2007/08 Support Budget

Long-Term Needs

Searching for bookA constant fiscal challenge at the CSU concerns how to address long-term budget need comprised of expenses that are too costly, or have had historical unfunded deficits that are too large to finance in a single budget year. The cost of keeping technology current, maintaining relevant library collections, reducing deferred maintenance, and funding instructional equipment replacement are examples of these types of core needs that require a multimillion-dollar annual commitment.

In past years, these multiyear commitments were funded as a separate component of the higher education partnership agreements, with 1 percent of the CSU’s budget earmarked for this purpose. The current Compact calls for restoration of this 1 percent General Fund commitment in the fourth year of the Compact (2008/09). However, it is important that the CSU continues minimum investments in these structurally deficient areas to impede significant growth in funding backlogs and to sustain the current quality of services available to students, faculty, and staff.

The total budget investment necessary to address long-term budget need reflects the continuing impact of permanent reductions in State General Fund appropriations to the CSU, such as the permanent base budget reductions that occurred during fiscal years 2001/02 through 2004/05.

Information Technology Acquisition and Support, $5 Million

The CSU has funded the baseline budget needed to acquire electronics required to operate the campuses’ telecommunications infrastructures and to renew and refresh this equipment on a regular and predictable cycle, thereby preserving the value of the state’s investment in that infrastructure. The framework that has guided CSU investments in technology for over a decade, the Integrated Technology Strategy (ITS), clearly articulated that the infrastructure was a prerequisite for disseminating the benefits of the technology initiatives to CSU students, faculty, and staff. In summer 2005 a study was conducted that found that, due to years of chronic underfunding resulting from budget shortfalls, inadequate funding has been allotted to academic technology.

The CSU is now concentrating on the first four of its academic technology initiatives designed to address problems created by this funding deficiency:

  • Focus on improving student success by providing online information, testing tools, and learning modules to allow students to be “college-ready” in mathematics and English. Not only does this improve time to degree, it reduces remediation costs in keeping with Trustees’ policy.
  • Leverage pooled systemwide resources to reduce the cost of electronic content and digital instructional media.
  • Strengthen investments in Learning Management Systems and other information technology applications such as the Common Management System and library systems by developing a hardware architecture system that allows each of the systems to integrate seamlessly with the others.
  • Develop and sustain an appropriate level of faculty development in academic technology to ensure the best use of new and emerging digital resources in the teaching and learning process.

In response to the need for initial improvements in these areas of CSU academic technology, onetime funds have been expended in the past few years to develop the needed structural foundation. The CSU funding study estimated that over $8 million would be required in one-time funds to fully launch these initiatives and conduct pilot studies that would inform the system about the campus costs of maintaining these initiatives; the $5 million allocation requested in 2007/08 will provide the initial funding to support these academic initiatives and would provide for their maintenance in future years. Over the next five years, the CSU has projected the need for a total base budget increase of $116.5 million, including this $5 million allocation, to fund one-time and ongoing technology projects that sustain, maintain, and significantly broaden academic technology support across the CSU.

Libraries, $2.5 Million

Since 1992, the CSU has been investigating numerous ways to eliminate its core library deficiencies by developing new technologies to keep volumes current and adequate to meet the academic and intellectual research needs of CSU students and faculty.

In fiscal year 2000/01, the CSU identified a permanent base budget need of $12 million to keep its permanent collection of books, serials, and periodicals current. This increase, added to existing budget support of $27 million, would have allowed annual ongoing funding to support restoration of permanent volumes needed in campus on-site collections and to establish new electronic and alternative collections through the use of new technologies to expand the campuses’ access to library services.

Since 2000/01, the CSU has been able to provide $6.9 million to increase permanent base support for libraries. However, state budget reductions in 2003/04 and 2004/05 reversed CSU efforts to reduce the structural deficiencies. In addition, declining purchasing power of dollars allocated for libraries is an important factor that contributes to continued growth in library deficiencies. Based on Department of Finance price letters, the purchasing power of CSU dollars budgeted for libraries has declined, on average, 6 percent annually.

The CSU Council of Library Directors estimated in 2005 that $13.5 million was needed to update the base budget for libraries, to provide resources to keep volumes refreshed, and to secure new acquisitions on an annual cycle. The CSU provided $2.5 million in permanent funds in 2006/07 to begin to address this need. For 2007/08, another $2.5 million in permanent support will be provided to expand systemwide programs for the Electronic Core Collection of bibliographic and full-text resources that are available to all CSU students and faculty. Additionally, these funds will support continued enhancement of online information searching and access tools as well as other systemwide projects designed to increase effective use of information resources.

Deferred Maintenance, $2.5 Million

CSU deferred maintenance remains an area of significant budgetary deficiency. Deferred maintenance occurs when scheduled repairs are delayed to subsequent years due to project cost, timing, and/or lack of available resources. Historically, the CSU has also used the deferred maintenance term to describe or include the delayed replacement of building systems that have exceeded their useful life as part of the funding deficiency.

Between the 1994/95 and 1999/2000 fiscal years, the state and the CSU provided permanent base budget resources for ongoing maintenance support to address funding deficiencies. However, during that six-year period, the state supported only $61 million in one-time funds to address a deferred maintenance backlog that exceeded $350 million. In 2000/01, the CSU used long-term funding provided by the partnership agreement to reduce the backlog by $2.8 million on an annual basis. Unfortunately, no funds were available to further reduce the backlog in the next four fiscal years (2001/02 through 2004/05). Consequently, not only was further reduction of the backlog halted, but inflation and the continual aging of buildings has caused the long-term maintenance repair and replacement needs to increase. Between 2005/06 and 2006/07, $4 million was used to support further reduction of the backlog of deferred maintenance. The 2007/08 support budget adds another $2.5 million to this effort.

In 1999, the CSU commissioned a study to better define the annual funding needed to replace building components and systems that have exceeded their life cycle. The purpose of the study was to confirm whether or not the long-term funding sought by the CSU would halt growth in the deferred maintenance backlog consistent with the intent of the partnership agreement.

The results of the study indicated that due to the substantial amount of construction from the late 1950s to the mid-1960s, on average, $100 million per year is needed to replace mechanical, electrical, and plumbing systems that have now exceeded their useful life. Annual need varies around this average as the study model takes into account building age, life cycle of systems, and campus repairs or replacements performed in the building.

To address some of this funding deficiency for buildings and systems beyond their useful life, the CSU received approval from the Department of Finance to include renewal of capital as a component in the CSU Capital Outlay Program beginning in 2005/06. The capital renewal program is envisioned to range from $25 million to $50 million annually; $26 million was funded in 2005/06, and $50 million will be funded in each of 2006/07 and 2007/08. A structured approach that utilizes capital outlay funding with support dollars will reduce deferred maintenance and improve the extended use of CSU capital assets.

The CSU is committed to sustaining and increasing its maintenance budgets in order to provide safe, functional, and efficiently operating buildings to serve its students, faculty, and staff. However, the ongoing maintenance rate of $8.84 per square foot funded in 2007/08 does not recognize scheduled maintenance need at an estimated cost of $1.41 per square foot. Campuses currently use productivity and efficient management of available resources to satisfy a portion of this unfunded need, but they most often have to delay scheduled repairs due to a lack of available funds, which increases the deferred maintenance backlog.

The table below shows the CSU budgeted deferred maintenance backlog from 1993/94 through current year.

2007/08 Calculation of Deferred Maintenance Backlog

Budget Year Prior Year
CA-CPI
% Change
Budget
Funding
Offset
Backlog
1993/94 Base     $351,000,000
1994/95 1.8% $17,000,000 $340,318,000
1995/96 1.7% $24,000,000 $322,103,000
1996/97 1.4%   $326,612,000
1997/98 2.3%   $334,124,000
1998/99 2.0%   $340,806,000
1999/00 2.5% $20,000,000 $329,326,000
2000/01 3.2% $2,813,000 $337,051,000
2001/02 4.3%   $351,544,000
2002/03 2.9%   $361,739,000
2003/04 2.6%   $371,144,000
2004/05 1.9%   $378,196,000
2005/06 3.3% $1,500,000 $389,176,000
2006/07 4.2% $2,500,000 $403,021,000
2007/08 3.0% $2,500,000 $412,809,000
2007/08 CA-CPI % source:
California Department of Finance, Planning Estimate Forecast, July 19, 2006
(calculated using a formula developed by the California Department of Industrial Relations)


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Last Updated: February 05, 2007