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January 12, 2011- Budget Update

January 12, 2011

Budget Update

President's Budget Forum Scheduled for Jan. 27, University Hour, ARTS 240

On Monday, Governor Brown released his 2011-12 budget proposal aimed at closing the estimated $28 billion spending gap in the California Budget. The governor has proposed significant cuts in state support for the California State University. The 18 percent reduction or $500 million puts state funding support for the CSU at the same level as the 1999-2000 fiscal year.  However, CSU is serving nearly 70,000 more students. Overall, the governor's budget reduces state support for all California's public higher education institutions by $1.4 billion. The governor has not indicated there will be any mid-year cuts. 

These reductions likely will have a severe impact on our ability to serve our region and our students, restricting access to qualified applicants and challenging our ability to achieve our long-term goals for growth.    

Yesterday, I met with my executive council to review the governor's budget and our planning assumptions. I announced in July that I had directed the Provost and vice presidents to proceed with the 10 percent permanent budget reduction plans that were developed last fall and reviewed by the University Budget Committee. That plan included a five percent reduction in our current year budget and five percent for fiscal year 2011/12. While we have not been informed of the specific reduction to CSUSM, we are proceeding with the planned reductions and have identified additional contingencies as part of a comprehensive plan to address the proposed cuts.   Current searches are proceeding.  

We will continue to advocate for appropriate state funding for the CSU, but we must continue to be prudent in our planning. At present, I anticipate addressing the reductions in the following way:

  • The reduction in general fund revenue will be partially offset by the 10 percent increase in the state university fee approved by the Board of Trustees in November. 
  • The Provost and academic deans will begin immediate planning aimed at maximizing the use of summer term through self-support.
  • We anticipate exceeding our target this year, which will provide excess fee revenue, and we are reviewing planning estimates for projecting next year's fee revenue.
  • We anticipate that carry-forward funds will be used to address remaining reductions. Throughout the budget crisis, I have asked you to keep a watchful eye on spending in order to maximize our carryover funds. Divisions have implemented a number of measures to reduce expenditures and achieve operational efficiencies. We will review the mid-year budget report when it is available in late February.     

The situation will remain fluid, as we know the budget cycle is only just beginning. The governor is seeking to hold a special election to ask voters to approve tax extensions set to expire in June. The reductions to the CSU could be larger if the tax increases are allowed to expire. The Chancellor's Office will release preliminary allocations based on the governor's budget in the coming weeks. We will continue to monitor information as we receive it from the Chancellor's Office and Department of Finance, and review our planning assumptions to determine if additional steps are necessary to address the reductions. The University Budget Committee will continue to review our budget planning information and our long-term strategies for aligning our resource allocation with the University priorities.

The Chancellor will hold a meeting with CSU Presidents prior to the meeting of the Board of Trustees on January 25th and 26th. I have scheduled a University Budget forum for January 27th during University Hour in ARTS 240 to provide the most up to date information and assessment by the CSU.  

The University and public higher education face a serious challenge from the erosion of public support. We must be diligent in our efforts to educate the Governor, legislature and the public on the CSU's impact to the economy and the future of the State of California. California's economy cannot improve without an educated workforce. We will continue to advocate for higher education and CSUSM. While the magnitude of these reductions will have an impact, we will respond to these challenges with innovative and entrepreneurial approaches, and expanded partnerships, to provide educational opportunity for this region and service to our students.