What is the true impact of the budget shortfall to CSU?

While the budget deal is still being determined the impact this could have on the entire state as well as CSU is far reaching and deep. In particular the budget shortfall and pending analysis that will need to take place once a deal has been made will leave the CSU wading through the details for a while.

Amidst this chaos one impact is for certain, many infrastructure projects across the CSU that were in the process of being undertaken have been halted. These projects include building upgrades; new buildings to meet campus and students needs; and safety improvements necessary to ensure the campus is secure.

The projects at all 23 campuses were halted in January due to lack of funding from the state. The Pooled Money Investment Board (PMIB) that is authorized through the state to make loans for state bond programs, such as the ones that fund the CSU’s capital projects, stopped issuing bonds in the middle of last year. Additionally they directed that all agencies including the CSU immediately cease entering into any new construction projects as well as froze disbursement of funds for existing projects.

This action resulted in the suspension of all design and construction contracts for the system. The result is more than 130 CSU projects well underway were halted with no notice.

The consequences of this action may end up costing the CSU far more than our projects not being completed on time but in fact could produce much more dire circumstances such as campuses being forced to go out to rebid every contract if the stop on work continues beyond 90 days.

In an effort to keep some projects moving forward, the CSU has sought the Department of Finance’s consideration to exempt 26 projects such as the Northridge Science Building, the Fresno Library Addition and the San Francisco Joint Project as well as some smaller projects that were in midstream when the freeze was imposed.

In addition without the state bond funds’ being issued it is likely CSU will not receive the needed funding of $68 million to pay for the November and December bills to our contractors. This all adds up to an approximate overall cost of $23.5 million to the CSU to shut down these contracts for the time being as well as puts 13,000 contractors off jobs that are critical to the state and economic recovery.

The freeze on capital funds also impacts secured dollars that the CSU had worked hard to gain through fundraising and grant contracts that cannot be utilized without the rest of the funding from the state. As of now the CSU has $135 million in donor and self-supports funds currently co-funding the state projects as well as $4.4 million that is being jeopardized in grant funds from investor owned utilities that are supporting the completion of energy efficient projects.

Overall the impact of the budget stalemate and the subsequent freeze on capital projects makes a cut far deeper than just not being able to update CSU facilities but also increased costs and puts into limbo thousands of jobs