Budget Development Message

Californians have consistently ranked education as a top state priority. In addition to extraordinary action taken with the enactment of Proposition 98, which guarantees 40 percent of state resources annually to K–14 education, Californians have consistently supported state budget actions to strengthen the quality of higher education programs, keep higher education fees among the lowest in the nation, and address workforce demands that required targeted growth in teacher preparation and recruitment, nursing and agriculture, and student academic preparation and outreach. Californians recognize that providing the resources to strengthen all educational opportunity leads to enormous economical and social returns to the state.

The instructional foundation of a strong K-12 education is realized in the achievements accomplished in the learning-center educational environment higher education provides. Professional and technical skills are nurtured and developed at the California State University (CSU) and other institutions of public and private higher education with the goal of producing one of the best-educated, highly skilled workforces in the country. With enrollment surpassing 400,000 students, the CSU is the largest, most diverse, and one of the most affordable university systems in the country. The university graduates approximately 77,000 students each year into California’s workforce, and it prepares more students than all other state universities in the fields that make California work: engineering, computer science, business, agriculture, nursing, and education.

The budget challenges the CSU faces going into the 2005/06 fiscal year are nearly unprecedented in magnitude. Over the past three years, the university has faced budget reductions of over $500 million that have resulted in a significant reduction in higher education opportunities. The fiscal impact of recent budget cuts has challenged CSU efforts to offer the course sections necessary for students to graduate in a timely manner, provide students with reasonable class sizes, and retain the necessary lecturers to meet these two objectives. The hardest hit areas have been critical student support services that provide counseling services, lab tutors, financial aid advisors, and services to our most needy disabled students. As the university reviews options for managing these challenges, it is important to understand the Higher Education Compact budget strategy the CSU pursued with the governor in an effort to begin the fiscal recovery of an underresourced system.

The Higher Education Compact agreement is similar to the funding of partnership agreements with prior administrations that not only provide fiscal stability to the university, but also allow for future planning for enrollment, student fees, financial aid, compensation, and restoration of the academic infrastructure (libraries, technology equipment, deferred maintenance). The CSU’s most recent budget experience has resulted in a level of fiscal uncertainty and inability of campuses to plan that is never in the best interest of students. The CSU accepted the 2004/05 budget reductions, contributing to the solution in resolving the state’s fiscal crisis, in return for a funding agreement that will be in effect for fiscal years 2005/06 through 2010/11.

This six-year agreement provides funding for 2.5 percent enrollment growth (8,000 FTES at CSU–per year), and a 3 percent increase in base funding in the first two years that rises to 4 percent in 2007/08 and 5 percent in 2008/09 through 2010/2011. This agreement also assumes undergraduate student fees will increase by no more than 8 percent in the first two years of the compact.

The CSU looks to the 2005/06 budget with the idea that its expectation of increased state revenues should support the mandatory cost obligations that the university is required to pay. The governor and legislature must continue to receive a clear message that without appropriate resources CSU enrollments cannot continue to grow, instructional quality will suffer, and critical support staff will be laid off and course availability will diminish. Tenure faculty can be retained, but student faculty ratios will have to increase in an effort to provide student access and to graduate students in a timely fashion. Skilled workers and professionals will be lost, and student services that are critical to a student’s academic success will continue to decline.

Following this introduction are details of the 2005/06 support budget request, starting with summary charts. Supplemental information is also included for reference purposes. Working with the support of the CSU Board of Trustees and the many constituencies the CSU serves, the university continues its resolve to maintain prominence as the nation’s strongest public system for baccalaureate and master’s degree education.

Patrick J. Lenz, Assistant Vice Chancellor of Budget Development

Rodney M. Rideau, Director of the Budget