UC faces half-billion-dollar budget deficit and sees tuition increase for new non-resident students

The University of California is facing a looming budget gap of half a billion dollars next year. To balance its books, it relies in part on out-of-state students.

Meanwhile, the system is investing tens of billions of dollars in construction projects for seismic renovations, new classrooms and medical centers — while also recognizing that it lacks the financing to build or renovate most of what it needs.

Out-of-state students at UC pay more than three times the total tuition that in-state students are expected to pay. Now system leaders want to increase supplemental tuition for new nonresident students by $3,402 next fall, an amount that is $2,208 more than what supplemental tuition would increase by under existing UC policy.

A UC regents committee approved the new increase Wednesday; A vote is planned today in the full board on whether or not to give the green light to the measure.

Under one model adopted in 2021each new cohort of students will see higher tuition and fees than the previous class of new students, but that tuition will remain the same for their time at UC. Students in the state pay tuition and a systemwide fee. Out-of-state students pay that plus a much larger additional fee. Basic tuition and fees would increase as planned under the 2022 model; only the additional compensation would increase higher than expected.

All told, this would mean that new nonresident students would pay $52,536 in total mandatory tuition next fall, not including the separate campus fees that a average $1,700. Current new non-resident students paying $48,636 annually, plus campus fees.

The move would approximately affect the 15% of UC studentsincluding transfer students, who live outside California and will begin their studies in the university system next fall. The increase would not affect current students or future students.

“As UC prepares for an expected state budget cut that could impact student services across the system, we are proposing an increase to support core operations without increasing costs for current students and California residents,” UC wrote spokesperson Omar Rodriguez in an email.

The increase would increase revenues for the system by about $41 million annually, Rodriguez wrote.

The impending deficit of half a billion next summer That would happen if state lawmakers and Gov. Gavin Newsom follow through on an agreement to delay previously promised new money for the UC and implement a cut in state aid.

UC’s operating income is estimated at approximately $53 billion in 2024-25. Most of that comes from the system’s medical services, including hospitals. The core mission of educating students, largely faculty salary and benefits and financial aid make up about $11 billion of the system’s budget. That amount is paid almost evenly because with state dollars and a combination of tuition revenue and other university funds.

It’s one of several budget details that emerged at the regents’ regularly scheduled meeting in November, including the revelation that the UC plans to spend $30 billion by the end of the decade to repair or replace the increasingly aging stock of academic buildings, medical centers and dormitories. And yet that enormous sum falls far short of the stated construction needs of the 10-campus system – a total of $53 billion in projects with no funding source.

The building boom is happening as UC moves forward toward a goal of adding 23,000 new California students by 2030 — fueled in part by lawmakers’ demands that the vaunted system make room for more high school students in California.

The tuition increase in context

In some ways, the emphasis on out-of-state students is a return to normal for the UC, which depends on these students for the much higher tuition they pay but also faces pressure from lawmakers to limit how many non-California students the system enrolls.

Eduardo Tapia Jr-Urbieta, director of the UC Student Association, which represents students, said the student body is against the increase. “The opportunities for higher education should not encounter further obstacles. Instead of raising the salaries of UC administrators, let’s make the university more affordable for everyone,” he told the regents yesterday.

Those September increases came in two waves: 4.2% for senior UC officials, such as the system president and most campus chancellors, and additional increasesincluding for most chancellors – ranging from 16% to 33%. The additional chancellor raises will be paid for with private donations, not tuition or state aid. Updated chancellor salaries range from $785,000 to nearly $1.2 million

Non-resident students usually do higher family incomes than resident students. In 2021, 45% of non-resident students had a household income of more than $185,000. The same was true for 25% of California students. Nearly three-quarters of nonresident students came from households worth more than $93,000; for California-based students it was 45%.

Still, nonresident students pay much more on average to attend a UC campus, even after all the financial aid is passed on to their costs. The net price — including tuition, housing and other related costs minus grants and scholarships — for resident students with household incomes above $180,000 was about $37,000 per year last fall. For non-resident students, the average net price was $67,000.

“I support it (the tuition increase for non-residents). I do get criticized for that, but here we are,” says Josiah Beharry, a student regent who can cast a vote on the board.

UC officials said that, compared to some other large public universities, UC’s non-resident students pay lower fees for non-residents. For example, nonresident students at the University of Michigan paid $11,500 more than their nonresident UC peers in 2023-2024. Nonresident students at the University of Virginia paid $7,000 more. Even when cost of living is taken into account, non-resident Californians have to pay less for their education, UC officials said.

UC policy allows 20% of new tuition revenue to be paid from non-residents reserved for financial aid for non-resident students.

$30 billion in planned construction

The $30 billion construction plan – and $50 billion in projects without a funding source – were outlined in a new, Report details of 207 pages construction plans that UC budget officials presented to the system’s regents yesterday.

“University enrollment growth and the continued need for renewal, modernization and seismic correction of existing facilities are the primary drivers of capital investment,” the report said.

Cranes have been floating above the campus skylines for years.

Since 2011, the UC has added beds for 42,000 students, a growth of nearly 75,000 beds. The increase means the system can accommodate 40% of its students, up from 32% a decade ago.

And UC isn’t done yet, as it is on track to build 14,000 new student dormitories across all nine campuses through 2030 — at a cost of $6.9 billion. That’s almost half a million dollars per bed.

But while student housing projects can largely pay for themselves over time through the rents campuses charge, classroom buildings have fewer sources of funding than system bonds and state dollars — which the UC says are barely enough to meet campus needs.

Take, for example, all the seismic repairs UC says it needs to undergo to extend the life of its buildings, with structures built in the 1950s and 1960s. represents the majority of UC’s massive building footprint. UC has $16 billion in seismic renovation needs, but has only found funding for 16% of that, or $2.5 billion. last academic year.

It’s not just finding money that’s a concern for UC. While buildings are renovated, classrooms, research and other activities essential to the system’s mission must continue. “The scope and complexity of planning required to minimize these disruptions can often necessitate the construction of temporary or replacement space,” the report said.

The scale of the need is enormous. According to the UC, approximately 1,464 buildings require seismic upgrades systemwide.

UC officials announced yesterday that the system is introducing a new plan in which campuses will reduce the backlog of structures needing seismic upgrades by 4% annually, prioritizing those structures most in need of an overhaul.

And then there is all the new construction that UC needs. The system completed 139 projects last academic year at a cost of $1.4 billion – but has more than $20 billion in active construction plans for approximately 400 projects. More than half of that is for UC’s expanded medical care operation, in part to comply with state regulations strengthen hospitals to better withstand earthquakes.

Through 2030, UC construction plans total $30 billion, of which approximately $12 billion for its medical centers. Philanthropy helps finance all those projects, but only a little. About $2 billion of the budget for the construction plan will come from donations. About $300 million will come directly from state funds — a relatively small portion of the total revenue for the system’s six-year construction plan. A large part of the projects will be paid for with external financingsuch as bonds that the system sells to investors.

But those are just projects with a funding source. For example, UC Berkeley has more than $14 billion in construction needs, but has just about identified the funding Of that, $2.8 billion.

What’s being built on the system’s oldest campus? To start with, a new academic building for students with 27 classrooms and an auditorium with 400 seats and a roof terrace. All that costs $137 million. The opening is planned for the academic year 2025-2026.