Chancellor's Communication-January 22, 2003
January 22, 2003
TO: All CSU Employees
FROM: CSU Chancellor Charles B. Reed
RE: CSU Update
Welcome to a new year and a new term at the California State University. I hope you are returning with renewed energy and enthusiasm for the year ahead. We have had many significant systemwide developments since I last wrote to you in September, so I wanted to take this opportunity to bring you up to date and to give you an idea of what to expect in the months to come.
The CSU has known for many months that California is experiencing very difficult budget times. When California's legislators passed the state's 2002/03 budget last fall, they directed the governor to make further unspecified budget cuts. In December, Governor Davis did just that: For the CSU, he proposed additional mid-year budget reductions totaling $59.6 million. Along with the $65.8 million in earlier cuts and unfunded cost increases, the December mid-year reductions brought the total 2002/03 budget impact to $125.4 million.
For a university like ours, no cut is without serious repercussions. In fact, it often takes years to restore the damage done even by so-called "one-time" cuts. But whenever the CSU is faced with budget cuts, we strive to manage those cuts with minimal disruption to our ability to provide access to students, deliver high-quality programs, and maintain essential student services. That is why we proposed to make the cuts and reductions we received for 2002/03 in the areas that would have the least immediate impact on our academic programs, such as technology equipment, scheduled maintenance, and one-time reductions in administrative and travel funding.
However, the $125.4 million in cuts and unfunded cost increases was still far too large to absorb without additional revenue. That is why, on December 16, the CSU's Board of Trustees made the difficult decision to increase student fees. The trustees approved a mid-year $72 undergraduate fee increase ($96 for campuses on quarter-calendars) for 2002/03, which, along with graduate fee increases, will generate $30 million in revenue. Of that amount, $10 million will go directly back into financial aid for our neediest students.
Now the state's worsening budget situation has brought the threat of additional cuts to the CSU. Governor Davis' 2003/04 budget proposal, which is attempting to close an estimated $35 billion budget shortfall, spares no state-funded organization from the pain, including the California State University. The governor's budget calls for $326 million in cuts to the CSU's budget, makes permanent a $43 million reduction taken in 2002/03, and leaves unfunded an additional $78.6 million in mandatory compensation and health insurance cost increases, which the CSU will have to pay for with funds from elsewhere in its budget. Altogether, the total fiscal impact to the CSU comes to $447.7 million.
These cuts would be devastating to our programs were it not for the governor's proposed revenue increases, which, if adopted, will soften the impact of these reductions. Gov. Davis has called for an additional $105.8 million to fund a 5 percent student enrollment increase for 2003/04, and $45 million to partially fund the 10,500 students that the CSU enrolled without funding last year. This increase will allow us to preserve our historic commitment to access and our non-negotiable commitment to quality. The governor's proposal also anticipates that the CSU's Board of Trustees will enact new undergraduate and graduate student fee increases (and use the revenue from this year's mid-year fee increases) to compensate for $142 million of the proposed budget cuts. If approved by the CSU's Board of Trustees, the new fee increase will mean an additional $396 per year for undergraduates, or a total annual undergraduate state university fee of $1,968 for 2003/04 (with additional financial aid provided for the CSU's neediest students).
While the proposed budget cuts will unquestionably have a significant impact on our campuses, I fear that the impact will be much more severe if we do not receive the new enrollment growth and student fee revenue that the governor has proposed for the CSU. We could not manage these cuts without significant reductions in our enrollment levels and other negative impacts on our programs and personnel. We will certainly not choose the path of enrolling students for whom we have no classes to offer. And the one thing we will never do is compromise on quality.
On a personal note, I know that all CSU employees are concerned about what the current budget crisis will mean for them and their families. The short answer is this: Until the budget is final, we won't know exactly what the impact will be on the CSU. But I promise you that we will do everything we can to minimize the impact on the hard-working people who make up the CSU. In the meantime, we must do all we can, cooperatively, to make a solid case in Sacramento for making sure that the cuts go no deeper and for preserving the CSU's enrollment growth and other proposed funding.
If you would like to learn more about the CSU's 2002/03 and 2003/04 budget, you may find a comprehensive summary at http://www.calstate.edu/BOT/agendas/Jan03/Finance.pdf. If you would like to learn more about the governor's overall 2003/04 budget proposal for the state, please visit the Department of Finance at http://www.dof.ca.gov/HTML/BUD_DOCS/Bud_link.htm. And if you would like to receive regular weekly updates on CSU news, I urge you to sign up for the CSU Leader e-mail newsletter at http://www.calstate.edu/csuleader/.
In the months to come, our entire university family is certain to face many new challenges. But I know that we will overcome those challenges - and ultimately emerge a stronger institution - due in no small part to your commitment and dedication. Thank you for the hard work that you do every day for the California State University.
CSU Chancellor Charles B. Reed
last updated January 22, 2003