2005/06 Support Budget

Higher Education Compact

Agreement Between Governor Schwarzenegger and the California State University 2005/06 through 2010/11

Compact photo 1In May 2004, the CSU and the University of California (UC) negotiated a compact for higher education to begin the fiscal recovery of the university and establish long-term funding stability to enroll students; restore academic and student services programs; provide for moderate, predictable, and affordable student fees; and make progress on salaries for staff and faculty at the CSU. The CSU’s current inability to fund these very priorities for its students is attributed to the lack of state funding over the past three years that has resulted in a net fiscal impact of $522 million to the CSU budget. There were many reasons for entering into this agreement with the governor:

  • As previously stated, the CSU suffered cumulative cuts over the past three years in excess of $500 million.

  • The 2003 budget included statutory provisions stating no enrollment growth, increases in faculty and staff salaries, or price increases would be supported by the state in the 2004/05 fiscal year.

  • The January 2004 budget included specific line-item cuts that, if implemented, would have eroded the quality of the CSU’s instructional programs.

  • The compact provides long-term planning and fiscal stability to the CSU.

  • The compact calls for predictable, moderate, and affordable increases in student fees and the allocation of financial aid.

  • The compact restores enrollment funding and the commitment to ensure students receive “authentic access.”

Compact photo 2Adequate financial support for the California State University is essential if the CSU is to fulfill its mission under the California Master Plan for Higher Education, contributing to a higher standard of living and better quality of life for the citizens of the state.

The compact is based on the value of the CSU to the state of California and its citizens. To ensure the university is well positioned to serve the state’s students and industry, Governor Arnold Schwarzenegger commits to a long-term resource plan for the CSU that addresses base budget allocations, enrollment, student fees, and other key program elements for 2005/06 through 2010/11. In exchange for this long-term stability, the CSU commits to focusing its resources to address long-term accountability goals for enrollment, student fees, financial aid, and program quality. To allow appropriate monitoring of progress toward these goals, the CSU commits to providing student and institutional outcome data in numerous program areas including program efficiency, utilization of systemwide resources, and student-level information.

The compact agreement between the university and the governor is similar to the funding support of partnership agreements with prior administrations that not only provides fiscal stability to the university, but also enables planning forward for needs and goals associated with enrollment, student fees, financial aid, compensation, and restoration of the academic infrastructure (e.g., libraries, technology equipment, deferred maintenance).

Compact photo 3Fiscal uncertainty and the inability to plan are never in the best interest of students or the university. The UC and the CSU agreed to do their part in accepting the 2004/05 budget reductions and contributing to resolve the state’s fiscal crisis in return for a funding agreement that begins in 2005/06 and runs through 2010/11. This six-year agreement provides for both universities funding for 2.5 percent enrollment growth (5,000 FTES at the UC, 8,000 FTES at the CSU-per year) and a 3 percent increase in base funding in the first two years, which increases to 4 percent in 2007/08 and 5 percent in 2008/09 through 2010/11. This agreement also assumes undergraduate student fees will increase by no more than 8 percent in the first two years of the compact.

Components of the Higher Education Compact

  • Covers six years—2005/06 through 2010/11

  • Adjustments to the base budget:
    3 percent annual increase for 2005/06–2006/07
    4 percent annual increase for 2007/08–2010/11

  • An additional 1 percent annual increase to the base budget for 2008/09–2010/11 for core academic needs

  • State will cover other basic adjustments such as annuitant dental benefits, retirement contributions, and debt service

  • Identifies importance of restoring more competitive salaries for faculty and staff

Compact photo 4It is true that the compact will not, in the immediate future, restore all funding and student enrollment the CSU would have received if no budget reductions had occurred and if the previous partnership agreement negotiated with former Governor Davis had been fully funded. However, the CSU believes that within the first two years of the new compact agreement, enrollment and funding reductions that did occur as a result of recent budget actions will be restored. The question that remains, given the state’s fiscal condition, is whether the governor or the legislature will be able to address additional long-standing fiscal issues above the compact that remain a high priority within the CSU.


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Budget Development
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Alex Porter
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Last Updated: October 27, 2004