Chancellor's Report

to the Board of Trustees

January 24, 2001

Thank you Chairman Gould. I want to begin by publicly thanking Gov. Davis for the strong support he has shown for the CSU in his 2001/02 budget. The 12 percent increase he has proposed for our general fund budget demonstrates his strong ongoing commitment to higher education. As you know, state support for the CSU budget has increased by $843 million over the last three years.

This budget would sustain and advance that investment with strong support in our priority areas:

• Ensuring access for students;
• Maintaining high quality by recruiting and retaining the best faculty and staff;
• Improving student academic preparation through K-12 collaborations;
• Contributing to California's workforce by investing in key academic programs.

We will continue to work with the state to fund several key items that were not included in his proposal, such as:

• An additional two percent faculty and staff salary increase to bring our compensation pool to six percent;
• $5 million to create an employee housing assistance program;
• $12 million to improve student services.

Once again, I thank the Governor for his strong support.

With regard to the current energy crisis, the CSU is continuing to do its part to conserve power. As an institution with a $50 million annual electrical bill and a 600-million kilowatt-hour annual consumption, we are very conscious of the need to conserve. Over the past 20 years, we have implemented energy savings projects that have saved cumulative 123 million kilowatt hours beyond code requirements.

We continue to participate in a contract with Enron Energy Services, through which they are the sole provider of electricity to most of our campus facilities. Over the past three years of this contract, our projected savings totals $6.3 million.

During the current crisis, I have asked all of our campuses to reduce energy consumption through efforts such as keeping thermostats set at 68 degrees. We have also identified, for the assistant secretary of consumer services, $185 million in distributed generation and demand reduction projects, which could yield 93 megawatts of savings by summer 2002. Over 31 megawatts of that represents permanent demand reductions, with no further utility, operational, or environmental costs. These projects represent a good investment for the state.

As many of you know, the current crisis has been costly for our campuses. The four campuses that are on interruptible service have been assessed penalties totaling about $3 million over the last six months, due to their need to continue normal operations during energy shortages. These campuses have needed to keep the power on during critical times like finals week, and so they have had to pay steep penalties.

We also need to be aware that natural gas prices have skyrocketed. Campuses are projecting a doubling of the natural gas portion of their utility budgets due to these cost increases. This could lead to an increase of about $16 to $20 million for the purchase of gas in 2001. We will continue to discuss this critical issue and look for new solutions to these costly problems.

In the remedial education area, we continue to make progress. It looks like we are making good strides in mathematics. However, while the percentage of students needing remediation in English is still on the decline, it's clear that our students still have English language problems. We will continue working with K-12 schools and students to reduce the need for remedial education.

I want to compliment our institutions and our students on reaching that goal of completing remedial education courses within a year. We raised the bar and our students and institutions rose to meet it. That says a lot about what we can accomplish as a university.

Next, I want to thank our advancement division and campus advancement offices for the good news we received in the latest report on external support. This revenue allows the CSU to provide a margin of excellence in the education it provides to its students. The increases we are seeing in external support reflect a growing confidence in the CSU on the part of its alumni and friends.

I also want to take this opportunity to thank our many generous contributors, especially Mr. Paul Orfalea, whom we honored earlier this morning for his generous contributions to Cal Poly San Luis Obispo.

A few miscellaneous announcements:

• Pres. Suzuki has been named as the CSU's representative to California's Student Aid Commission.
  
  
• Pres. Gerth has been named Sacramentan of the Year.
  
  
• Pres. McCrone was given the Distinguished Alumnus Award from the Geology Department at the University of Kansas.
  
  
• Congratulations to CSU, Dominguez Hills soccer team. The Toros won their first-ever NCAA Division II national championship in December.

Next, I would like to ask Chairman Gould and Ms. Shaun Henry from Bank of America to come up to the podium. Ms. Henry is senior vice president and the region executive for the Bank of America's South Bay Region.

Two years ago, the Bank of America Foundation made an extraordinary commitment to literacy efforts in Southern California. The Bank of America Foundation pledged $1 million to the CSU to support and expand upon Governor Davis' elementary reading initiatives. With the first installment of $500,000, the CSU was able to:

• Link faculty expertise with K-3 reading instructional goals;
• Expand service areas of the project;
• Connect community resources more closely with the Governor's reading goals;
• Collect data on schools with successful student achievement in reading.

So far, the Governor's Reading Initiative has helped more than 6,000 teachers add to their expertise in teaching reading. In addition, students in 2nd and 3rd grade have made greater improvements on the SAT-9 test than any other grade level in the state.

Ms. Henry is here to present the CSU with a check for $500,000, which represents the second installment of this grant.

Ms. Henry, on behalf of the California State University, I want to thank you and the Bank of America Foundation for your generosity and commitment to this important educational initiative. Please extend my gratitude to Bank of America Chairman and CEO Hugh McColl.

Next, I would like to invite President Marvalene Hughes to join me and Trustee Gould up front. President Hughes, we want to congratulate you and your institution on its 40th anniversary.

Over the past 40 years, CSU Stanislaus has grown into an outstanding institution that is distinguished for offering access to excellence. On behalf of the trustees and the entire California State University, I thank you for all that you do for the students of California.

Mr. Chairman, that concludes my report.