The California State University:The California State University:

Politics, Budget and PrioritiesPolitics, Budget and Priorities

CSU Financial Officers AssociationApril 9, 2001

Santa Barbara, California

Fiscal and PoliticalChallenges

The Three ‘R’s of Current California Politics

California’s Energy Crisis Has Raised Rates for Californians, and Distracted Legislators.

The State’s Once Enormous Budget Surplus Is Dwindling; Slowing Economy and State Energy Crisis Is To Blame.

The Legislature Will Soon Be Embroiled In The Process Of Redistricting The State’s Legislative and Congressional Districts.

Rates:

Revenue:

Reapportionment:

California Higher Education Finance Trends

California’s fiscal condition is the largest factor in determining funding for Higher Education.

Even when State finances are adequate, Higher Education must compete with other

budgetary priorities.

Higher Education funding is routinely burdened by budgetary cuts to augment other State

programs during a fiscal crisis.

California’s Competing Budgetary Needs

•K-12 Education- the State’s largest budget expenditure.

•State Health Care Programs.

•Entitlement Programs

•Law Enforcement and Public Safety

•Infrastructure- including energy and housing initiatives.

CSU Share of State General Fund Revenue

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

CSU share of annual State revenue has declined from an average of 5% prior to 1990, just 3.8% today.

300,000

290,000

280,000

270,000

260,000

250,000

240,000

230,000

220,000

91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01

Budget Actual

Funded Versus Actual Enrollment

The Enrollment Tidal Wave

Legislative Analyst’s Office:California’s Fiscal Picture

Economy Will Slow Sharply in First Half of Year and Remain Sluggish Throughout 2001

State Faces Most Unusual and Challenging Set of Circumstances in Recent History

Budgetary Decisions Must Be Coordinated With Energy Issues: Costs of Energy Policies Could Easily Surpass Amount Set Aside in Budget

The Incredible Shrinking Surplus

November 2000: $10.3 Billion (LAO)

January 2001: $8 Billion (DOF)

February 2001: $6.6 Billion (LAO)

The Wild Card: Energy CrisisEnergy Crisis

State Spending $50 Million Daily on Spot Market

State’s Choice: Raise Consumer Rates, or Find Another Funding Source to Cover Purchase Costs

CSU Issues:Increased Natural Gas Costs: $40 Million Ongoing CostsDirect AccessInterruptible Service Contracts

Politics and PolicyTerm Limits

•Short Term Relationships.•Little or No Staff Policy Experience.•Limited Institutional Knowledge and Experience.

Political Trends

•Increasing Role of Ballot Initiatives.•Stronger Influence Over Policy By Governor•Reapportionment

CSU 2001-02 Priorities

CSU Support & Capital Outlay Budgets

Need for Public Education Facilities Bond Act in 2002

2001 CSU Sponsored Legislation

2001-02 CSU Support and Capital Outlay Budgets

2001-02 Budget Priorities

Maintain Governor’s Proposed Budget

Additional 2% Compensation for Faculty

and Staff

Supplemental Requests:Increased Energy Costs

Enhanced Student Services

Faculty and Staff Housing Initiative

Governor Proposes 12% Increase in CSU Budget

Governor’s Proposal is Consistent with Higher Education Partnership, and Includes Significant Investments Above Partnership

Four Key Areas of FocusEnsuring Student Access

Maintaining High Quality Education

Improving Student Academic Preparation

Contributing to California’s Economy

Governor’s Proposed CSU Budget:Ensuring Student Access

3% Enrollment Growth: $62.3 Million

Conversion to Year-Round Operations at Nine Campuses: $16 Million

State University Grant Increase/Fee Waivers: $6 Million

New Campus Costs at CSU Channel Islands: $3 million

Ensuring Student Access:Cal Grant Guarantee Program

SB 1644 (Ortiz/Poochigian et al) Authorized Major Expansion of Cal Grant Program

30,000 Additional Students to Receive Cal Grants in 2001/02 Under New Program

Budget Provides General Fund Increase of $138 Million to Student Aid Commission to Cover Costs of New Program

Governor’s Proposed CSU Budget:Maintaining High Quality Education

4% Faculty/Staff Compensation Increase: $94.2 Million

Long-Term Budget Need: $23.5 MillionTechnology Infrastructure Build-Out: $10 Million

Increased Student/Faculty/Staff Access to Networking Services: $5 Million

Enhancement of Campus Libraries: $4 Million

Deferred Plant Maintenance: $4 Million

One-Time Funding for Critical Instructional Equipment Needs: $20 Million

Governor’s Proposed CSU Budget:Student Academic Preparation

Expansion of Successful CSU K-12 Academic Preparation Program: $8 Million

Will Double the Number of Targeted High Schools

Program Assists Schools, Teachers and Students to Achieve High Academic Standards and Prepares Students for College

Diagnostic Writing Service: $1 MillionCSU Request on Behalf of Education Round Table

Program Helps Students and Teachers to Identify Writing and Reading Deficiencies, Allowing Students to Strengthen Skills Necessary to Enroll in College-Level Work

Governor’s Proposed CSU Budget:Student Academic Preparation

Governor’s Teacher Fellowship Program:

$17.5 MillionProgram Provides Fellowships to Attend Teacher Education Programs and Teach in Underperforming schools

Governor’s Education Technology Professional Development Program: $18.5 Million

Amount Will Fully Fund Program, Which Provides Teacher and Administrator Training in Use of Technology in the Classroom and Curriculum

Governor’s Proposed CSU Budget:Contributing to California’s Economy

$10 Million to Improve Access to Strategic Academic Programs: Engineering, Computer Science, Agriculture, Nursing, Biotechnology, Biosciences

$1 Million Each for Three Areas of Applied Research Activities

Agricultural Research Initiative

CSUPERB (Education and Research in Biotechnology)

Marine StudiesCentral Valley Economic Incubator at CSU, Fresno: $650,000

Unfunded CSU Requests inGovernor’s January Budget

2 Percent Compensation Supplement for Faculty and Staff: $40 Million

Student Services Enhancement: $12 Million

Investment in Faculty and Staff Housing: $5 Million

Additional CSU Budget Objectives

$40.8 Million for Additional 2 percent Faculty and Staff Salary Increase

Allows Attraction/Retention of High Quality Employees

Helps Preserve Quality of Instructional Offerings

Reduces Faculty Salary Lag to 1.9 Percent (Was 11.1 Percent in 1999/2000)

Allows Development/Maintenance of Competitive Staff Salary Structures

Additional CSU Budget Objectives

Student Services Improvement: $12 MillionAugmentation of Academic Counseling

Online Checking of Admission Status

Electronic Access to Financial Aid Information

Permanent Funding for CSUMentor, CSU’s Internet-Based Information System for Students/Families

Faculty and Staff Housing Initiative: $5 MillionAffordable Housing Crucial to Recruitment

Initiative Would Provide Incentives Targeted to Faculty and Staff Recruitment

CSU Capital Outlay Budget

Governor’s Budget Proposes $201.5 Million to fund 27 major Capital Outlay Projects; $5.5 Million for minor Capital Outlay

LAO Withholds Recommendation on three major projects: Fresno Science Replacement Building; Sacramento Academic Resource Information Center; San Bernardino Science Building Renovation/Addition

LAO Recommends Deletion of two major projects: Channel Islands Science Laboratory; Fullerton Auditorium/Fine Arts Instructional Facility

Action Items: CSU Budget

PROTECT GOVERNOR’S CSU BUDGET

2 PERCENT FACULTY/STAFF SALARY SUPPLEMENT

$19 MILLION ONE-TIME IN CURRENT YEAR, $21 PERMANENT FUNDING FOR ENERGY COSTS

$12 MILLION TO ENHANCE STUDENT SERVICES

$5 MILLION FOR HOUSING INITIATIVE

Need for Public Education Facilities Bond Act in 2002

Tidal Wave II Has Begun: CPEC Estimates CSU Will Add 130,000 Students by 2010

Aging Infrastructure, Past Funding Shortfalls Have Created Multi-Million Dollar Maintenance Backlog

Unlike K-12 Schools and Community Colleges, CSU Relies Entirely on Statewide Bonds to Fund Program

Proposition 1A Provided Stable Funding Source for 4 Years; Funding Ends With 2001/02 Cycle

Planning for Progress:The Challenge of the Future

Tidal Wave II Arrives:Projected Enrollment at CSU 2001-10

0

100,000

200,000

300,000

400,000

500,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total Students

CSU’s Aging Infrastructure

Age of Campus Buildings

0-20 Years: 230 24%

21-40 Years:354 38%

41-60 Years:318 34%

Over 60 Yrs.: 40 4%

CSU’s Capital Outlay Needs

2001/02: $555 Million2002/03: $834 Million2003/04: $836 Million2004/05: $347 Million2005/06: $419 Million

TOTAL NEED: $3 BILLION OVER NEXT FIVE YEARS

CSU Higher Education Bond

4 Year Period Covered by Bond Act

Bond Act Worth $1 Billion Per Year

Joint K-12/Higher Education Bond

Split Between Higher Education Segments

Placed on Ballot March 2002

CSU Legislative Program

Senate Bill 277 (Chesbro) Public Employee Health Care Benefits: Rural Areas: State University Employees

Senate Bill 323 (O’Connell) California State University: Real Property Exchange CSU Channel Islands

Senate Bill 593 (Alarcon) California State University: Real Property Exchange CSU Northridge

Assembly Bill 1689 (Assembly Committee on Jobs) California State University: Vendors: Payment

Assembly Bill 1719 (Assembly Committee on Higher Education) California State University Omnibus Proposals

Senate Bill 713 (Alpert) Authority to Offer Doctorate of Education Degree

2001 CSU Priorities

2001/02 CSU Budget

Higher Education Bond

2001 CSU Legislative Program