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Savings Targets

Campus units must meet individual savings targets

Updated as of July 1, 2024

Beginning in fiscal year 2020-21, and initially phased in over a five-year period, each campus unit was assigned a target for ongoing core fund savings. Savings could be achieved through net revenue generation, realigning costs to other appropriate fund sources, targeted program reductions, streamlining and efficiencies. 

Units have developed plans to make progress toward their assigned targets. One-time bridging and limited-term cost containment strategies have been necessary in some cases; however, savings ultimately must be ongoing and cumulative. Plans are being assessed annually by the provost with input from the Budget Framework Advisory Committee for alignment with the principles and monitored as part of the annual budget process. The process is ongoing and iterative to reflect changing circumstances and emerging opportunities. 

Phased approach to core fund savings targets

Through fiscal year 2024-25, units identified a total of $45.9 million in ongoing savings. This exceeded the initial five-year target amount of $45 million by $900,000.

Beginning in 2020-21, an annual amount of $9 million in savings targets was allocated to units, growing to $45 million by 2024-25. Units were asked to accelerate their efforts to achieve these targets where possible. In 2023-24 it was determined that added budgetary pressures require that we extend unit savings targets an additional year and increase the amount by a combined $9 million, bringing the total unit savings targets to $54 million over six years.  

As part of the budget framework planning for 2024-25, given the uncertainty of state funding and continued cost pressures, we announced in April 2024 that it was necessary to allocate an additional $20 million in core funds savings to mitigate additional growth in the core fund deficit.  Units are in the process of developing plans to meet this additional target and encouraged to use one-time funds to bridge this reduction in the near-term while identifying strategic, ongoing cost reductions designed to minimize the impact on students and employees.  In the coming months, units will be asked to report on their plans for meeting these targets.

Central campus is committed to taking action

As part of the framework plan, central campus has identified $34 million in ongoing savings and $210 million in one-time funds to bridge the deficit over the past five years. The following actions will achieve these ongoing savings, many of which have campuswide impacts: 

  • Capital Investments: Between 2022-2025 we are reducing the planned core fund investment in our capital program debt service by up to $5 million, equivalent to up to $80 million in capital spending. This will delay much-needed capital investments. Therefore, we are evaluating alternative funding models, including internal borrowing, to mitigate the gap. 
  • Faculty Resources: Between 2021-2025, we redirected $9 million in base resources collected centrally from faculty returns to support faculty merits and promotions. In the past the central share of the faculty resources were reinvested in new positions through programs such as the Hiring Incentive Program. Funds for some reinvestment remain, but the scale will be somewhat limited. 
  • Space Release Program: We are reducing our use of leased administrative space in Davis, with a goal of at least $4 million in ongoing savings. We have launched an incentive program for units that release space to central campus. As of fiscal year 2024-25 space releases will reduce our annual lease costs by $2 million. 
  • Realign Funding for the Cost of Utilities: In the past, the majority of costs associated with utilities was paid centrally with core funds. We are realigning at least $5 million over five years from core funds to central campus Finance & Administration (indirect cost) funds. 
  • Savings from Limiting Core Fund Investments:  The annual budget framework assumes that the campus will make up to $4 million in ongoing core fund investments for critical priorities through the budget process. In 2021-22 through 2024-25 core fund investments were limited resulting in $10.6 million in combined savings directed toward achieving and increasing the central campus savings target by 2025. In 2024-25 central campus continued to limit core fund investments, saving $3.6 million in core funds that reduces the deficit. 

How savings targets were defined

  • In recognition of our primary teaching and research mission and strategic priorities, initial unit targets were disproportionately allocated to administrative activities. Savings targets, while not strictly formulaic, take into account multiple factors, including core fund base budgets, common operating fund expenditures, all fund expenditures, space utilization, unit net operating margin trends, and metrics such as staff and student to faculty ratios. To arrive at the initial targets, a measure of judgment was applied on top of the review of various measures described above. 
  • Unit leaders must strategically evaluate their activities for efficiency and efficacy, keeping in mind potential service impacts to clients, compliance, risk, and strategic priorities. Units with recharge activities must strive to manage rates in compliance with campus guidelines while delivering efficient services.

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