Budget Update: Revised State Budget & VSIP Program to Reduce Projected 2025-26 Budget Gap
The California Governor’s revised state budget proposal, released in May, held good news for the CSU. Instead of the 7.95% budget cut to the CSU that Gov. Gavin Newsom proposed in January, he now recommends a 3% cut to the system, which equates to roughly $143.8 million.
Cal Poly Pomona’s portion of the cut is roughly $7 million, and the university is now projecting a $7.8 million shortfall for the 2025-26 fiscal year, according to information shared during the May 15 Budget Briefing. The campus budget update was provided by Provost Terri Gomez, Interim Vice President and CFO Michelle Cardona, and Assistant Vice President for Budget Planning and Analysis Carol Lee.
In January, the budget outlook for 2025-26 was much more grim. The 7.95% proposed reduction would have meant a $18.3 million cut to campus. Added to rising costs for operations, financial aid and employee compensation, CPP had been looking at a budget deficit of $38.5 million for next year.
In response, the university implemented cost-saving measures across campus and offered a one-time Voluntary Separation Incentive Program to employees to reduce ongoing compensation costs.
Across campus, 120 employees took advantage of the program, which is projected to save the $13.4 million annually. (Incentive severance payments came from one-time funds.)
Approximately 44% of those taking VSIP worked in Academic Affairs. The next largest portions came from Administrative Affairs (more than 22% of participants) and Student Affairs (about 17%).
CPP also received $4.6 million in re-allocated funds to support enrollment growth and address the university’s’ existing over-enrollment. To keep this funding, the university must demonstrate actual year-over-year enrollment growth.
While the $7.8 million projected shortfall for next year is better than earlier projections, the budget is not yet final, and uncertainties remain especially around enrollment.
For fall 2025, the number of accepted students who submitted their “Intent to Enroll” was 6% below the level needed to meet CPP’s enrollment goals and receive its full CSU allocation.
“As a result, we will need to open spring 2026 to new transfer students,” said Gomez, who noted that yield, the number of admitted students who enroll, has declined by one-third since 2018.
Another big unknown is the financial impact on CPP and students of the decline in federal support for higher education research, student access, and higher education grant and loan programs, said Cardona. These impacts are also “creating new financial challenges including the ability to access credit.”
Despite the 3% cut to the CSU in the May Revision budget proposal, Cardona noted there is still time for people to lobby their legislators to eliminate all cuts to the CSU and advocate federally against policies that negatively impact CPP and the CSU. More information can be found on the Cal State Stop CSU Cuts webpage.
The California legislature and Governor are still negotiating a final state budget. The deadline for the state legislature to approve a final state budget is June 15. The Governor has until June 30 to sign the final budget agreement.