Governor's May Revision Ties $1 Billion CSU Cut to Tax Extensions

May 17, 2011
Total reduction would be 36% less in state funding than last year

_The following was provided by the CSU Chancellor's Office_ Governor Brown's May Revision of the state budget proposes an additional reduction of $500 million in state funding support for the California State University, bringing the total budget reduction to $1 billion, if his proposal for temporary tax extensions is rejected. That would represent a 36 percent year-over-year reduction in state funding for the largest public university system in the country with more than 412,000 students. The legislature had earlier approved an initial $500 million cut in state support to the CSU for the 2011-2012 fiscal year that starts July 1.

"That would be a scorched earth budget and would inflict lasting damages to the university," said CSU Chancellor Charles B. Reed. "There will undoubtedly be severe and painful choices that we would have to make to address such a massive funding reduction."

Earlier this month, CSU outlined a budget contingency plan of action to address an "all cuts" budget that potentially could reduce state support for the CSU by $1 billion. As part of the contingency plan, CSU said it would "wait list" applications for winter and spring 2012 and consider an additional tuition fee increase of up to 32 percent. Under this worst case scenario, CSU estimates it could turn away 20,000 qualified applicants who would otherwise enroll for the winter/spring 2012 terms.

In addition, if the final budget is not adopted by the legislature by the end of the fiscal year, and CSU faces a proposed $1 billion cut, the CSU board could be asked to take action at its July meeting to authorize a contingent tuition fee increase of up to an additional 32 percent (on top of the 10 percent increase approved for fall 2011). The final amount of any increase would depend on the final outcome of the state budget. For full time undergraduates, this would mean an increase of as much as $1,566 or a total of $6,450 in tuition fees per year. In addition, campuses charge various fees that average $950 per year.

"If the additional state revenues proposed by the governor are not an assured part of the final budget we will have no choice but to move forward in July to consider tuition and enrollment actions," added Reed.

In response to the already approved initial $500 million cut, CSU had announced that it will enroll fewer students this fall, and will apply an estimated $146 million from tuition increases already approved for fall 2011 to the budget reductions. Across the system, campuses will be asked to reduce their budgets by an additional $281 million, and the Chancellor's office will be cut by $10.8 million or 14 percent.

Since the state's fiscal crisis began in 2008-09, CSU has reduced the number of its employees by 4,145 or 8.8 percent. The Chancellor's office has reduced management personnel by 11 percent. In addition to reducing the number of employees CSU has implemented a number of strategies to address decreased state funding support including employee furloughs, raising tuition fees, enrollment cuts and other cost cutting measures.

"Raising tuition is always a painful choice, but at this point, we are faced with just trying to keep our classroom doors open," said Reed.

The CSU has also made strides in recent years to become more efficient, and is working on many fronts to do even more. Federal data shows that 10 of the 20 most efficient large campuses in the country are CSU campuses, in terms of institutional spending per student. However, officials stress that the system cannot address a $1 billion or 36 percent budget reduction in one year with simple efficiencies.

"Additional budget cuts to the California State University will only put the state further behind in its economic recovery," concluded Reed. "It is unrealistic to think that California will regain its Golden State stature without an educated workforce."