2009/10 Support Budget II

Additional Challenges

Addressing Off-Campus Centers' Fixed Costs, $5.2 Million

Public support for Off-Campus Centers has often been the key impetus for their development. The financial and civic commitments communities have made and the support these centers generate in the community are the core ingredients that ensure enrollments at these facilities will be sustained over time. Just as the communities and the universities have made major investments in the establishment of these centers, the state shares a responsibility for the continued operation of a permanent facility once enrollment thresholds have been met. Traditionally, the state has recognized that there are fixed as well as variable costs associated with enrollment thresholds at off-campus centers.

In January 2000, the CSU Board of Trustees adopted policies for the establishment of CSU off-campus centers with an enrollment threshold of 500 FTES and the expansion of existing centers above the 500 FTES threshold (REP 05-99-04). The adopted threshold is the same as used by the California Postsecondary Education Commission for its approval of centers. These policies included the expectation that campuses would be responsible for the variable cost enrollment needs of up to 500 FTES. These initial costs are supported by the campus assuming a portion of enrollment growth funding and academic and administrative staffing assigned from the home campus for program support. The initial fixed cost needs are supported with campus and system resources for limited facility and facility maintenance and services costs.

In considering the expansion of an existing center beyond 500 FTES, which must be consistent with enrollment demands in the region where the center is located, it is expected that there will be a need to request state resources. The additional fixed cost need, including outlays for acquisition, operations, and maintenance of facility space, cannot be supported through the enrollment growth funding received from the state on the margin. Marginal cost funding only supports existing levels of instructional support and does not recognize fixed-cost needs associated with enrollment growth or instructional program expansion.

Upon achieving permanent status at the 500 FTES threshold, there is general recognition by the CSU and the state that fixed costs related to satisfying the additional academic, student services, and facilities requirements—including additional personnel—must be funded. The CPEC reviews these costs as well as the core instructional value of the permanent center prior to granting approval to the establishment of a center, and uses the same 500 FTES threshold. In addition, there is generally strong community support from local civic and governmental agencies associated with these permanent centers, and the fixed cost requirements typically include economic development and joint-use projects that benefit the academic mission of the center and the region it serves.

Prior to fiscal year 1993/94, the fixed costs supporting the operational and facility space needs of the centers were funded by the state as ancillary support for the CSU academic program. Since that time, enrollments at CSU campuses have been building at a pace that will soon outstrip current capacity. The CSU has implemented several management policies and procedures to accommodate all eligible students seeking enrollment, and off-campus centers have been an important method of diminishing enrollment pressures at the main campuses. CSU campuses assume all variable costs for these centers until they reach the 500 FTES threshold. After the 500 FTES threshold has been reached, the centers are eligible for permanent status and must be funded for associated fixed cost increases. By funding these fixed costs, the state can encourage the efficient utilization and growth of state-approved centers, which are an effective way for the state to meet its higher education objectives in parts of the state that lack campuses.

This budget requests $5.2 million to support fixed cost requirements at five centers that either exceed 500 FTES at present or will exceed 500 FTES in 2009/10:

  • Antelope Valley (Bakersfield)
  • Palm Desert (San Bernardino)
  • Concord (East Bay)
  • Irvine (Fullerton)
  • Imperial Valley (San Diego)

Based on standards recognized by the state through the marginal cost methodology for funding enrollment growth and referenced by CPEC in addition to state-recognized standards for supporting assigned square footage, the 2009/10 cost formula identifies $1,056,000 in additional fixed cost need as centers grow between 500 and 1,250 FTES.

Additional fixed-cost funding is required to provide for costs associated with additional student services at the off-campus centers, increased staff and resources needed to expand and improve libraries, increased custodial support, increased technology and technical staff that support the availability of distance learning programs and curriculum development, and enhance joint-use or economic development projects that expand, assist, and support the center’s academic programs.

The methodology is comprised of two cost standards: the cost to provide educational services based on the average cost differential of CSU enrollment growth funding and the facility and operations need established by square footage calculations linked to additional academic or academic-related space. The educational services standard for fixed cost is based on the full average cost differential of educational support services based on state funded marginal cost multiplied by 500 FTES. For 2009/10, the standard supports the following cost differential for off-campus centers:

2009/10 Gross Average Support Cost per FTES $12,390
2009/10 Discounted Marginal Support Cost per FTES (11,250)
Fixed Cost Differential per FTES
(1,140 x 500 FTE = $570,000)
$1,140

The funding provided by this cost standard addresses the fixed-cost needs associated with the increased enrollment-related operational and administrative cost of instructional support, academic support, student services, and institutional support services.

The facility operations standard in the methodology is based on the campus acquisition and support of space requirements that serve up to 500 FTES. The off-campus center funding methodology for enrollments over 500 FTES provides support for the square footage differential required at the center to reach a maximum threshold of 1,250 FTES enrollment. This square footage differential (51,600 square feet) is multiplied by the 2009/10 new space rate of $9.41/sq. ft. for regular maintenance. Total funding provided at this rate, $9.41 times the 51,600 square feet differential, yields a fixed cost requirement of $485,000. Funds provided for facility operations include all additional costs associated with new lease or permanent space requirements for instruction and instructional support, academic support, student services, and institutional support.

Total Cost Per Center
$570,000 + 486,000 = $1,056,000
x 5 Centers
  $5,280,000