Fee Increase, Furloughs in Budget Plan

CSU Trustees Increase Student Fees for 2009-10 as Part of Overall Plan to Address Massive Budget Deficit
_The following budget update was provided by the CSU Chancellor’s Office._ Facing an unprecedented drop in state support and a $584 million budget deficit, the California State University Board of Trustees today increased undergraduate, credential and graduate student fees for the 2009-10 academic year as part of an overall budget action plan. Additional elements of the plan include employee furloughs and workforce reductions; enrollment cuts, and additional cost cutting measures on campuses.

Effective in fall 2009, full-time fees will increase by $672 for undergraduate students, $780 for teacher credential students and $828 for graduate students. This increase is in addition to the $306 fee increase (fulltime undergraduates) adopted in May. The undergraduate State University Fee will go up from the current $3,354 to $4,026 per year. Including the current average campus fee of $801, CSU undergraduate students will pay approximately $4,827 per year, which continues to be the lowest fee rate among comparable institutions.

“There has never been such a steep drop in state support in such as short amount of time,” said CSU Chancellor Charles B. Reed. “We are in the midst of a financial meltdown and need to take immediate action in order to preserve our institutions. We have developed an overall plan to get us through the next two years that both reduces expenditures and increases revenues. Raising student fees is always a difficult decision, and we recognize the tremendous burden and challenge it places on our students.”

One-third of the revenue from the fee increase ($79 million) will be set aside for financial aid. The remaining $157 million in fee revenue will help offset part of the $584 million budget deficit.

More than 187,000 CSU students will pay no fee increase due to increases in the State University Grants, federal grants, CSU fee waivers, and newly expanded federal tax credits. Also, the CSU is the largest recipient of federal Pell Awards, and the federal stimulus package will provide an additional $81 million for 120,000 of the CSU’s neediest students. Overall, factoring in financial aid, families who make $75,000 or less will not pay any fees. Financial aid and federal tax credits will also be available for many other students, including family incomes of up to $180,000.

The CSU Board of Trustees also voted to increase non-resident tuition from $10,170 per academic year for a full-time nonresident student to $11,160, effective fall 2009. This is the first increase in nonresident tuition since the 2004-05 fiscal year. The increase is expected to generate $11.5 million in revenue to help address the budget gap. Nonresident students pay nonresident tuition in addition to the State University Fee and mandatory campus-based fees. Thus, the total fees for full-time nonresident undergraduates will increase to $15,987 per academic year.
The CSU Trustees voted 17 to 1 to adopt the fee increase with Lt. Governor John Garamendi casting the dissenting vote.

Employee Furloughs

The board also approved changes to state regulations that will allow management and non-represented employees to be furloughed two days per month beginning on August 1, 2009. Approximately 85 percent of CSU’s budget costs are employee salaries and benefits, and the CSU has asked all of its 47,000 employees (except public safety personnel) to furlough as a way to protect the maximum number of jobs while generating essential salary savings.

If all employees were to furlough, it would generate $275 million in cost reductions. The California State University Employees Union (CSUEU), representing 16,000 non-academic employees, has ratified a furlough agreement. Members of the California Faculty Association (CFA), which represents 23,000 faculty, is holding a vote of its members on whether to negotiate a furlough option. The results of the vote are expected after July 22. The United Physicians and Dentists (UPD) with 117 members has agreed to furloughs, and several other small labor unions have either chosen to negotiate furloughs or have chosen layoffs per their contract.

At the board meeting Chancellor Reed reiterated the need to have a plan in place in order to prepare for the beginning of the academic year, and set a deadline of July 28 at 5 p.m. for all labor units to make a decision on the furlough option.

Enrollment Cuts

Over the last several years, budget reductions have forced the CSU to curtail enrollment and declare systemwide impaction last fall. In an effort to increase space available for new and continuing students, the board also approved changes to state regulations that will allow campus presidents to keep students from enrolling in additional state-supported courses and instead confer their degree when students have met all the necessary degree requirements.

CSU has already announced it plans to reduce enrollment by 40,000 students over the next two years, and has closed spring 2010 admissions completely. The enrollment cuts are expected to be implemented through a combination of enrollment management tools used last fall such as increased admissions criteria for out-of-area students.

Further Cost Cutting

Even after accounting for expenditure reductions from employee furloughs and revenue from the adopted fee increases, CSU campuses and the Chancellor’s office will be asked to cut an additional $183 million from their 2009-10 budgets. The CSU has already taken a number of cost cutting measures including a salary freeze for executives; a hiring freeze on non-essential positions, cancellation of all non-critical equipment and supply purchases, deferred maintenance and travel restrictions.

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.