Chancellor's Report

to the Board of Trustees

May 16, 2001

I want to begin by welcoming our newest board member, Kyriakos Tsakopoulos, who was appointed by Governor Davis last week. He has a strong record of leadership and community involvement, and we know he will be an asset to this board. Kyriakos, we are all looking forward to working with you.

Next, I want to congratulate Bill Hauck on his reappointment to the Board of Trustees. Bill, you have served the California State University well and we are fortunate to have you back.

I also want to announce that former Trustee Ali Razi, who has served this board so well over the past few years, has been nominated to serve on the CSU's Board of Governors. I am extremely pleased that we will have another opportunity to work with Ali. He has demonstrated through his past service that he is truly dedicated to the CSU.

As you heard from Richard West, Governor Davis has released his May Revise of the 2001/02 budget. Overall, we are pleased with this budget. All of our mandatory costs have been funded. This budget is especially good news for students. Our enrollment costs will be fully funded and there will be no fee increases. The Governor's budget also comes with some good news for campuses in light of the current energy crisis. The CSU will receive a total of $34 million in one-time funds to compensate for natural gas cost increases. However, we are disappointed in the news about compensation for employees. Our 4 % compensation pool is now down to 2 %. We know that offering competitive compensation helps us to recruit and retain high-quality faculty and staff, which in turn allows us to offer a high-quality education. We will continue to make employee compensation a top priority in the months and years to come.

As Governor Davis made clear in the May Revise, this energy crisis is a major statewide concern. As a university system, we will need to spend a lot of time thinking about our energy consumption. We also may need to consider changing our operations to adapt to this energy crisis. I have been talking to the presidents about making some changes to CSU operations over the summer. We're looking at working earlier hours, such as from 7 a.m. to 3:30 p.m. We're also looking at the possibility of working four 10-hour days, and closing down Friday-Saturday-Sunday. This all comes at a time when we are increasing our summer operations on campus to provide greater access for our students. We will have to continue to assess how to meet our students' needs while conserving energy and staying within our budget.

Over the past few weeks, California's bond rating has dropped two notches. The CSU's bond rating has dropped only one notch. I want to commend our staff - especially Rick Leffingwell - for working closely with the rating agency. We have made a solid case for how we are distinct from the state of California, and how there is a strong demand for the educational mission that the CSU provides.

There will be a hearing on the Education Doctorate issue in Sacramento on June 12. It looks like it will be a two-year bill. We have gotten a great deal of support for this effort from superintendents and other K-12 and community college leaders across the state, as well as from several newspapers. It also appears that we have good legislative support. The bill already has 35 co-sponsors.

I want to thank President Welty and everyone else who served on the Alcohol Policy Committee. We are sending $25,000 in matching funds to each campus to support alcohol abuse prevention efforts. That's a total of $50,000 on each campus - $1.1 million dollars altogether for our system. I believe that this is an important effort and we need to make a strong commitment to leadership and action.

Speaking of President Welty, I had the opportunity to attend the groundbreaking ceremony of the Save Mart Center at Fresno State last week. The Save Mart Center is the largest privately funded project in the history of the California State University system. Several other CSU campuses have also been the recipients of generous private gifts in the last few weeks: The Annenberg Foundation announced a gift of $3 million to CSU San Bernardino's Coachella Valley Center for the construction of a second building there. The H.N. and Frances C. Berger Foundation announced a second gift of $1 million, also for the Coachella Valley Center. Marian Kremen presented a gift of $4 million for Fresno State's school of education. The Benjamin and Marion Kremen School of Education and Human Development will be the first named college of education in the CSU system. Cal Poly San Luis Obispo has named its business school the Orfalea College of Business in recognition of a $15 million gift from Kinko's founder Paul Orfalea. All of this private support helps us build a margin of excellence at the CSU.

I want to reiterate my praise for this year's Wang Family Excellence Award winners, whom we honored yesterday. These employees have made extraordinary contributions to the CSU and to their respective fields. Together, they represent just a sampling of the high-quality teaching and learning that is found throughout the CSU.

Also, at the State University House on the evening before Cesar Chavez Day, the CSU recognized 21 students from around the CSU system who have shown outstanding leadership in community service. We gave them the STARS awards, which stands for Students That Are Recognized For Service.

Community service is one of the many areas in which our students distinguish themselves. Remember, our students performed a total of 33.6 million hours of community service last year. In a few moments, we will recognize some other outstanding CSU students when we honor two CSU athletic teams.

Before that, I want to congratulate the Chico State Women's Rugby Team, which just won the 2001 USA Rugby Division 1 Collegiate Women's National Championship.

President Esteban, please give my best wishes to this outstanding team.

Mr. Chairman, that concludes my report.