March 2005
Richard P. West, Executive Vice Chancellor and Chief Financial Officer
 News from the Departments
Budget Development
Patrick Lenz, Assistant Vice Chancellor

Business Planning and Information Management
Lenore Rozner, Assistant Vice Chancellor

Capital Planning, Design and Construction
Elvyra F. San Juan, Assistant Vice Chancellor

Financial Services
Dennis Hordyk, Assistant Vice Chancellor

Information Technology Services 
David Ernst , Assistant Vice Chancellor

Advocacy and Institutional Relations
Karen Y. Zamarippa, Assistant Vice Chancellor

Patrick Lenz, Assistant Vice Chancellor

The CSU assumes a budget of $2.6 billion from the state General Fund, approximately $1.2 billion from fee revenue, and $40 million from Lottery revenue for a budget of just over $3.8 billion in 2005-06. The 2005-06 CSU budget augmentation of $211.7 million consists of $110.5 million from the General Fund and $101.2 million from the increase in student fees. With the exception of a $7 million reduction for one-time funding in the 2004-05 fiscal year, the Governor’s January budget is consistent with the revenue and expenditure assumptions approved by CSU’s Board last October that include:

  • Increasing enrollment growth by 2.5 percent to serve an additional 8,103 full-time equivalent students,
  • A set-aside of $23.3 million for student financial aid,
  • $40.7 million to cover CSU mandatory costs for the first time in the past three years,
  • A compensation pool of $88.1 million, and
  • $7.9 million for long-term needs including technology, libraries, and instructional equipment.

LAO Recommendations

The LAO released their analysis of the 2005-06 state budget, indicating that revenue projections are $2.2 billion higher and expenditures are $250 million lower than anticipated when the Governor released his budget in January. The LAO attributes the increase in revenues to the growth in the U.S. and California economies, particularly from sales tax receipts from business profits. Despite this additional revenue, the LAO believes the budget can only be balanced if the magnitude of savings proposed in the Governor’s budget is realized. While the additional $2.4 billion in revenue is encouraging, and the $9.1 billion in structural budget changes will allow the 2005-06 budget to be balanced, the state still will incur a $1.1 billion deficit in 2006-07.

Because the Analyst believes student participation rates will remain constant, they recommend that CSU enrollment grow by 2% next year rather than the 2.5% increase proposed in the Compact and Governor's budget. The Analyst also will recommend that budget bill language specify the enrollment expectation for 2005-06.

The Analyst recommends the state fund enrollment growth at $5,999 per FTES rather than the $6,270 that is based on 2004-05 marginal cost methodology. This recommendation would result in an $11 million reduction in CSU enrollment funding. The reason for the reduction is to recognize the 5% changes in the student faculty ratio proposed in the 2003-04 and 2004-05 Governor’s budgets. However, the CSU did not support these recommendations and subsequently worked with the Department of Finance to implement other budget reduction options. The Analyst also questioned whether the marginal cost calculation was in compliance with the approved 1995 methodology, and that the methodology should be reevaluated to address several issues.    

The Analyst also recommends that the legislature reduce the CSU General Fund appropriation by $24.4 million identified as savings associated with the second year of the excess unit surcharge phase-in. Finally, the LAO recommends that $26.6 million in Student Aid Commission Ed Fund money be used to increase funding for Cal Grants so private universities receive the same benefit as the public universities. In total, the LAO will recommend that $61.6 million in Student Aid Commission Ed Fund monies be used to increase Cal Grant funding for all financially needy students.

Staffing Announcement: The Budget Office is pleased to announce the hiring of a new Research Support Analyst, Kara Perkins, who will assist in the review and analysis of several critical budget issues and projects. Kara was previously the fiscal and grants manager for the CSU California Academic Partnership Program and has worked on extended assignment at the CSU Chancellor's Office with the Office of the Trustees, Academic Human Resources, Employee Relations and Community Service Learning.

Lenore Rozner, Assistant Vice Chancellor


CMS Process Impacts & Measures Data Collection Taking Place in March: Required data collection will be done via the web beginning in March with an April 8th deadline for ALL campuses. Instructions and passwords are being distributed to all Project Directors and Functional Groups. This initiative provides opportunities for campuses to identify and share information and experiences utilizing CMS to improve administrative efficiency, effectiveness, and service in areas such as student administration, finance, and human resources; and how campuses are maximizing and extending the capabilities of CSU administrative systems. For more information, contact Matthew Ceppi at or (562) 951-4547.

Customer Satisfaction Surveys Participation Increases by 10%: Ease of administration via the web, the ability to customize campus surveys, and instant results are just a few of the factors attributing to a ten percent jump in function and campus participation in the spring 2005 Customer Satisfaction Survey initiative. Communications and requests for participation were sent to campus Quality Improvement Facilitators and function representatives in late January. While deadlines are quickly approaching for the spring survey process, there is still limited time to participate in this year’s effort if you have not already indicated. Surveying will take place from late March to late May, on a timeline selected by each campus. Systemwide results will be available by mid-June. For more information, contact Briana Anderson at or (562) 951-4552.

Save the Date: The Quality Improvement Symposium will be held on Thursday, February 23, 2006 at the LAX Crowne Plaza Hotel. Delegates will experience wonderful opportunities for learning and networking through keynote speakers and various breakout sessions and case studies. More information on how you can be a case-study presenter or delegate to this remarkable event will be in the Spring-Summer QI Newsletter - or visit

Matthew Ceppi
Director, Quality Improvement Programs

Elvyra F. San Juan, Assistant Vice Chancellor

During February, approximately 30 campus facility managers attended two days of training focused on subjects of specific interest to plant operations. Best practices in facility condition assessments and maintenance management systems were presented, as well as the State Fire Marshal approval process for minor capital projects. The second day was devoted entirely to labor management issues, led by staff from Human Resources. These courses provided information and critical discussion on topics that significantly impact the daily operations of physical plant.

The next scheduled program, Finances of Non-state Projects, will take place on May 12. Chancellor’s Office staff from Finance and Treasury, Financial Services Accounting, Contract Services and Procurement, Audit, and Capital Planning, Design and Construction will participate in presenting this training. Information on the 2005 Capital Training program, as well as online registration, is available at:

Nancy Freelander-Paice, Executive Program and Fiscal Manager


The Board of Trustees recently approved an agreement by which the Grupe Commercial Company (GCC), Master Sublessee of the Stockton Center site (now known as University Park), will allow for the Stockton Unified School District (District) to construct a kindergarten through eighth grade school. The Stockton Center Site Authority reviewed and approved the proposed agreement prior to forwarding it to the CSU Board of Trustees.

The agreement will allow the District to proceed with the development of the K-8 school as part of the Master Development Plan previously approved by the Site Authority and the trustees in November 2003. This local K-8 school construction project is a long-term investment and an important milestone for the overall University Park development concept.

In 1997, the CSU acquired the Stockton Developmental Hospital for the purpose of relocating the CSU Stanislaus Off-Campus Center and to support local community economic revitalization. The Stockton Off-Campus Center has been in operation since 1974, and currently serves approximately 400 FTE, providing the only access to a four-year public university in the region. This partnership, between the city, the CSU, and a private development partner, is a unique initiative that will yield long-term benefits for all the stakeholders, and maximize the use of a valuable state asset to benefit the local community.

The Land Use Planning Unit reminds campuses to plan for and complete "site clearance" for new capital projects early enough to allow for review/revision time and still be able to meet agenda item deadlines for trustees’ meetings. The three main areas involving site clearance are: preliminary site clearance for the location of projects on the capital outlay program master plan; preparation of Due Diligence Summary Reports for property acquisitions; and site clearance associated with clearing title for bond-funded projects. Due to the increased liability and significant cost associated with factors such as seismic stability, hazardous materials, mold, and Americans with Disabilities Act (ADA) compliance, the careful completion and verification of necessary due diligence is vitally important. The absence of adequate analysis at the early stages of a project can lead to lengthy delays and unnecessary costs, both of which can adversely affect the ability of the CSU to move a project forward to completion. The staff in CPDC, and LUPER specifically, is ready to assist campuses in completing this important documentation as part of the capital project development program.

David Rosso, Chief of Land Use Planning & Environmental Review


Construction Manager at Risk: Twelve projects are currently utilizing the CM at Risk with a Guaranteed Maximum Price model. Two of the projects have now attained the Guaranteed Maximum Price and have started construction. CPDC continues to work closely with these campuses to ensure a smooth delivery of their project and to develop a better model with guidelines for other campuses to use.


Contract General Conditions: The following contract general conditions have been updated on the web: Major Capital Outlay, Minor Capital Outlay, Job Order Contract, and Construction Manager at Risk. Design-Build will be updated and on the web site before the end of March.

Division One Specifications Tool: Division One is available on the CPDC web site for downloading and customizing for your project. This version is fairly basic and can be used for most projects. For more sophisticated projects, an advanced version will be made available on the web site before the end of March.

Prequalification of Prospective Bidders, Form 703.11: The prequalification forms have been updated, and are now available for downloading in read-only format.

Jim Corsar, Chief of Construction Management


New Energy Program Manager joins CPDC: Capital Planning, Design and Construction is pleased to announce the appointment of Aaron Klemm as Energy Program Manager effective February 21, 2005. Aaron was previously employed in the service departments of Johnson Controls, York, and Astropower (photovoltaic manufacturer). He also spent four years with Enron Energy Services, from the onset of California’s direct access through to the company’s bankruptcy. Aaron has a Bachelor’s degree in sustainable community development, which complements our increased interest in sustainability efforts systemwide. Please join CPDC in welcoming Aaron to the CSU.

UC/CSU/IOU Energy Efficiency Partnership Progress: To date, the Energy Efficiency Partnership program has achieved 97% of the electricity demand goal, 115% of the electricity usage goal and 66% of the natural gas goal. The Investor Owned Utility (IOU) representatives have reported that most of the Retrofit Project Commissioning Project (RPCP) paperwork has been authorized and returned to the campuses. The partnership team has finalized the scope of work for the Monitoring Based Commissioning (MBCx) projects. The final scope of work will be e-mailed to the campuses with MBCx activities and projects. Activity and funding levels are set to achieve program goals. Despite being on target to achieve the energy savings goals of the partnership, there is still funding remaining in the program. These funds total $1.2 million or 10% of the program total.

Direct Access Electricity: The Energy Contract Oversight Board, (ECOB), a joint UC/CSU committee, has selected three electricity service providers for final negotiations of a 3-year electric commodity supply. The board is working to obtain the best price for both university systems that will commence on July 1, 2005. A green-e certified renewable energy option has been requested for 12, 13, and 14 percent of the total electricity use for each successive year, pending CSU Board of Trustees’ approval.


State Fire Marshal to Charge for Services: The CSU relies on the State Fire Marshal to review and approve plans, field inspect projects under construction, and provide periodic reviews of existing buildings, most notably dormitories and science facilities.

For the last few years CSU has had a successful program in place with the State Fire Marshal to secure expedited plan review services. This program is funded by a supplemental .07% construction budget line item charge that CDPC collects as apart of overall soft-cost charges. The majority of Fire Marshal services up to now, however, have been funded as a part of the state general fund budget. In 2004/05 the entire State Fire Marshal budget was eliminated and they were mandated to begin charging each ‘client’ for services. CSU costs for State Fire Marshal services are projected to rise from .07% to .25% of construction costs. To forestall campus difficulties with the after-the-fact billing of these charges, CPDC is working with the State Fire Marshal to have them charge CPDC rather than campuses individually as they had originally planned. CPDC has informed the Department of Finance of this new charge and of our plans to increase budgeted soft costs in 2006/07 to cover this additional expense.

Tom Kennedy, Chief of Architecture & Engineering


Facilities Planning has been tracking the exceptional escalation of construction costs during the past year in order to improve budgeting for projects in future CSU capital improvement programs. Analysis of recent bid results, feasibility studies, and Engineering News Record indices has resulted in a determination that a 30% increase in construction cost guidelines be incorporated in all CPDC budgets for future state capital projects. Financial plans for non-state projects will also be reassessed in light of these spiraling costs. This increase is expected to bring projects budgeted for the 2006/07 Capital Outlay Program in line with current market conditions.

The Department of Finance has rolled back the submittal dates for Capital Outlay Budget Change Proposals (COBCP) from March to May, beginning with the current 2006/07 budget development cycle. As a result, the CSU Draft Five-Year Capital Improvement program will be presented at the May 2005 Board of Trustees’ meeting.

On February 24, 2005 the Legislative Analyst’s Office (LAO) released its analysis of CSU projects proposed for the 2005/06 Capital Outlay Program. No questions were raised regarding specific projects, which attests to the quality of the CSU programs. However, the LAO recommended designating the remaining 2004 bond funds to complete two projects proposed for partial funding in the current year that would otherwise be completed with funding from a future general obligation bond initiative. In addition, the LAO recommended that a project with combined state and non-state partial funding be approved contingent on the CSU committing to use non-state funds for project completion if state funds are not available. CPDC disagrees with the LAO’s recommendations. The CSU does not want to be limited to proposing projects that must be funded within a single bond cycle.

Larry Piper, Chief of Facilities Planning



As of January 31, 2005, Tom Roberts was named Director of Contract Services and Procurement. Tom joined the Chancellor's Office in 1994 after working for 13 years in the offshore drilling industry (eight years in foreign operations), and three years in commercial real estate development. Serving as Assistant Director of Systemwide Contracts, he and his staff were responsible for strategic contracting, real property leasing, master contracting opportunities and sponsored project management.

Systemwide Bids Now Underway

  • Data Center Services 40550 – solicits services associated with the provision of Data Center facilities, provision of hardware, on-going CMS data center operations management, and other related services.
  • E Advocacy System 40838 - The purpose of this Request for Proposal (RFP) is to solicit proposals from firms to provide an electronic advocacy network system to organize, inform, educate and activate a broad coalition of California State University (CSU) supporter
  • Direct Access Electricity Services 40025 – requests qualifications from qualified energy service providers for 28 campuses of the CSU and UC systems that are in Utility Distribution Company service territories.

Information on all Chancellor’s Office systemwide bidding opportunities can be found at:

Further information can be obtained at: or by contacting Tom Roberts at 562-951-4583.


"Fitting the Pieces" Conference: CSU Risk Management/Human Resources "Fitting the Pieces Together” Conference will be held on May 17, 18, & 19, 2005 at the LAX Crowne Plaza Hotel. The conference will include topics such as Accident/Incident Investigation and Reporting, Environmental Health and Safety (EH&S), Risk Management, and University Police Working Together; Special Events and Vendor and Student Organization Insurance Coverage; Workers' Compensation Reform SB 899; Process Mapping for Claims Processing; and Personal Preparation for Disasters. For more information, contact Marti Lopez at (562) 951-4580 or

Disaster Contingency and Planning Audit: All recommendations have been addressed by the Chancellor's Office and the campuses were recently provided with enhanced policies and procedures and various reminders for this area (see Executive Order 921 at The Disaster and Contingency Planning Audit reports can be found at A summary of findings can also be found at:

CSURMA Quarterly Deductible Billing Report: Campuses will receive a deductible billing report that includes information for the 2nd and 3rd Quarter. The reports will be sent to the campuses in mid-April with a request to send all deductible payments to CSURMA Accounting at the Chancellor's Office. For more information, contact Michelle Schlack at (562) 951-4568 or Lisa Gibbons at (562) 951-4621.

Charlene Minnick, Director


Financial Services Accounting: Plans are underway for the Year-end Closing Workshop scheduled for May 23 and 24, 2005 at a yet-to-be-determined hotel conference site near LAX. Registration information will soon be available on the web at:

George Ashkar, Senior Director/Controller

David Ernst, Assistant Vice Chancellor


Advancing the Planning: The Academic Technology Advisory Committee (ATAC) had its third meeting for the 2004-2005 academic year on February 4, 2005. Discussion focused on two existing initiatives: Professional Development and Development of Shared Resources. Workgroups reported on the policy issues involved in each of these two initiatives. ATAC also discussed the Digital Marketplace Initiative and reviewed proposed guidelines on ensuring access to technology for students with disabilities. The Provosts’ Technology Steering Committee (PTSC) met February 3, 2005 and discussed these same initiatives and outlined implementation strategies as well as on strategies for sharing best/exemplary practices for teaching with technology.


Digital Marketplace Initiative: Reduces cost and increases convenience/usability of academic technology content and tools. Renewal/revision of the systemwide contracts for the plagiarism detection software Turnitin has been completed. Approximately 40% savings were achieved through consolidation of contracts.

Library Strategic Plan: The initial outreach to systemwide groups and campus constituencies has been completed. The intent of the outreach was to present the accomplishments of the 2000 strategic plan and to identify issues and concerns that could guide the Council of Library Directors (COLD) in the current planning process.

The draft plan is now being prepared for distribution across the system in March for a two-month review and comment period. COLD intends to produce the final draft of the plan in early June.

With finalization of the plan in June, COLD will form committees to oversee the various initiatives of the plan’s goals and objectives.

The 2005 library strategic plan will look much different than the earlier plans and will address a shorter time frame of three years rather than five. It will be more tightly focused and dynamic. Rather than organizing itself around goal areas defined by traditional areas of library operation as in the past, it will revolve around four strategic themes designed to advance the libraries’ mission of providing excellent service to students and faculty.

The plan’s specific objectives will be limited to those that are feasible within the plan’s timeframe and anticipated resources, and will be designed to address the need to remain agile and innovative in the face of rapidly changing information and technology environments.


Infrastructure Build-Out Projects - Stage 1 and Stage 2: Construction for the Phase 1 and Phase 2 campuses continues, with almost two-thirds of the projects now fully complete, and all but one still expected to be finished by mid-summer 2005.

Six of the eight Phase 3 sites, San Marcos, Bakersfield, San Jose, Fresno, Fullerton and San Francisco, have started Stage 1 construction. San Diego has recently completed the project bidding process, with Monterey Bay soon to follow.

All campuses have now either completed or are actively engaged in Stage 2 activities. Los Angeles and Long Beach held their final close-out meetings in January and February respectively. San Luis Obispo is engaged in project close-out activities and anticipates final completion in March.

CSU is in the initial stages of designing a methodology to refresh network equipment. Work on refresh criteria will continue throughout 2005.

(As a reminder, the phases group campuses in the order that they undertake the TII project. Stage 1 refers to the physical construction of pathways, spaces and media on campuses; Stage 2 represents the installation of the necessary electronic components.)

Network Management System (NMS): NMS, a set of software tools that allows campuses to monitor and measure their network performance and quickly identify points of failure when problems arise, has been installed on all 23 campuses. Implementation of the latest NMS version is now complete. This new version updated the network management tools to coincide with current vendor software releases.

Network Infrastructure Asset Management System: The Asset Management tool is a software application that allows campuses to maintain records of their network infrastructure by tracking cables and equipment locations on campus. The Network Technology Alliance (NTA) Committee’s Asset Management Working Group has proposed a model that calls for a centralized datacenter facility capable of supporting all CSU campuses.

NTA’s recent study of NIAMS options has provided insight into the pros and cons of facilitating modern infrastructure management through the application of sophisticated software tools, and data regarding the relative readiness of CSU campuses to employ such tools. The proposed action plan is designed to achieve the CSU’s record-keeping goals in a productive manner while recognizing local resource limitations

Security Incident Response Team (SIRT): CSU has entered into an agreement with Carnegie Mellon University’s Software Engineering Institute to develop a framework for campus security incident handling.

As a follow up to the planning and training meeting held last December, a SIRT Framework Development Workshop is scheduled to take place April 11 -13 in Los Angeles. The purpose of the workshop is to develop a minimum baseline SIRT framework that is specific to the mission, vision and goals of the CSU campuses.

Campus Access Infrastructure Initiative (CAI): The Campus Access Infrastructure Initiative (CAI) is a system-wide program that will install and thereafter maintain the infrastructure required to connect each campus local area network (LAN) to the new CENIC wide-area network backbone (WAN). CAI will address the CSU's growing requirement for improved network reliability by providing services that will enhance network capacity and increased stability.

The Technology Steering Committee (TSC) has approved the project and TIS staff members are working with CENIC to finalize contracts for managed services and installation. Project implementation is targeted to begin in Summer 2005.

Reassignment of Business Management Systems (BMS): With Technology Infrastructure Services (TIS) continuing to evolve in the wake of decommissioning 4CNet, and Common Management Systems (CMS) adjusting to the gradual elimination of legacy systems, Information Technology Services (ITS) has reviewed its organization and service structures in order to ensure remaining well positioned to properly serve the needs of the CSU.

Given that the primary focus of CMS is the development and support of the Oracle/PeopleSoft applications, and the service portfolio of Business Management Systems (BMS) is more consistent with the developing TIS service framework, the BMS department of CMS was shifted to the TIS division on February 7, 2005. BMS continues to support CMS and other programs to the extent they require it, while beginning to provide support to TIS programs and other Chancellor’s Office programs, as appropriate

Among the anticipated benefits resulting from this change are the consolidation of core technology infrastructure services into one department and the combined positioning of BMS and TIS to improve the delivery of campus-focused, value-added services.


Finance Update: Three more campuses (Northridge, Sonoma and Maritime) have successfully completed their upgrade to FIS 8.4. By the end of November, four additional campuses (Sacramento, Hayward, Chico and Fresno) are scheduled to complete their
upgrade to FIS 8.4, bringing the total number of campuses (including the C.O.) live on
FIS 8.4 to 14.

Student Administration Update: The SA (Student Administration) campus go-live activity remains on schedule. In February 2005, Chico was in production with Student Records. San Jose is also planning to be live with their internal messaging system. The Sonoma campus completed its end of term processing in January 2005 and had a successful spring semester registration. Additionally, the Fresno campus fund disbursed $33 million in financial aid before the first day of school for the Fall 2004 semester. With its newly implemented online grading, Fresno finished the fall semester with over 95% of grades submitted as scheduled.

Human Resources Update: HR continues on the maintenance path with the majority of campuses in production with the CMS HR baseline. Current activities include completing campus business process reviews and facilitating the CMS fit/gap sessions in preparation for the next major upgrade cycle.

CMS Data Warehouse Update: The CMS Data Warehouse project is proceeding on-schedule through the vendor selection process. Bids were received in January and are being evaluated by a committee of CMS Central and campus staff. An award is anticipated in March 2005.

HOSS Data Center Services: The current outsourcing contract for Data Center Services with Unisys Corporation expires on February 28, 2006. Anticipating the expiration of the current contract, CSU engaged Blackwell Consulting Services (BCS) to examine alternative strategies for the delivery of Data Center Services to the campuses.

The objectives of the study were to identify and recommend alternative strategies that will allow CSU to achieve its stated vision and goals for CMS data center services. Other specific objectives were to: a) analyze potential alternatives for consideration; b) conduct an in-depth feasibility study of alternatives that are considered to be viable; and c) conduct associated risk benefit analysis along with estimated costs and propose implementation approaches and deployment schedules for providing future Data Center Services to CSU.

Based upon the analysis, CSU decided to issue a RFP for a new contract. This alternative offers many benefits, the most significant of which are the advantages available to CSU from the competitive process. It should provide CSU with the opportunity to negotiate better terms and to achieve improved quality of support and services.

A committee was commissioned by the CMS Executive Committee to gather the requirements for the data center services and to develop the RFP. The RFP was completed and posted on February 11, 2004. Vendor responses are due April 4, 2005.

Measures of Success: In preparation for the November 2005 Measures of Success, staff at the Social Behavioral Research Institute are conducting the third round of student surveys on attitudes and perceptions about access to, use of and satisfaction with the various aspects of information technology. As of the end of February 2005, over 500 of the 3000-person sample have been interviewed.

Karen Y. Zamarippa, Assistant Vice Chancellor

Governor Abandons Reorganization Effort:
Bowing to intense pressure from a wide variety of interest groups, Governor Schwarzenegger has abandoned his effort to reorganize state government by eliminating 88 regulatory and policy-setting boards and commissions. The far-reaching proposal, which he outlined in his first State of the State speech more than a year ago, was part of his effort to “blow up the boxes” of state government.

Critics of the governor’s plan contended that abolishing regulatory and licensing entities such as the California Medical Board, the Board of Registered Nursing and the Board of Accountancy would make it harder for consumers to get grievances investigated, compromise public safety and make government more secretive. The proposal drew fire from accountants, dentists, and many other powerful interests in Sacramento. Moreover, it was criticized at a recent meeting of the Little Hoover Commission, which is required to review any government reorganization proposal.

While many elements of the reorganization plan encountered stiff opposition, some proposals enjoyed relatively broad support. Representatives from CSU and other higher education entities expressed support for improving financial aid implementation and for the creation of an office within the administration focused on higher education and financial aid issues, consolidating the functions of the California Postsecondary Education Commission (CPEC) and the California Student Aid Commission (CSAC). However, despite significant support for this proposal, it was abandoned with the rest of the reorganization plan.

The governor has indicated that he still intends to proceed with a scaled-back version of the reorganization plan for California’s prison and parole system. After the Little Hoover Commission completes its review of the plan, the Governor can then submit it to the Legislature and it would become law unless the Senate or Assembly rejects it within 60 days. Other reorganization proposals may also emerge as freestanding legislation over the next few months.

Panel Considers Pension Reform: The Assembly Public Employees, Retirement and Social Security Committee recently held an informational hearing to discuss the possibility of converting the state’s pension fund to a defined contribution plan, as proposed by Assembly Member Keith Richman (R-38-Northridge). ACA 1x (Richman), which has been endorsed by Governor Schwarzenegger, would phase out the current defined benefit pension system for state employees and replace it with a defined contribution system similar to 401(k)-type programs used in the private sector.

Robert Palmer, Chair of the State Association of County Retirement Systems’ Legislative Committee and administrator of San Joaquin County’s retirement plan, spoke in support of the defined contribution plan proposal. He stated that, since utilizing the defined contribution plan, funding for San Joaquin County’s retirement plan has been consistently higher than the industry standard. Palmer went on to argue that defined contribution plans are more economically sound and practical for both the employer and the employee, particularly since current state and county employees are beginning their terms of employment at a later age, retiring earlier and living longer.

Representatives of the California State Teachers’ Retirement System (CalSTRS) spoke against the defined contribution plan proposal. Chief Executive Officer Jack Ehnes and Deputy Chief Executive Officer Ed Derman expressed concern over the proposed conversion to a defined contribution plan, arguing that elimination of the defined benefit plan would remove incentives for long-standing teachers to remain with the California public school system. Teachers make up 37 percent of employees covered under the current retirement system, which Ehnes and Derman contended remains very strong. California Public Employees’ Retirement System (CalPERS) Chief Executive Officer Fred Buenrostro also spoke against the defined contribution proposal. Buenrostro noted that CalPERS, which provides a defined benefit plan for state employees, is the number one retirement benefit system in the nation with $182.9 billion in holdings. He also pointed to the fact that, despite some recent losses, CalPERS is still financially sound and its funding status is expected to increase over the next few years.

Campus Advocacy Teams to Converge on Sacramento This Spring: The CSU’s annual Alumni Legislative Day is scheduled for Monday, April 11, 2005. Campus teams from throughout the state are invited to come to the State Capitol to rally support for the system and to lobby the Legislature on CSU-related issues. Campus advocates will likely dedicate themselves to defending the governor’s proposed CSU budget in the midst of a continuing fiscal crisis. In addition, advocates will be touting the findings of the recently-released CSU Impact Report, including:

  • For every $1 the state invests in the California State University system ($3.09 billion in 2002/03), CSU-related expenditures generate $4.41 in spending. As a result, the immediate impact of CSU-related expenditures creates $13.6 billion annually in economic activity and supports 207,000 California jobs. In addition, some $760 million in taxes is generated for the state’s coffers.
  • The 1.7 million CSU alumni living and working in California earn $89 billion in income, $25 billion of which is directly attributable to their degrees. If the enhanced earnings of its graduates are factored in, the total effect of the state’s investment in the CSU climbs steeply, so that the annual spending impact rises from $4.41 to $17 for each $1 invested.
  • The combined total annual economic impact of CSU expenditures, the enhanced earnings of its graduates, and the ripple effect of both generates a $53 billion spending impact on the state, supports 527,000 jobs, and creates $3.11 billion in tax revenue for state and local governments—more than is provided to the CSU in direct annual state support. The CSU in effect pays for itself
  • The CSU confers 65 percent of California’s business baccalaureate degrees, 52 percent of its agricultural business and agricultural engineering baccalaureate degrees, 52 percent of its communications baccalaureate degrees, and 45 percent of its computer and electronic engineering baccalaureate degrees.
  • The CSU also trains the professionals needed to keep the state running. It provides bachelor’s degrees to teachers and education-related staff (87 percent), criminal justice workers (89 percent), social workers (87 percent), and public administrators (82 percent)
Copies of CSU Legislative Reports and other legislative information pertaining to the CSU are available on the AIR website at:

Review past issues at the CSU Business & Finance News archives. Visit the CSU Business and Finance website.

Subscription Information: Questions related to receiving the B&F Newsletter or changes in e-mail addresses should be directed to Majjie Smith at (562) 951-4554 or