The University of California system is facing a significant financial shortfall, projected at $504.7 million for the 2025-26 academic year. This budget crunch is due to potential state funding cuts and increased costs, including faculty and staff pay raises, retirement contributions, and healthcare expenses. Despite these challenges, UC plans to enroll 3,600 more California students next year, aiming to add 2,044 undergraduates and 625 graduate students. However, the ability to replace out-of-state and international students with Californians remains uncertain if funding is reduced.