With a $21 billion deficit that is really looking to be closer to $24.3 billion, the Governor, the Legislative Analyst’s office (LAO) and the Department of Finance (DOF) continue to put out solutions that will help bridge the gap.

Higher education and the CSU will be facing severe cuts to our current and outgoing budgets as a result of this gap. With no help from the recent special election to offset some of the deficit the state must now come up with the full amount with new savings and revenues.

Along with the deeps cuts that are expected at the CSU, the LAO is also reporting severe reductions in the areas of K-12 education, social services programs, Medi-cal and the prison system. The cuts in these areas combined with those proposed for higher education will amount to over $10 billion in savings to help bridge the gap.

Specifically the report indicates the Governor is proposing reducing the General fund support to the CSU and the UC by a total of $1 billion which is in addition to the $510 million of federal fund swap assumed in his February budget package. This total would be about $1.5 billion between the two segments with an unknown amount to be offset by federal stimulus funds. The LAO is estimating that the gap would be around $230 million between the two segments.

This would bring the current total that the CSU faces to $410 million in its 2008-09 and 2009-10 budget that will severely impact our ability to provide student access to our universities, preserve services, and protect the quality of our institutions. That is the equivalent of a 10 percent overall budget reduction, and a 15 percent reduction in the state’s General Fund support of the university system.

In addition to these CSU related reduction the proposal indicates that K-12 education will also face a $5.3 billion dollar cut; Medi-cal will lose $1.1 billion and social services is looking at over $900 million in reductions in areas such as in –home supportive services and social security income for the disabled. Local governments will also be feeling the cuts as the Governor has proposed a $2 billion reduction against local property tax revenue which could have an effect on local services such a fire and police.

Unfortunately some unknowns still remain as the proposal that was set out by the Governor on May 20 following the election sought to only cover a $21 billion gap, not a $24.3 billion gap. As of now the Governor and the DOF are looking at further cuts to make up the remaining $3 billion.

The Governor has proposed additional cuts to the CSU budget of as much as $375 million over the 2008-09 and 2009-10 fiscal years. Additionally Schwarzenegger proposes eliminating the CalGrants program saving the state an additional $173 million.

Over the next few weeks, the Budget conference committee will begin solidifying a plan that will ultimately lay out the cuts to the CSU and the potential impact this will have on the university. Chancellor Reed has sent a letter to the committee in order to help educate them further on the impacts these cuts will have for the CSU and its students. The committee is expected to take up higher education and public testimony on education next week.

"We know that there will be very challenging and difficult times ahead. In the coming weeks, the campus presidents and I will be meeting to address how to move forward to address these fiscal issues and to develop a plan of action in consultation with our Board of Trustees. These are all very hard decisions and there are no good options," stated Chancellor Reed. "We will all need to work together to explore what is feasible with the primary goals of serving our students and preserving as many jobs as possible."

CSU has already implemented a number of cost cutting measures including a salary freeze for vice president/chancellor level positions; a hiring freeze on non-essential positions; cancellation of all non-critical equipment and supplies purchases and travel restrictions for employees. In addition for the first time in its history, CSU declared systemwide impaction to limit the number of new students entering in fall 2009, due to the state’s inability to fully fund enrollment growth and operational needs.

The CSU will continue to post current information regarding the budget and its impact on the university and the state as a whole on their website.