CSU Board of Trustees Hear Details of Budget Plan

Jul 08, 2009
State Funding for CSU $500 Million Below Level a Decade Ago

_The following budget update was provided by the CSU Chancellor’s Office._ Trustees of the California State University heard details of the massive $584 million budget cut facing the CSU for the next fiscal year, and discussed a range of options including employee furloughs, enrollment reductions and potential student fee increases needed to address the deficit. State general fund support of the CSU for 2009-10 is expected to be $1.6 billion, which is $500 million below the level of state support provided a decade ago.

“We have never before seen such a devastating cut in a single year,” said CSU Chancellor Charles B. Reed. “I am really concerned because the CSU system has a national reputation for access, quality and diversity.”

CSU Board Chair Jeffrey Bleich emphasized the purpose of the meeting was to lay out all of the options. “This is going to be a terrible situation for California and for this board,” he said. “We all need to understand what we’re dealing with and the timing and tools that we have available to address the budget situation.”

Employee salaries and benefits account for 85.9 percent of the CSU’s operating budget, which means that large expenditure cuts will require significant reductions in labor costs, explained Robert Turnage, CSU assistant vice chancellor for budget. The overall goals of the effort to close the budget gap are to serve as many students as possible with quality instruction and to protect as many jobs as possible. However, Turnage also stressed that the enormity of the budget problem means that there is no single solution.

“We are facing a historic downturn in state revenues,” said Turnage. “No single option can solve the problem, and the problem will extend beyond 2009-10. The realities of operating our campuses require moving forward, even if action on the state budget is delayed.”

To illustrate the magnitude of the cuts, the $584 million is equivalent to the funding provided by the state for about 95,000 students or approximately the number of students CSU graduates each year. Turnage emphasized that it is likely that the state will take a long time to recover, and that any plan for the CSU needs to anticipate fiscal uncertainty for at least the next 24 months.

Employee Furloughs

Trustees also heard an update on the CSU’s meetings with its labor unions to discuss an option to furlough all employees for two days per month as one part of the effort to address the budget crisis. To date, CSU has reached a tentative agreement with the California State University Employees Union (CSUEU) that represents more than 16,000 non-academic employees. Applied systemwide, a two day furlough per month for all 47,000 CSU employees would generate approximately $275 million toward the $584 million deficit. In addition, it would save 22,000 classes – or about 15 percent – that would otherwise need to be cancelled for the coming academic year.

In addition, members of the Academic Professionals of California, that represents 2,400 student services employees, have also voted to begin negotiating furloughs. Furloughs for approximately 5,000 management, executives, presidents, and non-represented are expected to begin August 1, 2009 following board action on July 21 to change state regulations.

To date, approximately 21,000 of CSU’s overall workforce of 47,000 employees have committed to furloughs as one part of the overall effort to address the massive deficit. CSU has met with the California Faculty Association (CFA) to discuss the furlough option, but to date, no vote of its members has been scheduled. There are approximately 23,000 faculty personnel, but only dues-paying members of the faculty union are allowed to participate in a vote. Employees in the public safety labor unit will be exempt from furloughs, and several other collective bargaining units have either rejected furloughs or are still negotiating with the CSU on the option.

“We know that furloughs save jobs, protect retirement and keep health benefits in place,” said Reed. “There are no savings in furloughs. Furloughs cut expenses, and will allow us to preserve as many jobs as possible and to offer as many course sections as possible.”

A furlough is a mandated period of time off without pay. Furloughs differ from salary reductions and pay cuts in that they are temporary and do not affect employment status, or health benefit eligibility or pay rate for retirement benefits. Employees are required not to work on furlough days.

Enrollment Cuts and Student Fees

Trustees also were briefed about planned enrollment reductions for 2010-2011. Chancellor Reed announced that campuses will be closed for spring 2010 enrollment and will close winter 2010 admissions. Overall, CSU will look to reduce its enrollment by 32,000 students systemwide for 2010-2011 through a combination of enrollment management tools used last fall such as increased grade point averages for out-of-area applicants.

There will also be a fee increase considered at the July 21 board meeting that will go into effect for fall 2009. While the exact amount of the fee increase has not been finalized, increases in financial aid included in the federal stimulus package will likely cover any fee increase for 187,000 of CSU’s 450,000 students. In addition, CSU expects to receive an additional $81 million in Pell awards for its neediest students, and would also set aside one-third of any fee increase toward financial aid. Tax credits, increased work study and student loan improvements will also help to offset the fee increase for many students.

Next Steps

Chancellor Reed reiterated that CSU is running out of time to plan for the beginning of the new academic year, since many personnel decisions require a minimum of 45 days notice. “I have got to ask the presidents to move forward with their plans on how they will deal with the budget cuts on their campus, and we need to follow the contract provisions to reduce our workforce,” said Reed. Campus presidents are due to submit their campus plans within the next two weeks. The CSU Board of Trustees will vote on the entire action plan to address the $584 million deficit at its July 21 meeting.

About the California State University

The California State University is the largest system of senior higher education in the country, with 23 campuses, approximately 450,000 students and 46,000 faculty and staff. Since the system was created in 1961, it has awarded nearly 2.5 million degrees, about 90,000 annually. Its mission is to provide high-quality, affordable education to meet the ever-changing needs of the people of California. With its commitment to excellence, diversity and innovation, the CSU is the university system that is working for California.