May 8, 2026 - Budget Call 2026-27

Dear Campus Community, 

Several times this spring, I have shared my optimism about our prospects for the 2026–27 budget. That cautious sense of hope remains as we head toward the Governor’s May Revise. If the most favorable scenario holds, we could emerge from deficit spending and move into a surplus position. However, if a more moderate or alternate approach is adopted, we would remain in an unsustainable position and must take the necessary steps to respond. 

As always, I’m grateful to the University Financial Services team and the University Budget Committee, whose careful work continues to guide our planning across multiple scenarios. Based on what we know today, I am releasing the budget call for campus and have already distributed it to the vice presidents. Over the next two months, each member of Cabinet will work with their respective units to develop plans and projections. 

As of today, Governor Newsom’s 2026–27 proposed budget includes a 3% base funding restoration for the California State University, keeps FTES funding targets flat, partially restores year 4 Compact funding, and fully restores year 5 Compact funding. At the same time, we are closely monitoring our current fiscal year performance, and at this point, we estimate using approximately $3M from baseline state funding reserves to close out the year.  

The recommendation from the University Budget Committee is sound. Depending on the outcome of the final budget from the state, we are preparing for two paths forward.

If the state provides us the full allocation outlined in the Governor’s January proposal, we recommend staying on the path of fiscal sustainability — using base budget increases to reduce the use of reserves as well as rebuild reserve levels. Operations will remain largely constant, with the exception of adding course sections where needed to support enrollment growth.  We will also prioritize divisions currently relying on reserves and increase their base allocations to reduce that dependence, with any remaining funds directed to central reserves.  

However, if the state provides a reduced allocation, we will implement a three-year reduction plan, addressing 20 percent of any resulting deficit each year over the next three years. 

We will continue to support the Chancellor’s Office in advocating for the California State University system, and we will closely monitor any developments through the May Revise, expected no later than May 14, and the final state budget. 

For more information and an update regarding the May Revise, I encourage you to attend the University Budget Forum on Monday, May 18, at 3 p.m. via Zoom. The Chico State budget process webpage also remains a key resource for current information and projections. 

Regardless of how the May Revise unfolds, we are in a markedly different position than we were a year ago. This would not be possible without the steadfast, disciplined, and sometimes difficult work of the people on this campus to manage spending and navigate the impacts of a challenging fiscal environment.  

While our work is not yet done, I’m confident we are in a much stronger financial position and that we are continuing to move forward in ways that support our long-term fiscal future and our commitment to students, our community, and the North State.  

I am grateful to each and every one of you for all you do to support this work. 

Thank you,
Steve Perez