’s Council
  • Academic Senate
  • Associated Students of UC Merced (ASUCM)
  • Graduate Student Association (GSA)
  • Staff Assembly
  • Non-Senate Academics Council (NSAC)

This process ensures that diverse campus perspectives are considered, and that recommendations are vetted and reviewed before being submitted to the Chancellor.

Q: What are the current enrollment projections, and how are they informing budget decisions?

Until four years ago, campus achieved a steady enrollment growth.  Since then, enrollment has been relatively flat, while operational costs and staffing levels, both faculty and staff, have continued to rise.  At current staffing levels, the campus is operating as though it serves 11,000 students, while actual enrollment was 8,943 as of the Fall 2025 census.  This mismatch between our primary revenue base, undergraduate enrollment, and our operation costs is the fundamental driver for campus financial stabilization planning.

Enrollment trends are being closely tracked by the Vice Chancellor for Enrollment Management and Institutional Research and Decision Support (IRDS).  A significant factor influencing enrollment projections is the anticipated decline in the number of high school-aged students in California and across the Western U.S. over the next decade.  Without changes to the current demand for undergraduate education, the campus could face future enrollment reductions, which would necessitate deeper budget reductions to align our revenue base and cost structure.

To address this challenge, the campus is actively revising its marketing strategies and investing in student wellness amenities to enhance competitiveness.  These amenities are commonly found at peer institutions and are essential to attracting and retaining students.  While these efforts require investment, they are critical to achieving campus’s long-term goals a research university. 

The investments required to improve our campus’ competitiveness, potential changes to future enrollment, and our rising cost structure are being incorporated into the campus’ financial models, which are guiding leadership decisions on the scale and duration of the budget reductions necessary to ensure fiscal sustainability.

Q: What is the timeline for implementing the campus’ financial stabilization plan?

UC Merced is proactively addressing our structural deficit by considering a range of factors that will influence our financial future, including enrollment growth, rising operating costs and changes to state and federal funding.  As a people-first organization, we are committed to managing this process in a way that minimizes abrupt changes to our workforce and campus operations. 

The multi-year campus Financial Stabilization Plan will be implemented over the next three years, beginning with budget reductions of 7% in fiscal year 2027 (FY27), followed by a 5% reduction in FY28 and 3% in FY29.  During these years, we expect to see the tangible benefits of our collective efforts as well and gain clarity on internal and external factors that impact our fiscal sustainability.  Should our financial condition improve, either through increased enrollment or improved budget conditions, we will revisit future year targets (FY28 and FY29). However, based on current trends (such as projected shifts in student demographics), it is more likely than budget reduction efforts will extend for an additional two to three.

Our goal is to establish a sustainable glide path toward financial stability that does not yield significant year-to-year change in our campus’ operations. To support this, our financial models that guide our decision-making incorporate flexible timelines that dynamically adjust to these parameters.

Q: Will the cuts be applied by unit, division, or across the board?

The budget reductions for FY26, based on the work done during FY25, were applied across the board, meaning that every division was required to reduce their core budget (e.g., state general and tuition funding) by 5%.

Budget reductions are handled at the divisional level and the Vice Chancellors overseeing each division have been given autonomy to determine how and where the reductions are made. This approach allows divisions to make strategic decisions based on their internal priorities and operational needs.

Q: Will the 5% vacancy savings policy be retained moving forward?

Yes, the vacancy savings policy will be retained moving forward, with important caveats:

  • The policy only applies to staff positions, not faculty.
  • While the current rate is 5%, this percentage may vary depending on the campus’s financial status.

As UC Merced makes progress in reducing its structural deficit, the vacancy savings rate may be reduced in future years.

Q: What is considered “central” when referred to as a funding source for the campus?

When the campus refers to using “central” funding sources, it typically means drawing from campus-wide financial resources that are managed centrally rather than within divisions or units.  This includes either directly using campus reserves or reducing the incremental state general funds received  over the prior year– funds that could otherwise be invested in mission-critical priorities such as academic programs, student services or infrastructure. 

In recent years, the incremental funding provided to UC Merced by the state has not kept pace with the rising operational costs, particularly those related to labor.  As a result, most central funding allocations now come at the expense of our fiscal reserves, making each decision to use central funds a careful trade-off between immediate needs and long-term financial sustainability

Q: What is the budget reduction for FY27?

As part of the campus’s ongoing Financial Stabilization Plan, budget reductions will be implemented over the next three years. For fiscal year 2027 (FY27), divisions should expect a 7% reduction to their budgets. This will be followed by a 5% reduction in FY28 and a 3% reduction in FY29, as the campus continues efforts to achieve long-term financial sustainability.

Planning, Communication and External Factors

Q: Why did the campus proceed with the 5% budget reductions when the Governor’s budget resulted in a lower reduction to our state allocation?

The campus proceeded with the 5% budget reductions for FY26 despite the Governor’s budget resulting in a lower reduction to UC Merced’s state allocation because of the campus’s significant structural deficit, which is projected to reach nearly $38 million in FY25.

Key Reasons for Proceeding with Reductions

  • State funding makes up nearly 60% of UC Merced’s revenue base (excluding contracts and grants), so while important, it’s not the only factor driving budget decisions.
  • The Governor’s decision to avoid major cuts for FY26 helped lessen the severity of reductions needed, but did not eliminate the need for them.
  • The campus faces rising operational costs, especially labor-related expenses, while enrollment remains flat, limiting revenue growth.
  • These conditions have created a structural imbalance between revenues and expenditures, requiring a multi-year budget reduction strategy.
  • The 5% reduction is the first step in this longer-term effort to restore fiscal stability.

Q: How is the university preparing for changes in federal or state funding?

In today’s dynamic funding environment, UC Merced is taking proactive steps to prepare for potential changes in federal and state support. Recognizing the uncertainty that surrounds public funding for higher education, the campus has adapted its financial model to incorporate these variables. This allows for greater sensitivity analysis in our financial forecasting, helping us understand how different scenarios could impact our operations and long-term planning.

To strengthen this approach, UC Merced is actively collaborating with the UC Office of the President and our sister campuses across the system. Together, we are modeling a range of funding scenarios and sharing strategies to ensure that each campus is equipped to respond effectively. These partnerships not only enhance our ability to plan locally but also contribute to a more resilient and coordinated response across the UC system.

As we navigate these uncertain times in higher education, UC Merced remains committed to data-informed decision-making and systemwide collaboration—ensuring that we can continue to support our academic mission, student success, and institutional sustainability regardless of shifts in public funding.

Q: How are we learning from how other campuses are managing budget challenges?

UC Merced is proud to be part of the University of California system, one of the most prestigious networks of public research universities in the world. As we navigate budget challenges, we recognize that we are not alone—every UC campus is facing similar pressures, though the degree and nature of those impacts may vary.

To ensure that our approach is informed and strategic, campus leadership maintains close and active ties with peers across the UC system. These relationships foster ongoing dialogue and collaboration, allowing us to share ideas, compare strategies, and learn from one another’s experiences. Whether it's exploring new models for fiscal sustainability, evaluating staffing structures, or rethinking service delivery, these cross-campus conversations provide valuable insights that help shape the decisions we make locally.

By learning from how other UC campuses are responding to financial constraints, UC Merced is better equipped to make data-informed, mission-aligned choices that support our academic enterprise, student success, and long-term institutional health.

Q: Has the campus been working with the University of California Office of the President on renewing our Memorandum of Understanding?

Since its founding, UC Merced has operated under two Memoranda of Understanding (MOUs) with the University of California Office of the President (UCOP)—agreements that have provided critical one-time funding to support the campus’s growth and development. The current MOU is set to expire at the end of fiscal year 2026, and in anticipation of this, campus leadership has been actively engaged in discussions with UCOP about renewing and evolving this financial partnership.

The revised MOU introduces a performance-based framework, designed to align UC Merced’s decision-making with a more fiscally sustainable model. This approach reflects a shared commitment to accountability, strategic growth, and long-term financial health. UCOP has expressed support for the revised structure and has encouraged the campus to begin working toward the performance metrics outlined in the agreement.

While UCOP is currently unable to commit new funding due to broader fiscal uncertainties, both UC Merced and UCOP remain hopeful that resources will be available once the current one-time funding concludes in FY26. Importantly, the goal of this revised MOU is to help UC Merced reach a point where ongoing one-time support is no longer necessary, and the campus can operate with financial independence and resilience.

More details about the revised MOU and its implications will be shared with the campus community during the Fall 2025 term, as leadership continues to work closely with UCOP to ensure a strong and sustainable future for UC Merced.

Q: Will there be opportunities for ongoing communication and input during this process?

There will be ongoing opportunities for communication and input throughout financial stabilization process.  Here’s how the campus community can stay informed and engaged:

Regular Communication

Ongoing updates via email and this Financial Stabilization website about multi-year financial stabilization planning. These updates will reflect the outcomes of the consultation process and decisions made by leadership.

Consultation Channels

As part of the recommendation process to the Chancellor, input is gathered from:

  • Extended Cabinet
  • Dean’s Council
  • Academic Senate
  • Associated Students of UC Merced (ASUCM)
  • Graduate Student Association (GSA)
  • Staff Assembly
  • Non-Senate Academics Council (NSAC)

Each group is consulted to varying degrees, ensuring broad representation of campus perspectives.

Engagement Opportunities

  • Financial Transparency Town Halls: These sessions provide updates on financial status and to provide a venue for Q&A.
  • General questions: Email dofa@ucmerced.edu.  Responses will be added to this Financial Stabilization website.
  • Anonymous feedback/questions: Submit them HERE.

Staffing and Job Security

Q: How many positions were reduced as a result of the FY26 budget reductions across campus?

As part of UC Merced’s FY26 budget reduction process, the campus made every effort to uphold its people-first values by minimizing direct impacts on staff.  To meet divisional targets, leadership prioritized the use of existing staff FTE vacancies, rather than filled positions, wherever possible. 

In total, the FY26 reductions resulted a decrease of 26.7 staff FTE across campus. The majority of these were unfilled vacancies, allowing divisions to absorb the budget reductions without disruption to current personnel. However, a small number of reductions in personnel did occur, primarily in connection with divisional restructuring efforts aimed at improving operational efficiencies.

In addition to staff impacts, budget reductions in Academic Affairs are expected to affect the campus’ ability to hire new faculty, which may influence instructional capacity in the years ahead.

These decisions were made with careful consideration and a commitment to balancing fiscal responsibility with the well-being of our campus community.

Q: Will there be layoffs or furloughs for faculty or staff?

As one of the largest employers in the Merced area, the campus remains dedicated to being a people-first institution and is highly cognizant of its role in the broader community. This said, nearly two-thirds of the campus budget is allocated to personnel. As a result,  any significant reduction in campus spending will, impact staffing levels, including both staff and faculty.

Under the FY26 budget reduction framework, a limited number of staff layoffs occurred as part of divisional reorganizations. However, most of the reductions were achieved through curtailing existing spending commitments and retiring vacant FTE positions.  Decisions regarding layoffs both prior and current, are made at the discretion of the Vice Chancellor overseeing the division. To ensure transparency and institutional awareness, the campus leadership team was informed of these decisions prior to the recommendations made to the Chancellor, particularly to assess potential impacts on service delivery across the campus.

Furloughs are managed centrally by the University of California Office of the President (UCOP) and are not at the campus’ discretion.  The campus will not be advocating for furloughs at this time, as they provide only temporary financial relief.  To achieve long-term budget alignment, we must focus on permanent reductions.  There were no Senate faculty layoffs as these positions are governed by the tenure process.  Academic Affairs did reduce a large portion of their faculty vacancy pool to meet budget reduction goals for FY26, which will impact their ability to hire new faculty moving forward.

Q: Will current vacancies be filled, or will there be a hiring freeze?

The decision to fill vacancies remains at the divisional level.  Each division is responsible for meeting its budget reduction target and may proceed with hiring if doing so aligns with its financial plan.  On March 19, 2025, President Drake issued a hiring freeze at all UC campuses.  This directive is implemented locally through the campus’ position control process, which ensures that hiring decisions are consistent with divisional budget reduction targets.

Q: Is there a plan to prioritize retaining current employees over filling new positions?

Decisions about whether to prioritize retaining current employees over hiring for new positions are made at the divisional leadership level.  The campus has encouraged leaders to carefully assess existing vacancies as they arise, ensuring that any position being filled is operationally necessary.  However, divisions may choose to prioritize new positions as part of broader efforts to reevaluate their organizational structure and capacity in order to best serve the campus.

Q: Will support be available for those affected, such as severance or benefits extensions?

Divisional leads will work with Human Resources to ensure that the campus meets all employment obligations for staff impacted by budget reductions.  This includes providing appropriate support such as severance packages, benefits extensions, and other resources in accordance with university policy and applicable labor agreements.

Compensation, Morale and Support

Q: Will there be any type of COLA (cost-of-living adjustment) or merit increase next year?

Decisions surrounding annual general salary or COLA increases are made at the systemwide level. UC Merced will implement any such increases consistent with our sister campuses.

Q: What is the status of the STAR Award Program?

As announced on May 28, the STAR program has been suspended for fiscal year 2025–26 to allow time for review and program redesign.  

Q: Will senior leadership also share the burden, such as through pay reductions?

Senior leadership will receive the same salary program increases as all non-represented staff, as announced by President Drake on June 25, 2025. 

Q: How will the university support staff and faculty facing increased workloads or burnout?

As the campus navigates a multi-year financial stabilization plan, divisions are being asked to evaluate how work is currently performed and to identify opportunities to improve organizational efficiency. Through this process, we anticipate that both workload expectations and the nature of work may evolve as we move toward a more fiscally sustainable model.

Each divisional lead has been asked to work closely with their teams to address changes in workload that may result from staffing reductions. The campus remains committed to supporting employee well-being and encourages open dialogue, flexibility, and the use of available resources to help manage workload and prevent burnout.

Q: Will professional development opportunities continue to be supported?

Professional development remains a valued priority for the campus, as it enhances our employees' knowledge, productivity and morale.  Decisions to support professional development activities and opportunities will be made at the divisional level and are contingent on the availability of internal funding. 

Campus-wide professional development programs and resources managed through Human Resources will continue to be offered, provided they remain fiscally viable and demonstrate a meaningful return on investment for the campus.

Workload, Tools, and Operational Capacity

Q: Why is position control in place?

On March 19, 2025, President Drake issued a hiring freeze at all UC campuses.  This directive is implemented locally through the campus’ position control process, where all positions funded on core funds are reviewed to ensure that divisions are properly evaluating replacement needs, prioritizing mission-critical workforce needs, and ensuring that hiring decisions are consistent with divisional budget reduction targets.

Q: Will there be campus-wide strategies like shared tools or service consolidation?

Yes, the campus is actively exploring campus-wide strategies such as shared tools and service consolidation as part of the budget reduction planning process.

Vice Chancellors and Deans are meeting regularly to discuss potential strategies for achieving collective budget goals.  A major focus for the coming year is to facilitate discussions around shared tools that can be used across units to reduce duplication, along with consolidation of services to improve efficiency and better align with campus priorities. These efforts aim to maximize resources, reduce redundancies, and enhance operational effectiveness across divisions.

Q: How will service levels be maintained with fewer resources?

As UC Merced navigates budget reductions, maintaining service levels with fewer resources requires a thoughtful and strategic approach. At the heart of this effort is a commitment to ensure that our core missions—teaching, research, and service—remain supported even in times of fiscal constraint.

This alignment requires campus leadership to prioritize among available options, carefully evaluating which initiatives and services best advance our strategic goals. As a result, some services may evolve or change through the financial stabilization process. These changes are not made lightly, but rather as part of a broader effort to ensure that every dollar spent contributes meaningfully to the university’s long-term success.

To help mitigate potential impacts on service levels, divisional leaders are encouraged to assess how efficiently their current resources are being used. This includes exploring opportunities to restructure organizations, streamline processes, and eliminate redundancies. Through these efforts, the campus aims not only to preserve service quality but also to enhance it over time—by focusing on smarter, more intentional ways of working.

Academic Mission and Strategic Priorities

Q: How will reductions affect teaching, research, and core academic functions?

As a research university, we are deeply committed to ensuring that our instructional and research missions remain at the forefront of our resource planning.  The academic enterprise is central to this mission, Academic Affairs plays a vital role in supporting both student success and research excellence. 

However, in the context of our broader fiscal sustainability efforts,  we must also evaluate how our existing resources are being used.  This includes evaluating whether they are being deployed efficiently and effectively – not just across administrative units, but within the academic enterprise itself.  Given that academic functions represent the largest expense category for the campus, these principles of evaluation and efficiency are especially important.

To guide this process, the campus is taking a data-driven approach to understand how budget reductions may affect teaching, research and core academic functions.  We are actively gathering and analyzing data from our peer UC campuses to benchmark our decisions and ensure that any actions we take are consistent and aligned with systemwide priorities and do not compromise our core mission. 

This ongoing analysis will help us monitor the impacts of reductions, make informed adjustments, and maintain alignment with campus values and goals.

Q: Will the university’s R1 status or rankings be at risk due to these changes?

The University of California, Merced’s recent designation as a R1 research university marks a significant milestone in our institutional journey – one that reflects the exceptional research contributions of faculty and the strength of our graduate education programs. This achievement places us among the top tier of research institutions nationwide and underscores our commitment to advancing knowledge and innovation in the Central Valley and beyond.

As we move through the current financial stabilization plan, it’s natural to ask whether our R1 status or institutional rankings might be at risk.  At this time, the level of budget reductions considered is not expected to compromise our ability to maintain R1 status.  Campus leadership is taking a data-driven approach to monitor research productivity and ensure that reductions are evaluated carefully for their potential impact on core academic functions.

However, we must acknowledge that external factors – including shifts in the Federal funding landscape – pose challenges that are beyond our control.  These changes could affect not only UC Merced, but institutions across higher education.  If our R1 status were to be impacted, it would likely be due to these exogenous factors, not a reflection of diminished effort or commitment on our campus.

As we proceed through the financial stabilization plan, campus leadership is continually monitoring, using a data-driven approach, our research productivity and paying attention to the measures of our peer UC campuses. Our leadership is committed to protecting the integrity of our research enterprise and ensuring that we remain a vital contributor to the UC system, the Central Valley, and the state of California.

Q: Why are certain capital projects (e.g., new buildings, athletics expansion) continuing during budget reductions?

The capital projects currently underway are not funded by the same resources used for campus operations.  Many are supported through state allocations or through student fees designated specifically for these initiatives. Thanks to the successful efforts of Chancellor Muñoz and campus leadership, UC Merced has secured funding that allows these projects to move forward without drawing from core operating budgets.

We are excited to move forward with the construction of a new Student Union, a project approved by our students and funded through student fees in the coming years.   As the only UC campus without a Student Union, this facility will provide essential space for community building, wellness services, and student engagement, enhancing th overall student experience and making our campus a more attractive destination for future generations of students.  Similarly, the expansion of our athletics program into the NCAA Division II is expected to enrich campus life and attract new applicants, offering a sound return on investment both financially and in terms of mission fulfillment.

Q: Will we replace faculty in units that are struggling to deliver curriculum?

The university recognizes that some academic units may be facing significant challenges in delivering their curriculum due to faculty departures. To address this, the EVC/P and academic deans are developing a set of data-driven criteria to guide decisions about faculty replacement. These criteria will help determine when a vacancy is critical to the campus’s instructional and research mission, and where a vacancy backfill would have the greatest impact.

This approach ensures that faculty hiring decisions are not only fiscally responsible but also responsive to the needs of students and academic programs. By focusing on areas where instructional delivery is most at risk, the campus aims to preserve the integrity of its academic offerings while navigating financial constraints.

Q: As a faculty member, how can I help increase enrollment?

As a faculty member, you play a vital role in shaping the future of UC Merced—not only through your teaching and research, but also by helping to grow and sustain our student community. We deeply appreciate the tremendous work faculty have done to expand our academic offerings, including the development of new undergraduate programs supported by the ACE (Accelerating Campus Evolution) initiative, funded by the UC Office of the President. These programs are essential to our long-term strategy for enrollment growth, offering students innovative pathways that reflect the evolving needs of our region and state.

Beyond program development, faculty can support enrollment efforts by partnering with the Vice Chancellor for Enrollment Management, engaging in outreach, and participating in recruitment activities that showcase the strength and uniqueness of UC Merced’s academic experience. Faculty presence and engagement, whether through public lectures, community events, or interactions with prospective students, can have a powerful impact on how our campus is perceived.

Equally important is the role faculty play in student retention. By fostering inclusive classrooms, mentoring students, and supporting their academic journey, faculty help ensure that students not only choose UC Merced, but thrive here. Enrollment is truly a shared mission across campus, and we are grateful for the faculty’s continued partnership.