2007/08 Support Budget

Budget Proposal: Enrollment/Student Fees/Financial Aid

2007/08 Marginal Cost of Instruction

Two students reviewing a paperFor each additional student that the CSU enrolls, the state provides funding at a marginal cost rate to support direct instruction, academic support, student services, institutional support needs, and plant operations. Prior to fiscal year 2006/07, the stateís share of CSU marginal cost was based on a marginal cost methodology for higher education adopted by the governor and the legislature in 1995 that encompassed average CSU program area costs discounted by negotiated deflators. The 1995 methodology did not recognize increased fixed costs associated with increased enrollment thresholds or actual new faculty hire rates in addition to other funding deficiencies. The 2005 Budget Act Supplemental Report Language required the Department of Finance (DOF) and the Legislative Analystís Office (LAO) to convene a working group with the CSU and the University of California (UC) to review the 1995 marginal cost methodology and determine possible modifications.

During the marginal cost methodology review that occurred in fiscal year 2005/06, the CSU recommended changes that included requests to: (1) use the average new hire faculty salary rate, (2) reflect the optimal level of instructional support students require in the student-to-faculty ratio (SFR), (3) adjust the unit load associated with full-time graduate study from 15 units to 12 units, (4) eliminate current discounts for fixed costs, and (5) include funding for facilities operations and maintenance required when student enrollment increases.

The legislature approved a marginal cost methodology for enrollment growth in the 2006/07 final budget that contained a hybrid of proposals from the DOF, LAO, CSU, and UC. The methodology approved by the legislature included the current average new hire faculty rate, changed the full-time graduate student unit load from 15 to 12 units per term, and added a Plant Operations component 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 review of the marginal cost calculation methodology with the Department of Finance, the Legislative Analystís Office, and the University of California, advocating the universityís needs in covering the cost of enrollment growth.

Based on the marginal cost methodology approved by the legislature, the 2007/08 marginal cost rate of instruction for the 2.5 percent enrollment growth (8,351 FTES) will be as follows:

2007/08 Resident Student Marginal Cost of Instruction Rate

  Marginal
Budgeted
Amount
Unaffected
Activities
Cost
Per FTEa
Faculty salaryb $61,088 $61,088 $3,232
Faculty benefits 23,079 23,079 1,221
Teaching assistant salaryc 10,209 10,209 17
Instructional equipment 39,817,000 39,817,000 119
Instructional support 291,867,063 274,378,106d 821
Academic support 482,495,752 443,969,943e 1,328
Student services 370,356,558 370,356,558 1,108
Institutional support 525,623,520 370,648,670f 1,109
Operation and maintenance 479,385,553 324,499,566g 971
Total Marginal Cost     $9,927
 Less: Fee Revenueh     ($2,234)
State Funding Rate     $7,693
a Full-time equivalent
b Based on fall 2005 average annual salary of all new professors and a student-to-faculty ratio of 18.9:1
c Based on average annual salary of a full-time TA and a student-TA ratio of 608:1
d Excludes costs for existing TAs
e Excludes museums and galleries, ancillary support, and academic personnel development
f Excludes executive management, logistical services, and public relations/development
g Excludes physical plant administration, logistical services, information technology, major repairs, and lease purchase
h Based on the average systemwide fee revenue collected from each FTE student, discounted for financial aid

2007/08 Marginal Cost Program Detail

Program 2006/07
Gross
Final Budget
2006/07
Retirement
Adjustment
Marginal
Cost
Factor
Instruction $1,764,399,000 $13,188,000 $1,777,587,000
Instructional Faculty 1,458,574,000 11,473,343 1,470,047,343
Instructional Support 305,825,000 1,714,657 307,539,657
Research 4,384,000 26,000 4,410,000
Public Service 11,456,000 51,000 11,507,000
Academic Support 507,474,000 2,915,000 510,389,000
Student Services 389,249,000 2,518,000 391,767,0008
Institutional Support 553,141,000 2,869,000 556,010,000
Operation and Maintenance of Plant 505,382,000 1,717,000 507,099,000
Student Grants and Scholarships 260,705,000 0 260,705,000
Reimbursed Activities 183,262,000 0 183,262,000
Provisions for Allocation 36,153,000 0 36,153,000
Gross Expenditures $4,215,605,000 $23,284,000  
Less      
Health Services Expenditures
in Trust
(6,485,000)    
Reimbursements (183,262,000)    
Gross CSU Operations Appropriations $4,025,858,000    

2007/08 MSN Graduate Nursing Student Marginal Cost of Instruction Rate

The MSN graduate nursing marginal cost rate is adjusted to reflect the higher cost of graduate nursing instruction and includes a lower student-to-faculty ratio (SFR) of 10.5:1. The following table summarizes the 2007/08 marginal cost rate for MSN graduate nursing enrollment growth (163 FTES):

  Excluding
Budgeted
Amount
Marginal
Unaffected
Activities
Cost
Per FTEa
Faculty salaryb $91,101 $91,101 $8,676
Faculty benefits 34,418 34,418 3,217
Teaching assistant salaryc 10,209 10,209 17
Instructional equipment 39,817,000 39,817,000 119
Instructional support 291,867,063 274,378,106d 821
Academic support 482,495,752 443,969,943e 1,328
Student services 370,356,558 370,356,558 1,108
Institutional support 525,623,520 370,648,670f 1,109
Operation and maintenance 479,385,553 324,499,566g 971
Total Marginal Cost     17,367
 Less: Fee Revenueh     (2,234)
State Funding Rate     15,133
a Full-time equivalent
b Based on fall 2005 average annual salary of professors (adjusted for 2006/07 proposed salary increase) and a student-faculty ratio of 10.5:1
c Based on average annual salary of a full-time TA and a student-TA ratio of 608:1
d Excludes costs for existing TAs
e Excludes museums and galleries, ancillary support, and academic personnel development
f Excludes executive management, logistical services, and public relations/development
g Excludes physical plant administration, logistical services, information technology, major repairs, and lease purchase
h Based on the average systemwide fee revenue collected from each FTE student, discounted for financial aid


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Budget Development
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Last Updated: February 05, 2007