September 5, 2025 - 2025-26 Campus Budget Plan Finalized

Dear Campus Community,

In my July 14 message regarding the State of California budget, I promised to update you as we learned more. Although we remain cautious that several unknown factors could impact us in the coming year, this message is largely one of good news thanks to the hard work of our faculty and staff over the last few years. As I said in July:

On June 27, Governor Gavin Newsom signed California’s 2025 State Budget. This final budget reflects a significant improvement over earlier proposals, and I want to thank all those who helped advocate for Chico State and the California State University. Our importance to the state and our region cannot be overstated; we all worked to share that importance with lawmakers, and we appreciate everyone’s effort and its impact.

While the budget is better than the projections used in our spring budget modeling, it still presents meaningful challenges for the California State University system — and for us here at Chico State.

First, let me describe what we have learned and how your work has made a difference. Our financial outlook for the 2025–26 academic year is mixed. The great news: we project to have more revenue than last year, due to your dedicated work growing enrollment and retention and advocating for us with the State. The challenging news: Our expenses are still projected to outpace our revenue, and at what scale depends on how fast those expenses grow.

Regardless, the best- and worst-case scenarios are both significantly better than the projected $32.5M operating deficit we were anticipating for 2025–26 when conservative numbers were calculated in spring. At that time, the University Budget Committee recommended strategically utilizing reserves to smooth the transition to a more sustainable budget over three years by reducing allocations to divisions by 40% of the deficit over each of the next two years and 20% in the third. That amounted to approximately $13M in reduced allocations to the divisions for 2025–26.

Our progress to date has nearly met the recommended reduction, as our worst-case scenario projected deficit is now approximately $12M lower than originally anticipated.

This is due to several positive factors. First, our projections for 2025–26 incorporated an $8M carryforward deficit from 2024–25. We now know we have carried forward a smaller $2.5M deficit into 2025–26. In other words, we proactively adjusted by $5.5M last year. This is to the credit of everyone who worked to reduce expenditures, generate unprojected revenues, and utilize an all-fund approach — all while continuing to support our students, each other, and our region.

Additionally, we are seeing impacts of our advocacy efforts with the State during the budget process. What was originally projected to be a $12M reduction to Chico State turned out to be a $5M reduction, eliminating $7M of our projected deficit for 2025–26. The combination of these two impacts alone essentially covers the $13M reduction that was recommended by the University Budget Committee.

We still face significant unknowns for the coming year, including uncertain unfunded compensation adjustments, potential impacts of federal policy on the state’s financial circumstances, and unknown final enrollment numbers. Because of this uncertainty — and because we are still projecting a deficit — we must remain steady with our efforts to be prudent with spending.

As such, each division will receive the same allocation of baseline funds as last year with a few adjustments. The adjustments include removing the management of benefit costs from divisions to a campus-level and internal reallocations of programs or employees between divisions. It’s important to distinguish between allocations (the funding each area receives) and spending (the actual expenditures made). While allocations will remain similar, we must be cautious not to spend deeply beyond them. While we are fortunate to have reserves, we have spent from them the last two years and simply cannot draw too much from them to cover overages in spending. Any increases in compensation or other costs that are not funded centrally will need to be absorbed within existing allocations. This makes it even more critical to align spending with available resources.

I cannot express enough how deeply grateful I am for the efforts of everyone on campus to support our students, each other, and our region and for the collective spirit to do it in ways that both increase our enrollment and reduce our costs. We’re making this progress together, and I look forward to continuing transparent engagement about the budget and regularly sharing real-time updates as we move through the year.

Thank you for all you continue to do,
Steve