In April, UC Davis Chancellor Gary May expressed concern about pending budget cuts to the UC System.

On May 16, he warned students, faculty, staff and alumni that they must “brace for unprecedented financial challenges.”

The warning comes after months of fears that deep state funding cuts would lead to reductions in student services, course offerings and even enrollment.

Sonoma State University has already announced it is ending all athletics, multiple majors and faculty members due to a budget deficit of near $24 million, and that all 11 division II teams will cease operations at the end of the 2024-25 school year.

In Gov. Gavin Newsom’s January budget proposal, the University of California and California State University systems were facing $771 million in cuts. And this past Wednesday, despite an additional $12-billion state budget shortfall, the governor’s revised budget proposed lessening the earlier blow

The proposed cut to UC dropped from $397 million in January to $130 million four months later, representing a 3% year-to-year budget cut. For CSU, Newsom’s budget cut went from $375 million in January to $144 million, also a 3% budget reduction.

In his regular Checking In With Chancellor May” column that appears on the UCD Website, May stated “Today, we must tap our ingenuity, resilience and history of collaboration as we brace for unprecedented financial challenges.”

“Today’s challenges are driven by three key factors: Substantial reductions in federal research funding and uncertainty about what lies ahead; a 3% reduction in state support for the University of California; and escalating operational costs,” he writes.

“We are taking strong measures to curb costs, expand revenues and mitigate the impact of anticipated cuts; however, the challenges will likely require even more significant measures. We will have to work together to determine what UC Davis must be in a time of austerity rather than what we envision in a time of greater resources.

May goes on to report “what we are looking at as of today:

“At the federal level, several agencies — including the National Institutes of Health, or NIH; Department of Energy; and National Science Foundation, or NSF — have proposed caps of 15% on reimbursements for facilities and administrative costs, or F&A. This is a substantially lower percentage than is reimbursed today. If the proposed caps were applied across all federally funded research, it would result in approximately $114 million annual loss to UC Davis.”

The university is already seeing early terminations of research contracts and grants, and “we are bracing for a broader decline in federal research funding. UC Davis received $441 million in federal contract and grant awards in fiscal year 2023-24. Our models project reductions of 10%-30% to that type of funding, which translates into future annual revenue loss between $44 million and $132 million, plus an additional loss of the corresponding F&A revenue.

“Depending on the extent and timing of these and other reductions — along with potentially rising costs for construction and supplies due to new tariffs — we estimate that upcoming potential federal budget impacts to the Davis campus could range from $118 million to $408 million,” May writes.

Noting the reduced budget cuts from Gov. Newsom and improved state funding “UC Davis still faces a $53 million deficit on tuition and state funds, making continued expense reductions essential.”

Some steps now being taken include a staff hiring freeze, reviewing consultant relationships and contract positions, while also reevaluating planned capital projects.

UC has joined other major universities in suing to block NSF’s unilateral reduction of F&A cost reimbursement, which the universities believe violates federal statutes and rulemaking procedures.

“While these lawsuits are pending, our Office of Research, in consultation with Campus Counsel, is also working closely with principal investigators to review grant terminations and evaluate the options for appealing the terminations so that they and their graduate students and post-doctoral scholars may continue their work and drive new knowledge without disruption or hardship,” he states. “We know will not be successful in every case, so we are also seeking alternate options.

Importantly, we and our allies are working closely with our elected representatives to press the case that UC Davis plays a vital role in the prosperity of our region and state, developing the next generation of leaders and making lifesaving breakthroughs.”

“These challenges are daunting, and I know our students, staff, faculty and alumni are concerned about what these budget challenges mean for people and programs,” May states. “Campus leaders are working closely with the Academic Senate to achieve our shared objectives. We are monitoring what remains a fluid and uncertain situation, and are making decisions based on the best available information and with compassion for those who contribute so much to our university.”

“In the days ahead, we will take appropriate and necessary steps to move forward while best protecting our community and our mission. We will meet this challenge … together,” May concludes.