2007/08 Support Budget

Sources of Revenue

Sources of Revenue photo The 2007/08 California State University Trusteesí Support Budget is based on revenue assumptions derived from the Higher Education Compact, a six-year agreement signed in May 2004 with the governor, the University of California, and the CSU. Beginning in fiscal year 2005/06 and through 2010/11, the governor agreed to request sufficient funds to support scheduled base budget increases for general operations, enrollment, and mandatory cost obligations for debt service and annuitant benefits.

The Compact is highly beneficial to the CSU in that it provides a stable financial base to plan for future needs and goals. In exchange for this pledge of funding, the CSU will be accountable for addressing state goals for student access, academic program quality, student support services, and effective managerial resources. The CSU will provide student and institutional outcome data that addresses operational efficiency, utilization of systemwide resources, and student progress.

The revenue components of the compact agreement include the following for 2006/07:

  • 4% Increase For General Operations ($109,736,000)

    In 2007/08, the CSU budget will be based on a 4 percent increase for general operations in accordance with the Compact agreement. Each year, the increase for general operating support is calculated using the prior year General Fund appropriation adjusted for retirement costs and scheduled lease revenue and deferred maintenance bond payments.

    For 2007/08, the 4 percent increase is calculated as follows:

    2006/07 Final General Fund Budget 2,788,910,000
    Lease Revenue Bond Payment   (64,597,000)
    Deferred Maintenance Bond Payment   (4,187,000)
    2006/07 Retirement Increase   23,284,000
    Total, CSU 2007/08 General Fund Base Budget 2,743,410,000
    2007/08 General Fund Increase for General Operations
    (Base Budget x 4%)
    109,736,000

  • 2.5% Enrollment ($64,244,000) and MSN Enrollment Increases ($2,467,000)

    The Compact includes a 2.5 percent annual enrollment increase. For 2007/08, a 2.5 percent increase in CSU resident student enrollment yields an additional 8,351 Full-time Equivalent Students (FTES). Also, the 2007/08 support budget request continues planned Master of Science in Nursing (MSN) program enrollment growth of 163 FTES. This represents the second cohort of students in a multi-year agreement with the state to increase the number of licensed nurses serving California. In total, the CSU will be funded to serve 342,712 resident FTES in 2007/08.

    Based on the 2006 Budget Act marginal cost methodology, the gross marginal cost rate for 2007/08 is $9,927. The state share of this rate is $7,693 per FTES, which reflects a $2,234 offset for student fee revenue. The $7,693 state rate multiplied by the 8,351 FTES enrollment growth equals $64,244,000. One-third of the marginal cost fee revenue is set aside for financial aid ($745 per FTES).

    Regarding MSN enrollment funding, the 2007/08 marginal cost rate is adjusted to reflect the lower student/faculty ratio (SFR) and the instructional cost of graduate nursing instruction. Based on a graduate nursing instruction standard of 10.5 SFR and the average cost of faculty professors, the state cost to add a new MSN graduate nursing cohort is $2,467,000. This represents a cost of roughly $15,000 per FTES. The marginal cost adjustments required to more accurately reflect the instructional cost of students enrolled in nursing programs represent a state marginal cost rate for nursing that is double the cost requirement for regular student enrollment.

    The marginal cost calculation is based on the methodology approved by the legislature used to fund CSU enrollment growth in the Budget Act for the 2006/07 fiscal year. The graduate unit load for a full-time equivalent student was changed, as requested by the CSU, from 15 to 12 units per term. A plant operations component was specifically included in the enrollment funding methodology to recognize the cost of maintaining existing space and opening new space to support existing enrollment levels and accommodate enrollment growth. The governor vetoed this methodology in the 2006 Budget Act, but sustained the state marginal cost rate enacted by the legislature.

    The CSU will continue to participate in the review of the marginal cost calculation methodology with the Department of Finance, the Legislative Analystís Office, and the University of California to advocate the universityís needs in covering the cost of enrollment growth.

  • Revenue Augmentation ($65,168,000)

    The 2007/08 budget plan includes a revenue augmentation of $65.2 million to support CSU budget plan expenditures. With no change in CSU fee rates included in the 2007/08 budget request, additional state funding is needed to address critical needs associated with CSU mandatory cost obligations and market-driven competitive salary requirements for the recruitment and retention of professionally trained and highly skilled employees.

    Following are the 2007/08 CSU State University Fee rates with no change from 2006/07:

    CSU STATE UNIVERSITY FEE (SUF) RATES
    STUDENT LEVEL   2007/08
    % change from
    prior year
    2007/08
    SUF Rate
    Undergraduate      
    Regular   0.0% 2,520
    Limited   0.0% 1,464
    Credential Program Participants      
    Regular   0.0% 2,922
    Limited   0.0% 1,698
    Graduate/Post-Baccalaureate      
    Regular   0.0% 3,102
    Limited   0.0% 1,800

    The CSU continues to maintain the lowest undergraduate fees among the California Postsecondary Education Commissionís (CPEC) 15 higher-education comparison public institutions. (The 15 comparison institutions have historically been referenced for faculty compensation and student fee comparisons.) The average 2006/07 academic year resident, undergraduate student fees at the CSU are $3,199 and, at comparison institutions, $6,665. The average 2006/07 academic year resident, undergraduate student fees include both systemwide and required campus fees. The total CSU 2006/07 systemwide and campus fees average is comprised of $2,520 for the undergraduate SUF (6.1 units or more) and $679 for the average campus-based fees that must be paid to apply to, enroll in, or attend the university.

  • SUF Revenue from Enrollment Growth ($25,200,000)

    Revenue associated with a 2.5 percent increase in resident FTES enrollment (8,351 FTES) is projected to generate $25.2 million in new student fee revenue. The Compact agreement calls for the university to set aside 20 percent to 33 percent of new State University Fee revenue for financial aid. In 2007/08, the CSU will set aside one-third of the student fee portion of the marginal cost of instruction for financial aid. The $6.2 million provided by the set-aside will be used to increase the CSU State University Grant (SUG) pool. The $18.98 million balance of enrollment growth revenue will support all other marginal cost enrollment growth.

    2007/08 2.5 Percent Resident Enrollment Growth Revenue

    One-third Financial Aid Set Aside
    $25,200,000

    ($6,221,000)
    2007/08 SUF Fee Revenue from Growth Net of Financial Aid $18,979,000

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Last Updated: November 13, 2006