2010-2011 Executive Summary

Additional Budget Challenge

Core Compact Recovery, Compensation $238 Million

Researcher looking into a microscope. Ongoing restoration of a portion of the Compact funding foregone in 2008/09 and 2009/10 related to employee compensation is requested for the 2010/11 fiscal year. The CSU regards this portion as “core Compact recovery” under the Higher Education Compact with the governor.

The 2007/08 Budget Act provided the CSU with the full complement of funding promised by the Compact, including the basic budget support and core academic support needs components. On the basis of this funding commitment, the CSU entered into multiyear collective bargaining agreements with the California Faculty Association and other employee bargaining groups that provided multiyear incremental salary increases. These increases were agreed to not only to keep employee salaries ahead of changes in the cost of living, but also to close long-standing and documented salary “gaps” with similar employee groups at comparable institutions, in order to keep the CSU competitive in the recruitment and retention of highly qualified faculty and staff.

Based on the California Postsecondary Education Commission’s (CPEC) 20 higher-education comparison institutions, the 2008/09 projected faculty salary lag was 18.5 percent, and the 2008/09 projected CSU presidents’ salary lag was 46.7 percent. Also, CSU Human Resources 2008/09 staff market analyses indicate that many classifications including physicians, health care support, and various technical and administrative support groups have double-digit salary lags.

The 2008/09 CSU support budget plan approved by the CSU Trustees included Compact-level funding, with a total of $154.3 million (5.08 percent) for employee compensation increases consistent with collective bargaining agreements. The 2008/09 Budget Act, however, did not provide any increase in state funding for the CSU and, in fact, included mid-year reductions. The collective bargaining agreements included clauses that led to reopening of negotiations on salary and benefit increases because the state did not provide the annual increase in funding called for by the Compact. The lack of a funding increase in the 2008/09 Budget Act denied the budgeted resources for the CSU to provide salary increases previously negotiated and scheduled to take effect in 2008/09. Of the $154.3 million, there is an ongoing need for $116.7 million after implementation of obligatory provisions in the California Faculty Association bargaining agreement of $37.6 million.

The CSU 2009/10 support budget plan assumed a resumption of the state’s funding commitments under the Compact and included $173.3 million (5.5 percent) funding for employee compensation increases. Again, more severe budget reductions in the 2009/10 Budget Act denied the budgeted resources for the CSU to provide salary increases previously negotiated and scheduled to take effect in 2009/10. Of the $173.3 million, there is an ongoing need for $166.3 million after $7 million was implemented for an obligatory provision in the California Faculty Association bargaining agreement.

The CSU support budget plan for the 2010/11 fiscal year assumes a resumption of the state’s funding commitments for 2010/11 under the Compact, and the budget plan includes $75.9 million (2.5 percent) within Compact funding for employee general compensation increases in 2010/11. This necessary augmentation, however, cannot by itself keep employee compensation on pace to reach competitive levels. The CSU needs the additional $283 million augmentation requested here in order to avoid losing ground in its efforts to close salary lags and reach competitive levels.

Core Compact Recovery - Compensation (in millions)

  Budget Plan Implemented Recovery Balance
2008/09 $154.3 $37.6 $116.7
2009/10 $173.3 $7.0 $166.3
Total     $283.0