Transcript: CSU Chancellor Outlines Plan to Address Massive Budget Cuts
Chancellor Charles B. Reed:
What I would like to do is give a brief overview of the massive budget reduction that the California State University is looking at and then share with you the California State University plan of action that we will present to our Board next Tuesday, July 21.
I’m an old guy I’ve been in the public service business for more than 40 years in government and I have never seen a massive reduction come so fast in the 40 years that I have been doing this business. It is nothing short of a mega meltdown financially. The state of California passed a budget, as you all know in February and from that February budget they are currently reducing $26.3 billion dollars and that is underway as we speak. Our current estimate of our share of that reduction is going to be $584 million dollars or a 20% reduction in our state general funding. We have to act very quickly and we don’t have a lot of tools to use to reduce our budget of $584 million dollars. But if you think about it, ten years ago that is a half a billion dollars less than we had ten years ago and we’re currently serving more than a 100,000 students than we did 10 years ago. So our action plan, as I said we don’t have a long time to do this and we’ve got to act swiftly.
Our action plan is guided by two overall goals that I have established. One, is we want to continue to serve as many students as we can with quality. And secondly we want to save as many jobs as we possibly can. The tools or options that we have are not good but they are the only ones that we have, and there are four. One furloughs or work force reductions, two fee increases for students, three enrollment reductions, and four additional campus by campus cuts and I will go over those four areas. We have $584 million to reduce in the next 12 months. Number one, furloughs. I’ve recommended that we take furloughs for all 47,000 of our employees. Eighty-five percent of the California State University budget is salaries and benefits and so with a two day per month furlough we can save or reduce our expenditures by $275 million dollars and those furloughs will affect every employee from the Chancellor to the presidents to the vice chancellors, vice presidents – every management employee. I have asked all of our labor organizations to consider furloughs. Our one labor staff organization has approved tentatively a furlough plan, they have that out for ratification. Our faculty labor group are voting this week on the possibility of furloughs. Other labor groups are negotiating with us about furloughs and a few labor groups have said that they would rather have layoffs. Furloughs save jobs, furloughs keep people’s health insurance and retirement benefits in place and that’s why I have advocated the two days per month furlough.
Now number two, we’ve got to increase our student fees and on July 21st at the board meeting I am going to recommend a $672 dollar fee increase or $336 dollars per semester. That will bring the total fee increase in the California State University to $4, 026 for the year. I think that’s a good bargain especially if you compare the California State University to all the other public colleges universities in this country. With the fee increase goes financial aid. We will put 1/3 of our fee increase into financial aid. We are lucky from a timing stand point with the Obama stimulus package we are going to see the California State University, an $81 million increase in our Pell Awards to our most needy students. In addition to our putting 1/3 of the fee in, there will be additional Federal reductions by the tax credits and people will be able to apply for the tax credits next April 2010 to reduce their burden. We believe or know that 187,000 of our students will not see any fee increase with the financial aid package that we have. If they come from a family who makes $75,000 or less, again they will not be a part of having to pay the higher fee.
Thirdly, enrollment reductions. If you reduce your budget expenditures by $584 million dollars we have to reduce the number of students that we are serving. I have asked all of our campuses to close immediately their spring 2010 enrollment. And in 2010-11 see if we can reduce our enrollment by approximately 40,000 students and that will occur over the next two years. In essence the California State University will be reducing our access for California students over the next two years.
Fourthly, we will still with all of those options implemented, have to cut $190 million from each of our campuses. And they will reduce travel, they will freeze positions, they will reduce maintenance and repair, they will cut large purchases and they will reduce their budgets every way that they possibly can during this year to get to the $584 million dollar reduction.
In conclusion, let me just say this is going to be tough on everybody . Everybody that is a part of the California State University family are gonna feel the pain, everybody’s gonna share in that pain. These are challenging times to our state and very challenging times to the California State University. I want us all to work together to get through the next 18-24 months, I want us to be ready to reinvest in the California State University so that we can serve California’s work force and strengthen California’s economy going forward.