The Taxpayer Relief Act of 1997 Impact on Higher Education

On August 5, 1997, President Clinton signed both the Balanced budget Act of 1997 and the Taxpayer Relief Act of 1997. The Taxpayer Relief Act of 1997 provides for the HOPE Scholarship and Lifetime Learning Credits.

$1,500 HOPE Scholarship to make the first two years of college universally available. For students in the first two years of college (or other eligible post-secondary training), taxpayers will be eligible for a tax credit equal to 100% of the first $1,000 of tuition and fees and 50% of the second $1,000 (the amounts are indexed for inflation after 2001). The credit will be available on a per-student basis for net tuition and fees (less grant aid) paid for college enrollment after December 31, 1997.

Lifetime Learning Credit for College Juniors, Seniors, Graduate Students and working Americans pursuing lifelong learning to upgrade their skills: For those beyond the first two years of college, or taking classes part-time to improve or upgrade their job skills, the family will receive a 20% tax credit for first $5,000 of tuition and fees through 2002, and for the first 10,000 thereafter. The credit is available for net tuition and fees (less grant aid) paid for post-secondary enrollment after June 30, 1998.

For purposes of the tax credits, postsecondary educational institutions will be required to report the following information to the IRS:

   - The name, address, and TIN (taxpayer identification number) of the qualifying student
   - Name, address, and TIN of the taxpayer who claims the qualifying student as a dependent
   - Amount of payments for qualified tuition and related expenses
   - Amount of reimbursements (i.e., scholarships and grants) or refunds paid to the qualifying     student

At a meeting held in September, the Department of Treasury indicated plans to provide guidance allowing for simplified reporting requirements for the 1998 tax year. The Department will be participating in two meetings (October 20 in Arlington, VA and November 5 near Chicago, IL) sponsored by higher education associations to discuss reporting issues related to the Taxpayer Relief Act of 1997.

Other tax changes related to higher education were establishment of Education IRA's; student loan interest deductions, IRA withdrawals for higher education expenses, extension of Employer Provided Education Benefits; community service loan forgiveness, and expanded benefits for pre-paid tuition plans.

The $150 million bond cap that affects private higher education institutions and certain other charitable institutions was also repealed. The repeal applies to tax- exempt bonds issued by these institutions to finance new capital expenditures.

George Pardon, Director


Support Budget Update

The Governor took action on legislation that has an impact on both the 1997/98 and the 1998/99 budgets. He signed AB 1318 which reduces the State University Fee for undergraduate students by 5% beginning in fall 1998 and freezes that level for the following year. The bill carries an appropriation to backfill the loss of revenue in 1998/99 with General Fund dollars. He also signed AB 1517 which restores the $2.5 million for the Economic Improvement Initiative that was originally contained in his January budget, but which he had vetoed from the Budget Act after the legislature had redirected that amount. That bill also contained an additional $5 million for technology which he vetoed. This means a net augmentation to the 1997 Budget Act of $2.5 million for the Economic Improvement Initiative. One other action of particular significance to CSU and UC was the Governor's veto of AB 1415, the so-called "Compact II" bill, which would have put into statute the basis for stable funding for the two senior segments for four years beginning in 1999/2000 similar to the compact implemented by the Governor in 1995, but with specific recognition of the need to fund anticipated enrollment growth.

Lottery Revenue

The 1997/98 $34.4 million Lottery Revenue Budget was approved at the September CSU Board of Trustees' meeting. The budget represents an increase of $5.3 million over the 1996/97 lottery budget. The bulk of this increase is going toward campus implementation of the CSU's technology initiative.

Once again the lottery budget will only be posted on the world wide web at the following address:

Questions regarding the lottery budget should be directed to Mark Lopez at (562) 985- 2712 or by email to:

1997/98 Final Budget Submission

Due to the lateness of the adoption of the state budget, the submission of the campus' 1997/98 Final Budgets were delayed until late August. The prompt response by campuses has been very helpful as we put together the Board of Trustees' budget proposal for 1998/99. We appreciate the effort that each campus made to provide the data that is integral to the budget preparation process. This short time line and the newness of the change to the FIRMS format has resulted in inevitable problems. These problems fall in a variety of categories and are primarily technical in nature.

Staff of both IRT and Budget have compiled a listing of items and plan to hold a systemwide workshop to discuss the submissions. At this time it has not been determined whether it would be more advantageous to hold the workshop as soon as possible so that details are fresh or, conversely, whether to hold it in the Spring of 1998, just prior to 1998/99 budget submittal. Your thoughts on this subject would be appreciated. Please direct them to either Donald Brown at (562) 985-2726; e-mail address or Laleh Graylee at (562) 985-9559; e-mail

1997/98 Retirement Rate Reductions and Health Benefit Rate Increases

Campuses have been advised that PERS retirement rates have decreased approximately 3 percent over 1996/97 rates effective July 1, 1997. As a result of savings to PERS retirement costs for 1997/98, it is expected that the CSU's General Fund appropriation will be permanently reduced, however, not until later in the year by the Governor's Executive Order. As a result, each campus will not see a permanent budget reduction until the 1998/99 base budget. The systemwide retirement budget reduction is estimated at $5 million with campus permanent budget reductions pro-rated based on prior year retirement expenditures. You will be notified of your campus' reduction within the next few months.

Campuses are also advised that health benefit rates will be increasing January 1998. A one-time only allocation will be made to fund campuses for the six months of health increases during fiscal year 1997/98. Permanent full-year funding will be proposed in the 1998/99 Trustees' support budget. Please contact your Human Resources Office for information regarding rates for both retirement and health.

John Richards, Director


CSU Pursues Higher Education Purchasing Consortiums

CSU's Target of Procurement program continues to make progress towards maximizing CSU volume purchasing power. Currently, campuses are working together to establish CSU master pricing agreements for office supplies, scientific, laboratory supplies, and hazardous material removal services. We are also in discussions with University of California material managers and Office of the Regents executives to pursue consortium purchasing arrangements with the UC system. Projects to date include a joint effort with the UC to obtain direct access energy services and negotiations with UC primary laboratory supply and furniture vendors to explore utilizing existing UC pricing agreements to obtain additional discounted pricing for the CSU. We recently culminated an agreement with the UC which allows them to 'buy-in' to CSU consortia pricing agreements for library subscription database services. Preliminary discussions have also taken place with the California Community College system to explore mutual beneficial opportunities for sharing volume discount opportunities.

M/W/DVBE Program Restructuring

The State of California's M/W/DVBE participation requirements have been revised by a judicial edict. The Ninth Circuit Court of Appeals has ruled that the Minority Business Enterprise (MBE) and Women Business Enterprise participation goals of fifteen percent (15%) participation and five percent (5%) participation are unconstitutional. A revised set of instruction documents for compliance with the DVBE program is located on the Contract Resource Library on the CS&P home page. Questions concerning program compliance and DVBE resources in California may be directed to Loren House.

Pat Dayneko, Director


Parking Program

If your campus is considering issuing debt to finance a parking project, please contact Ms. Rosa H. Renaud, at (562) 985-2790, for information pertaining to the issuance of Trustee bonds.

Distribution of Housing Reserves

On September 9, 1997, a total of $7.0 million in housing reserves was distributed to campuses based on a recommenation by the Housing Proposal Review Committee. Approximately $6.2 of this amount was distributed based on the percentage of each campus contribution to the system surpluses for the years leading up to the 1994 housing decentralization. The remaining was distributed based on a percentage of centrally paid costs for 1994/95 and 1995/96. For funds accumulated in 1996/97 and thereafter, two distribution plans were also approved. First, housing loan repayments will be distributed to participating campuses based on their individual percentage share of total housing design spaces as of the 1994 decentralization. Second, future interest earnings of centrally paid funds will be distributed to campuses based on their individual percentage share of total centrally paid costs. A distribution of funds for the 1996/97 fiscal year will be made to campuses shortly. Future distributions will follow the same post year approach. The funds being distributed as well as those generated annually by the housing operations are restricted by our bond indentures for the sole use of the DRF student housing programs. Please contact Mr. Benjamin Figueroa in Financing and Risk Management at (562) 985-2790, or e-mail at if you or a member of your staff have any questions on this matter.

CSU Headquarters Financing

On October 9, 1997, the financing for the replacement headquarters building for the chancellor's office was completed. Bonds in the aggregate principal amount of $30,680,000 were sold in a negotiated sale consisting of both serial and term bonds maturing along a twenty-five year schedule. The total interest cost of the entire issue is 5.42%. Paine/Webber was the lead underwriter for the sale. The proceeds from the bonds, along with additional cash contributions from the trustees, will fund a soil mitigation program for the foundation of the replacement building, demolition of the existing structure, and construction of the six story replacement facility, a trustees conference center, and new parking facilities.

Richard Leffingwell, Director


For copies of CSU Legislative Reports or other legislative information pertaining to the CSU, please visit our website at

Karen Yelverton, Director


The Information Resources & Technology division serves three distinct customer bases--the CSU Chancellor's Office, the CSU system of 24 organizational entities including 23 CSU campuses and the Chancellor's Office, and other educational organizations with whom the IRT collaborates. For more information related to technology projects within the CSU, please visit our website at

Tom West, Assistant Vice Chancellor


Annual Architectural Prequalification

November 1, 1997, begins the annual prequalification for architectural firms interested in securing commissions within the CSU system for the fiscal year 1997/98. Firms already on the list will automatically be requested to renew and update qualification information. While notification of this enrollment will be placed in a number of newspapers including the State Contracts Register, any campus wishing to work with a particular firm should notify them that the open enrollment period runs from November 1, 1997 through January 15, 1998, and that they should contact Physical Planning and Development for the prequalification questionnaire.

Campuses wishing to review the data base for existing qualified architects can find that information at the following web site:

Capital Outlay Restructuring Status Report

Certification: A total of sixteen campuses have been certified to manage the capital outlay process beginning with the 1997/98 fiscal year. With the exception of the Maritime Academy, the remaining campuses have either requested certification or expressed an intent to become certified during the current fiscal year.

Capital Outlay Educational Training Program: PP&D, in conjunction with Contract Services & Procurement and Accounting, will soon initiate the first in a continuing program of capital outlay educational training sessions, aimed at assisting campuses in the management of capital outlay projects under the restructured capital outlay implementation process.

The initial training sessions will be held December 4-5, 1997, at CSU Hayward and December 8-9, 1997, at Cal Poly Pomona Kellogg West Center. These two-day intensive programs will provide both a general overview of the restructured capital outlay process and policies, as well as specific timely topics related to particular areas of contract management for design and construction, including financial accounting for major project fund sources.

Capital Outlay Management Tool: With the help of several campus executive deans, the PP&D Construction Management unit is reviewing its own procedures manual towards producing a version that will assist the campuses in the construction management phase of their capital projects. This manual will be completed in time for use in the training program.

PPD Due Dates for CPB&G Agenda Items (January 27-28, 1998 Trustees' Meeting)

Master Plan Revisions:
All Other Items:

November 25, 1997
December 2, 1997

Jon H. Regnier, Senior Director


Benchmarking Project

A very productive set of pre-data collection workshops for benchmarking functions were held September 29-October 3. It was especially pleasing to see the enthusiasm and organization of the new functions - Career Centers, Libraries, Mail Services, Parking, Sponsored Projects, and Student Health Services. This year an abbreviated version of the NACUBO instrument is being used, although during the workshops various functions augmented it with additional data elements and benchmarks. In addition, new survey instruments (different from NACUBO) are being employed by the Parking and EHS functions. The data collection period has now begun and will

The Benchmarking Customer Satisfaction Survey was shipped to participating campuses the week of October 13. Seventeen campuses and the Chancellor's Office are participating. All surveying activity must be concluded by November 15.

If you have any questions concerning the above, please contact Ron Ashcroft (e- mail at, phone (562) 985-2706, fax (562) 985-2710).

Process Mapping Project

The Human Resources process mapping project is on schedule. The consultants are now in the second round of campus visits and are actively mapping campus HR functions and processes. The Process Mapping Team will receive the first draft of the final report on November 19.

If you have any questions concerning process mapping, please contact Ron Ashcroft.

CSUMentor Program

The project team has completed the final installation of the CSUMentor web system which includes activation of Internet credit card payments by students without special software or "cyberwallets". Initial activation of the CyberCash "CashRegister" computer fileserver began early October on a limited basis. Students applying to the Long Beach, Los Angeles, and Pomona campuses through CSUMentor will be able to complete Internet credit card payments through CyberCash during this trial phase. Additional campuses will be activated on CyberCash as the system becomes fully operational beginning in November 1997.

Campuses having their own cashiering websites and automated systems will have the option to work with the project team to develop customized web and systems software which would allow them to interface and download student payment information from CSUMentor into their computerized cashiering systems. The project team has provided software specifications for customization to the vendors of "BANNER," "CashNet," and "SalePoint" products used by several CSU campuses.

Please contact Lawrence Lin at the Chancellor's Office at (562) 985-2705 or e-mail: for additional information

Collaborative Management Systems (CMS) Project

In August, the CMS Financial Services, Human Resources, Information Technology, and Student Services Committees began their review and evaluation of system modules from Oracle, PeopleSoft and SCT. The CMS Evaluation Team had approved and qualified these three vendors to participate in the second phase of the CMS Request For Qualifications (RFQ) process for integrated campus financial, student, and human resource systems software packages and services. The CMS Task Force will review the evaluation reports and recommendations in late October. Readiness and financial assessment tools are also being developed by the task force staff and will be available for campus self assessment.

The CMS Human Resources (HR) work group has also developed an evaluation matrix to identify the current and future HR/payroll services required by the CSU as a part of our continuing participation in the State Controller's Office (SCO) 21st Century Project. The CMS HR work group met during the month of August to complete the HR/Payroll evaluation matrix and develop initial recommendations to the CMS Task Force. If you have any questions concerning CMS, please contact Lawrence Lin at the Chancellor's Office.

SIP - Systemwide Internal Partnership

The Chancellor and campus presidents on September 15, 1997, selected a team of world-class technology firms, lead by GTE, to proceed to phase IV of the Telecommunications Infrastructure Initiative (TII) - development of a partnership agreement. The other team members are Fujitsu, Hughes Global Services, and Microsoft. Until another name is selected, the potential partnership is being referred to by the name suggested in the business plan by the private firms - CETI (California Education Technology Initiative). Dr. Maynard Robinson, formerly Administrative Vice President at CSU Stanislaus, has accepted the lead role for the CSU in developing the partnership by the end of 1997. Additional information on this critical systemwide effort is available on the web at:

Lenore Rozner, Senior Director

The Business and Finance Newsletter is now accessible from the Chancellor's Office website:

If you have a question or comment on a technical issue related to receiving the B&F newsletter or want to add, delete, or modify an e-mail address, please contact Suzanne Wallace at voice: 310-985-2075, fax: 310-985-2710, or e-mail: