Regents hear broad boost to UC funding in governor’s budget but warn of out‑year risks

University of California leaders briefed regents on the governor’s January budget introduction, calling it “one of the strongest budgets for the University of California” in decades while cautioning that multiyear state revenue risk could imperil the gains.

Nathan from the Office of the President said the governor’s package would increase state appropriations for UC to about $5.3 billion, which he described as a $350 million, or roughly 7 percent, increase over the prior year and would restore a 3 percent deferral from the current year. “We are extremely grateful for the strength of this budget proposal,” Nathan said, while adding that the administration and the legislature will want to watch revenue scenarios closely.

Kain, presenting slides, showed how the proposal affects UC across the next two fiscal years. Under the governor’s plan UC would receive a $254 million compact installment for 26‑27, roughly $96.3 million of previously deferred compact funding in 25‑26, and about $370 million in one‑time back payments in 27‑28. Kain summarized the net effect as an estimated increase of about $472 million in 26‑27 tied to the base increase and deferral restorations.

Presenters urged caution: Nathan and Kain noted the governor’s revenue projections exceed recent legislative analyst estimates and flagged multiyear deficit scenarios of $20–35 billion. “If revenues do not materialize as projected, we will need to advocate strongly to maintain this very, very favorable budget introduction,” Nathan said.

Speakers also highlighted the proposal’s implications beyond general fund appropriations. Kain flagged roughly $212 million of regents’ requests that the governor did not include (including remaining compact funding and certain graduate health program support). Nathan identified four legislative vehicles that could supply capital funding outside the administration’s one‑time items: AB 48 (a possible UC/CSU general obligation bond), AB 736 and SB 417 (housing bond proposals), and SB 895, a large research bond currently forecast in the $22 billion range.

Regents pressed administrators on timing and sustainability. Chair Cohen and other regents asked how May’s budget revision and the administration’s emphasis on balancing the 27‑28 year would affect UC. Nathan said balancing 27‑28 would require either substantial new revenue or cuts elsewhere in the state budget and emphasized the need for continued advocacy to protect UC’s discretionary share.

The presentation also covered compact outcomes: UC officials reported adding nearly 15,000 undergraduate students systemwide since 21‑22, reductions in nonresident enrollment at several campuses, and an increase from 63 to 73 percent in the share of incoming California students with debt‑free pathways. Administrators said those results will feature in advocacy for preserving compact funding going forward.

The committee did not take final budget votes; staff said regents and OP will pursue hearings and advocacy in Sacramento ahead of the May Revision.