Chancellor's Recent Speeches

Remarks by Dr. Charles B. Reed
Chancellor, California State University
“Fitting the Pieces Together”
CSU Risk Management/ Human Resources Conference
Hilton Oakland Airport, CA
November 5, 2008

Thank you, Charlene.

I call Charlene the “24/7 gal” because she is on the job all the time…she is always prepared, and I like that.

Yesterday she emailed me at 3:21 a.m. to tell me about a flood at Fresno State. Join me in thanking her for all she does …she might be small in stature, but she is tall in performance.

Being prepared like Charlene is all the time is an important trait to have; especially in these bad economic times that requires 24-hour attention.

Yesterday’s Election

    Let me make a few statements about yesterday’s election.
  • As you all know, we have a new President: Barak Obama. He has much to deal with when he takes over. There are still some outstanding Senate seats to be decided.
  • As for California, there was a pick-up of seats by the Democrats in the Assembly – they now are four seats short of the two-thirds margin of Democrats.

I think our country will move forward in a different way, and that is a positive sign. Whether you are a Democrat or a Republican, I think we all agree it is time for a change.

We are in the middle of two wars that are costing the country $9 billion per month, which is $108 billion per year. The economy is sour; Wall Street is suffering and now is the time to invest in education – that is the American future.

Bad news – good news

First, I want to talk about where we stand on the budget – that’s the bad news. Second, I want to talk about some good news.

Communications people say you should start with the bad news and end with the good news because the ending is what people usually remember, so I hope that works here.

Some of the good news will include our workers’ compensation program, our combining of several departments under Charlene’s wing, our lower property losses and our emergency preparation efforts.

State budget

Let’s get to the state budget first.

As you all know, Richard West, our Executive Vice Chancellor and CFO, is retiring – sort of – next month, so that leaves me to talk to you today about the budget. Richard will still be assisting me through September. Ben Quillian is our new vice chancellor for Business and Finance, and he will be working with all of us.

Governor Schwarzenegger will issue a call tomorrow (Nov. 6) for a special legislative session to deal with an increasingly large state deficit, which ranges from $5 billion to $12 billion, depending on who is doing the talking.

We can expect the Governor to give his estimate of the size of the deficit, plus his proposed solutions.

That most likely will include some tax hikes, plus additional cuts for the CSU and every other part of state government.

There is no way with a deficit approaching $12 billion that the CSU will not experience some cuts – the only uncertainty is how much it will be.

This additional cut will be on top of the $31.3 million that the CSU has already taken this year. I’ll talk more about that in a minute.

While the Governor will formally call lawmakers into session tomorrow, they probably will not return until after their leaders have had a chance to meet among themselves. They first want to work out a deal between both parties and bring in something they can vote on.

This all has to be concluded by November 30, when the current session ends, and 42 lawmakers are termed out. This is one of those times when the words “stay tuned” apply. You will be hearing and reading a lot more about the budget this month and next.

The Governor also signed an Executive Order last week to create a bipartisan Commission on the 21st Century Economy to modernize California’s tax and revenue laws. Currently, five percent of the state’s top earners pay 80 percent of our state’s taxes.

The goal is for the commission to suggest changes that will result in a more stable funding stream, one that will not be so tied to the way the economic wind blows. For example, to talk about a service tax – this is a service economy and few services are currently taxed.

That 12-member commission is to report back to the Governor no later than April 15, 2009, which, ironically, you all know is tax day…

The operative word for the economy is “down”:

  • 8% unemployment
  • Housing foreclosures up and starts down
  • Tax collection down (sales and capital gains)
  • Manufacturing (cars down 45%)
  • Exports down
  • Wall Street down
  • CalPERS - $54 billion down (Portfolio at $185 billion, down 23% since July when at $239 billion

CSU Budget

Let me turn to our current budget and what we are certain of so far. I want to repeat here what I have written in my last two budget messages to all employees.

Last month the Department of Finance, under direction from the governor, directed state agencies and departments receiving General Fund allocations to cut $390 million statewide from the current budget.

The CSU’s reduction is $31.3 million. What we have told Finance and the Governor is that this would have to be a one-time reduction, and must not affect our base general fund budget going forward.

If this affects our base, we will not be able to continue our mission to provide accessible, affordable education to our students – it is that simple.

We anticipate that we will be able to manage the $31.3 million reduction without disrupting campus operations or impacting instruction, student services or public safety.

This $31.3 million is on top of the $215 million we are already short in this current 2008-09 budget of nearly $3 billion from the General Fund, which is about what we received last year.

We have already begun this year short of money and with 10,000 more students than what we are funded for. What we will be doing is declaring systemwide “impaction” – that means we will be denying qualified students admission to our universities because we will not be adequately funded to serve them.

This is not the position we want to be in, especially since students are applying for admission this month for next fall. We have received more than 138,000 applications already, which is an increase of 17 percent from this time last year.

We all need to be advocates for the CSU. Under these circumstances we must focus our attention, energy and efforts toward the larger problem of additional cuts.

Just as last year when the entire CSU family came together to advocate as one, we need to reinforce that coalition and continue working together to advocate against any further budget cuts.

The hard work that all of the faculty, staff and students put into campus budget forums greatly helped our budget position for this year. That kind of hard work will be instrumental in defending the university against further cuts both this year and next.

If we do have to take more cuts this year, there will be definite disruptions to the services that campuses provide, including access, student services, faculty hires and classes offered.

That is why we need to continue to advocate together on the critical role CSU plays in preparing graduates for California’s workforce, and the need for investment in higher education.

I will be calling on everyone to work together to once again prove to the Governor and Legislature what a difference the CSU makes in every aspect of the lives of California’s residents.

Turning from the budget, let me talk about some of the successes, some of the good news we have had this past year.

Working Together

All of your departments have been working together better. The challenge this year will be to do more with less, to be innovative in what we do every day… and not run out of less. We need to be more efficient.

We will have fewer face-to-face meetings; we will use more teleconferencing and other methods of communicating. We need to cut back on travel.

This year and next will be a true test of our mettle. This is not to be a downer but we need to be realistic where the CSU is at.

Successes

Number 1: Our Worker's Compensation program declared a dividend last month, returning almost $10 million to campuses.

If you add the $15 million returned last year, that totals $25 million. This is due to lower costs, fewer claims and fewer severe injuries.

There has been great teamwork between safety programs, as well as early intervention by the campus coordinators and our third party administrator (Sedgwick). This is why we should not cut safety programs on the campuses because there will be paybacks like this.

Number 2: I want to applaud the efforts to combine our affinity groups under one umbrella. That includes risk management, worker's comp, environmental health & safety, and emergency management.

By bringing all of these departments together, this will help to mitigate risk in a cohesive and comprehensive approach.

In addition, it will make us all work more efficiently and help reduce costs, which is certainly important, given what I have just told you about the budget. All of you will meet together twice a year, which will also save money on travel costs.

Charlene said that the newly formed executive committee, which has representatives from each group, will form task groups for specific needs as they arise.

This is a good way to work on issues together for the benefit of our students, staff and faculty.

Number 3: We have also had fewer property losses this year.

That will help in negotiating talks with the insurance underwriters this spring. We have had fewer fires and floods, and not as much mold in our buildings.

The wildfires this year were not as bad as last year. So far, the cost is under $700,000. We also have not had as much rain yet, which is better for those areas that were hit by fire, as well as for any potential flooding.

We have to do the routine maintenance things like cleaning out gutters – those kinds of actions will help us in the long run. We have had losses, but nothing catastrophic so far.

Of course, a lot of this is just plain luck. But whatever it is, we need to be ready and be prepared for what could happen.

For example, two weeks ago, two students were shot at the University of Central Arkansas. Since classes started here at the CSU, we have had students robbed or raped on several campuses at gunpoint.

This is very serious. We all need to remind our students to pay attention to their surrounding and not just walk around listening to their I-pods or texting or talking on the phone with hooded sweatshirts covering their faces so they don’t see where they are going at 2 or 3 a.m. We have to send messages to students not to walk to parking lots alone and to always let someone know where they are.

This also reminds us that we need to maintain professional law enforcement on our campuses. All 23 campuses have sworn police officers. Even with our budget problems, it is important to maintain safe staffing levels. Many of our campuses also are engaged in law enforcement accreditation processes, which will help the departments when it comes to best practices.

Number 4: Emergency planning: I want to congratulate all the campuses for completing their active shooter exercises.

Everyone has taken this seriously, and we must continue to do so. Communications is a major issue in these activities. We soon will do an exercise at the Chancellor’s Office.

We are also working with the public affairs offices on the campuses to continue with our crisis communications plans. We have to continue to practice those scenarios.

The recent earthquake near Cal Poly Pomona showed that communications plans worked fairly well, but they still need improving. People need to have better access to the satellite phones because other lines and towers go down in these situations.

That same earthquake was felt at the Chancellor’s Office, and people exited the building when they weren’t supposed to. We need to keep practicing our earthquake drills so people know what to do. It has been nearly 15 years (January 1994) since the big Northridge earthquake, and if we are not prepared, we will lose lives like what happened then.

The campuses also are continuing training with James Lee Witt & Associates on our disaster scenarios. That is good and we need to keep doing it. Practice, practice, practice.

We are working with the FBI and CIA on terrorism issues, and we are beginning to set up “Centers of Excellence” with these agencies. We have to be vigilant in this area.

I met with the Assistant Director for Intelligence for the FBI and the Senior Director of Clandestine Service for the CIA on Monday in Washington, D.C. We discussed priorities pertaining to terrorism and counter-intelligence.

In Summary:

Let me end by repeating what I said in the beginning about preparation. That is the key to all of our work here.

We have to be prepared for what we are not prepared for. It is the same as with the Obama administration – they also have to be prepared in the same way – there is nothing easy anymore.

I’m close to being at the CSU for 11 years now. We have not suffered a big emergency, a big catastrophe, but that doesn’t mean it won’t happen.

At the end of the day, our goal is to create a safe, learning environment for our students, staff and faculty. We can only do this if we are prepared.

Thank you for all you do for the California State University every day.

I would be pleased to take some questions on the budget or any of the other issues I have talked about today.