With the recent passage of the long overdue state budget and the subsequent mid-year budget reduction that soon followed, I believe it is a good time to update you on CSULB’s budget planning for this fiscal year. First, I would like to take this opportunity to thank all of you for your dedication, hard work and commitment to our great university. I feel very fortunate to be a part of this campus where the faculty and staff regularly demonstrate their commitment to our public mission and genuinely believe in the value we provide to our students, our community, and the State of California.
I also want to thank our Resource Planning Process (RPP) Task Force for their ongoing counsel and guidance on the development of a fiscally responsible and creative financial strategy that will allow us to continue striving forward despite external economic conditions that have been thrust upon us.
Following the longest budget delay in state history, the Governor signed a state budget in late September that resolves the $24 billion deficit identified in the state’s budget May Revision but does not resolve California’s persistent structural budget deficit.
As you already know, the passage of the May Revision protected us from very serious and difficult budget cuts first advocated in the Governor’s initial legislative proposal last January. I am grateful to the collaboration of students, faculty, staff, administrators, and alumni working with the “Alliance for the CSU” which proved very successful in advocating the protection of education and the CSU from the initial budget cuts. I’d like to thank all of you for your enthusiasm and support of this important alliance. However, as we have recently experienced, we still have much work ahead and maintaining the strength of the “Alliance for the CSU” will be critical as we wade through uncertain economic waters.
Overall, this year’s budget provides the CSU with essentially the same level of state support as last year, or $2.97 billion from the state General Fund and an estimated $1.5 billion from student fee revenue. A component of the budget is a 10 percent student fee increase for undergraduates, graduates, and credential students. However, CSU fees remain very low compared to other state university systems. For example, our 10 percent increase equaled only $276 per year for full-time resident undergraduate students at CSULB, bringing our total fees to $3,392. This compares very favorably to the national public university average for tuition and fees, which rose to $6,585 for fall 2008 after increasing $394. Additionally, CSULB continues to be the most affordable campus in the CSU, costing less than half the national average for comparable state universities. High quality education and low costs are two important reasons why CSULB consistently ranks among the best universities in the nation.
Unfortunately, just after we finished analyzing the state budget at it was passed, the Department of Finance estimated that state revenues received in the first quarter of the fiscal year were $1.1 billion below the budget plan earlier anticipated. In that context, state agencies and departments, including the CSU and UC, were informed that $390 million would have to be reduced from their current budget allocations in mid-October. This mid-year budget reduction means the CSU experienced a $31.3 million immediate cut, which also translates to a $2.3 million reduction for CSULB. So despite the rhetoric that the CSU received the much improved allocations proposed in the May Revision, the CSU will actually receive less. Based upon what is known today, it is currently expected that this reduction will be non-recurring. For this reason, I have decided to use campus contingency funds to cover this reduction to cause the least disruption to current campus operations and instruction.
Regrettably, the CSU budget is still more than $200 million below operational needs. This year’s budget provides no increase for enrollment growth, a trend that began in 2005-06 when student enrollment grew faster than state funding. Furthermore, this budget does not provide funding for unavoidable cost increases for health benefits, compensation, or escalating energy costs. We must find ways to cover these ourselves without additional state assistance.
The state’s worsening budget situation also brings the possibility of further mid-year reductions in the 2008-09 budget. We certainly hope this does not occur but must be prepared as a campus. The Governor has already announced plans next month for a special session of the legislature to address the budget situation. We will keep you informed of any new developments that surface in November and beyond.
Although the CSU still faces this serious funding gap, we all remain committed to preserving academic quality and academic programs that are critical to the future success of California.
The campus budget situation is as good as can be expected under the current state and national economic circumstances. The final budget, which excludes an almost $7.5 million state budget reduction that was part of the Governor’s January proposal but also doesn’t provide all funding proposed in the May Revision, still represents an improvement over our original budget planning scenario.
However, the budget unfortunately provides no funding for enrollment growth for additional students or for unavoidable mandatory cost increases. These mandatory cost increases include health benefits which increased by $1,598,000, energy costs which grew by $335,000, as well as unfunded compensation increases of $6,665,000. We also have identified essential campus initiatives totaling $3.5 million for activities such as the emergency notification system, classroom maintenance, and the comprehensive fundraising campaign.
Even though the final state budget reduced the level of budget cuts assigned to the CSU, our campus still faces a $6.9 million shortfall generated by the mandatory costs and high-priority activities described above. In order to lessen the effects of this shortfall, we will again utilize temporary resources in the amount of $2.9 million to sustain operations until permanent funds become available. Consequently, divisions will only be asked to implement $4 million in reductions. While still serious, this reduction amount is significantly less than the $7.8 million reduction planned for in our original budget scenario based upon the Governor’s January Budget.
This year’s final state budget only delayed some difficult decisions that will have to be made in the coming years. It is highly likely that we will face a new set of budget reductions in fiscal year (FY) 2009-10. Therefore, it is imperative that we make progress resolving our current year $6.9 million shortfall. If we are not careful this year, we will face a more drastic fiscal situation next year. The threat of further mid-year reductions in 2008-09 and the expected reductions in 2009-10 should encourage us all to take measures such as to curtail travel, defer purchases, and even delay the filling of some vacant positions.
The following chart displays the distribution among divisions of the $4 million base reductions and the loss of one-time Budget Recovery Program (BRP) funding which had been provided last year but is discontinued in FY 2008-09.
|A - Base Budget Cut||B - Loss of BRP Funds||C - Total Impact|
|Academic Affairs - Instruction||-$1,202,700||$0||-$1,202,700|
|Academic Affairs - Non-Instruction||-402,879||-744,566||-1,147,445|
|Total Academic Affairs||-1,605,579||-744,566||-2,350,145|
|Administration and Finance||-1,519,468||-786,181||-2,305,649|
|University Relations and Development||-148,570||-80,240||-228,810|
I am pleased to support the recommendation of the RPP Task Force in allocating $1 million in one-time dollars to non-instructional budgets to partially fund the final year of the Budget Recovery Plan. I understand this still results in a loss of $2 million from 2007-08 funding levels (column B above), but this funding will help mitigate the overall reduction to non-instructional budgets in 2008-09.
The multi-year budget recovery plan successfully protected the campus from the disruption and trauma of earlier state budget cuts and almost restored instructional and non-instructional based budgets to the 2003-04 level. The plan enabled us to preserve instructional capacity, improve quality, and partially restore services impacted during those budget reduction years. It is unfortunate that we were not able to complete this effective budget recovery strategy.
Unfortunately, the 2008-09 state budget does not include provision for salary increases for faculty and staff. Because increased salaries are well deserved and critical to our ability to recruit and retain the best employees at CSULB, the Chancellor and the Board of Trustees are committed to seeking additional state funding in future budget cycles, including the upcoming 2009-10 budget year so that we can offer competitive salaries.
State resources alone are simply not sufficient to take CSULB to the next level. Private dollars are essential to a university’s ability to excel. We have embarked on a comprehensive fundraising campaign to provide better educational opportunities for our students, build our endowment, boost fundraising efforts, and strengthen our statewide and national reputation.
Given our recognized achievements, large alumni base, excellent reputation in the community, and our compelling vision, we are well positioned to be successful with a major fundraising campaign. With an expected return on investment of $7 for every $1 spent on fundraising, dedicating some resources toward this endeavor is essential and vital in building the kind of flexible funding that assists faculty, staff, and students.
Already we are seeing positive results from our development efforts over the previous three years. Last year we experienced our most successful fundraising year in our history. The university raised $34 million, which represents a 26 percent increase from the previous year and a 66 percent increase since 2005-06. We also received the largest single gift in CSULB history, a $16 million gift from the Bob Cole Trust to establish the Bob Cole Conservatory of Music.
Our endowment grew to nearly $38 million, despite a very troubled year in the investment markets. This represents an increase of over 9 percent from last year, and a 40 percent increase from two years ago. More importantly, we now have over $66 million in gift expectancies or pledged gifts that will add to our endowment in the years to come.
Enrollment at CSULB continues to be very strong. Our new enrollment this fall pushed us to nearly 38,000 students, not because we admitted more but because the rate of acceptances exceeded previous years, and because we are retaining more students. These are both very encouraging trends of which we all should be proud. The increase in enrollment is even more gratifying considering that once again we attracted a growing number of economically disadvantaged students and President’s Scholars. The campus has worked hard to provide adequate classes and services and is to be commended for these successful efforts. However, our enrollment success during a difficult budget period when state funding support for enrollment growth is not available challenges our ability to well serve our students.
With no enrollment growth funding, our funded enrollment target for 2008-09 is 29,357 FTES. We already achieved this level of enrollment in 2007-08, and current indications are that we exceeded this target by about 1,300 FTES. Consequently, our first funding priority has been to ensure that courses are available for students. We must manage our student enrollment while maintaining our educational effectiveness, focusing on student success, and improving our graduation rates. As enrollment rises, we remain committed to ensuring all students have the level of support and high quality university experience they deserve. We also recognize, however, that if state support is not forthcoming, it is not feasible to sustain this enrollment level. Therefore, we are anticipating reducing our enrollment by approximately 1,300 FTES for 2009-10 to move back to our funded enrollment target.
This fall, we welcomed 35 new tenure-track faculty members and a number of new lecturers who have joined us from all over the nation and the world and who bring very impressive professional and academic credentials.
We also added many new staff members to our campus family from academic department staff, counselors, advisors, maintenance and custodial professionals, campus police officers, grounds crews, to many, many others who will collaborate in new and creative ways to ensure that more students achieve their educational dreams.
This year we will have more campus construction underway at one time than at any other point in the history of the university. Nearly $250 million in building and renovation projects will affect virtually every corner of our campus.
Recently we achieved many institutional milestones that are praiseworthy. Our unofficial graduation rate is expected to be nearly 54 percent, above 50 percent for the first time in history and more than double the graduation rates in the late 1980s and early 1990s. The influence and impact our approximately 8,500 graduates will bring to California and the national economy is immeasurable.
Due to our increasing momentum and attractiveness, we received a total of about 70,000 applications for fall admission. To put this in perspective with many other universities nationwide that also had record-setting applicant numbers: We had 17,000 more applicants than the University of Texas-Austin; 24,000 more applicants than the University of Florida; 32,000 more applicants than the University of Wisconsin-Madison; 44,000 more applicants than the University of Virginia; and 47,000 more applicants than Harvard, which also had its biggest year.
Today, out of 2,018 other four-year universities, there are only a handful of institutions nationwide that are more affordable to their students – where undergraduates finish college in less loan debt, have a lower percentage of its students graduate with any loan debt, and offer a greater individual or social rate of return than CSULB.
CSULB continues to be recognized for its excellence in academic programs and increasingly is being recognized as one of the nation’s truly high-quality/high-value university models. Thanks to your dedication and commitment to our students, our outcomes at every level indicate that we are among the nation’s best producers of highly educated talent. Unfortunately, the unpredictable economic circumstances that we are experiencing are well beyond our control. Therefore, it is imperative that as we move forward we will need to continue to be strategic, entrepreneurial, and creative due to a very troubling fiscal environment. Despite these challenging economic conditions, I am confident that we will adjust and fulfill our mission in the collaborative spirit that has proven to be the envy of many universities in California and beyond.
Once again, thank you for your dedication and commitment, and Go Beach!