New Report Suggests University of California’s Claims of Financial Distress were Unfounded

While imposing a hiring freeze, layoffs and a tuition hike, UC accrued billions in surplus funds & gave massive raises to executives

CALIFORNIA: A new analysis of the University of California’s financial statements, payroll records, UC policies, acquisitions and investment assets shows that the University is likely in the strongest financial position in its 150-year history, and calls into question the claims of financial distress university leaders made last year to justify a system-wide hiring freeze, layoffs, and its latest round of tuition hikes.

Read the Policy Brief, “Assessing & Understanding the Strength of University of California’s Financial Position.”

The report details significant growth in UC’s revenue streams and assets over the past decade. During this period, the system’s annual investment income, state appropriations, cash reserves (most of which are unrestricted), and private donations all nearly doubled, while its Medical Center Revenues nearly tripled. UC acquired eight new hospitals since 2023, and completed 150 new capital projects last year alone. In fiscal year 2025—as the University imposed hiring freezes and layoffs on its frontline workers and a new round of tuition hikes on students—it reported $5.5 billion in surplus revenue and erased $2.5 billion in unfunded pension liabilities.

“The complex and expansive nature of the University of California often results in an opaque and incomplete understanding of the system’s overall financial health,” said AFSCME 3299 Research Director Claudia Preparata. “This policy brief provides a comprehensive independent analysis of the University’s overall financial performance aimed at helping the public and policymakers hold UC accountable to its core public mission, and to assess the credibility of financial claims that are often used to justify cutbacks that hit low wage workers and students the hardest.”

Alongside the doubling of UC revenues over the last decade, the average salaries of UC’s highest paid Chancellors, Medical Center CEOs and other executives have also doubled, from an average of $540,000 per year to more than $1.2 million per year. Many of these same high paid employees are able to access other benefits, including sub-market rate loans to purchase primary or secondary homes.

While the University and its highest paid personnel are doing better than ever, the report shows how students and the system’s frontline workers are not. The university’s frontline patient care and service workforce—more than 40,000 full time employees who have been working without a contract for more than a year—have seen their real wages drop by up to 6% since 2017. News reports have detailed how these essential workers face a growing housing and affordability crisis. For students, tuition is up by as much as 53% over the last ten years, with recent UC expansions only increasing the number of students without access to guaranteed housing. Last year, UC surveys also showed 48% of its undergraduates experiencing food insecurity—the highest share ever reported.

“The University of California has all the resources it needs to address the affordability crisis plaguing its frontline workers and students,” said AFSCME Local 3299 Executive Director Liz Perlman. “UC’s failure to act reflects a lack of respect and morality, not a lack of money.”