Update on Financial Planning and Sustainable Operations

April 02, 2025

I am writing to provide updates and share measures that UC San Diego is taking to protect our university’s future. In a landscape of escalating financial pressures, increased scrutiny, shifting policies, rising costs and exceptional uncertainty about future funding for research universities nationwide, it is essential that we remain nimble and proactive in evaluating and responding to the many challenges facing our institution.

We know this is a stressful time for many in our community. I will reiterate UC President Drake’s message – the mission and values that unite us as a community have not changed. We are here to support you as we work through this together.

Since my last update, we have implemented various measures to assess, respond and prepare for the future. These measures, along with some updates on the impacts to our campus, research enterprise and Health system, are outlined below.

UC San Diego and UC San Diego Health Financial Impacts

UC San Diego relies heavily on state and federal funding to conduct lifesaving research, treat patients, teach the next generation of leaders, and maintain facilities and operations. This funding includes research grants, indirect cost recovery from research, student financial aid and Pell Grants, as well as reimbursement from Medicare and Medicaid payments for patient care.

Current and proposed budget cuts, grant cancellations and stop work orders, grant reimbursement policy changes, executive orders, federal agency reductions and payment delays, and threatened cuts to Medicare and Medicaid pose a significant financial risk to the university. We are unable to predict exactly what the losses will be, but our initial scenario planning models indicate possible reductions ranging from $75 million to more than $500 million annually. In preparation, I have asked budget offices to model a 2.5% to 12.5% budget reduction based on these initial scenarios. We will continue to evaluate the data and further refine the range of our estimates.

Actions We Are Taking

As we navigate these unprecedented conditions, mindful that what will happen next is uncertain, we are taking proactive steps to protect UC San Diego. I have initiated several discussions with my Cabinet, Academic Senate and other campus leaders on issues related to planning and budgets. Given the complexity of the situation and the need for a multifaceted communications approach, I have instructed the vice chancellors to communicate directly within their units, including deans and chairs, to ensure that up-to-date information is distributed to affected areas in a timely manner.

Faculty and staff hiring pause: We announced a hiring pause for UC San Diego and UC San Diego Health, with limited exceptions. Vice chancellors will manage exceptions in their schools and units. The UC San Diego Health CEO will manage exceptions to ensure clinical needs are met and our health enterprise is functioning smoothly.
Capital project changes: We are indefinitely delaying the Multidisciplinary Life Sciences Building and the Hillcrest Multipurpose Clinical Research Building and pausing several other medium-sized projects. We will finish projects that are currently near completion.
Budget planning: I have instructed all vice chancellors and Cabinet members to work with the Campus Budget Office to develop budget strategies to respond to actual and potential reductions in research grants, indirect cost recovery, and state funding. Due to the interdisciplinary nature of our campus and budget model, the response will be a combination of short- and long-term strategies and may impact campus areas differently.
Advocacy: I am leading a campuswide approach that involves many members of Cabinet, faculty and alumni to support and proactively engage with stakeholders, including Congressional representatives, professional organizations and federal agencies. Our ongoing communication and education initiatives underscore the critical need to safeguard research and reinforce the message that research universities like ours are a primary driver of innovation, economic growth and scientific progress.

Updates on Grant Disruptions

In the last month, UC San Diego Principal Investigators (PI) have received approximately 50 notices of award disruption. We have also seen a concerning rise in payment delays on expected grant revenues from most federal agencies.

Research disruptions present both short- and long-term cash flow challenges, and we know that managing this financial challenge is very difficult, both personally and professionally. Abrupt termination of research funding has far-reaching and damaging consequences not just for the research, but for individuals, teams, our university and society as a whole.

The road ahead will require tough decisions, and we are committed to equipping affected researchers with the tools, guidance and support they need to make these decisions. Research teams may be the first to receive notice indicating termination or modification of an award. If researchers receive such communication from a funding agency, please forward it to vcresearch@ucsd.edu and immediately inform the Department Chair or Unit Head. The Office of Research and Innovation will gather grant information including personnel and financial data for researchers to review. PIs and the supervisory units must immediately begin any necessary actions, including temporary layoffs in accordance with the appropriate policy or collective bargaining agreements.

How You Can Take Action

I continue to hear from many in our community asking how they can take action to support our work. Here are a few things you can do:

Learn about and participate in the Behind Every Breakthrough campaign, a universitywide effort communicating the value of research to internal and external constituencies. Connect with your unit’s media contact if you would like to participate and highlight your research.
Join the UC Advocacy Network and help protect life-saving research by contacting your representatives.
Use this toolkit to raise awareness on your social media and share your story about the impact of NIH-funded research. You can also invite others to join the campaign.
Share any media inquiries you receive with your unit’s media contact or send them to marcom@ucsd.edu.

Stay Informed on Key Federal Updates

It’s important to stay informed about policies that can impact our university community and everyone in it. We encourage you to frequently monitor the following resources for updates:

UC Federal Updates website
UC San Diego Federal Updates website
UC San Diego Health Federal Updates website (login required)
UC San Diego Health Sciences Federal Updates website (login required)

Next Steps

As we move forward, we remain committed to championing the critical work of our university, which is more vital than ever before. Guided by our mission and values, we will continue to navigate the evolving landscape, adapting our strategy to address emerging issues and opportunities.

We also continue to coordinate with the University of California Office of the President and UC Regents, ensuring our comprehensive campus response supports the UC system’s unified strategy. Additional updates will continue to come from my office, vice chancellors and Health system leadership, and UCOP. All of us remain united in responding to these unprecedented challenges.

We are grateful for your support and dedication to our university community, and we appreciate your trust and understanding as we work together to build a stronger future.

Sincerely,

Pradeep K. Khosla
Chancellor
Joan and Irwin Jacobs Chancellor’s Endowed Chair

Update on Financial Planning and Sustainable Operations

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