Sources of Revenue | 2010-2011 CSU Support Budget Executive Summary | Budget | CSU
2010-2011 Executive Summary

Sources of Revenue

The 2009/10 Budget Act, as revised in July, provides $2.346 billion—a drop of $625 million.The governor and legislature only recently resolved a $26.3 billion state budget deficit, which included severe reductions in support at the California State University. In 2007/08, state General Fund support for the CSU totaled $2.971 billion. The 2009/10 Budget Act, as revised in July, provides $2.346 billion—a drop of $625 million. This 2010/11 California State University Trustees’ Support Budget starts from an assumption that the state will provide at least this amount of support in 2010/11 in order to be minimally consistent with maintenance of effort requirements for state spending on higher education imposed by the American Recovery and Reinvestment Act of 2009 (ARRA). This budget assumes further that the following one-time reductions totaling $305 million will be restored:

  • A $255 million line-item veto. The governor’s veto message specifically describes this reduction as one-time in nature.
  • A $50 million reduction by the legislature in the 2009/10 Budget Act as originally enacted in February 2009. The legislature included budget act language stating its intent to restore these funds.

Restoration of the $305 million one-time reduction would result in a “restored base” of $2.651 billion for General Fund support of the CSU. This 2010/11 Support Budget builds upon this restored base utilizing the revenue framework of the Higher Education Compact, the six-year agreement signed in May 2004 with the governor and the public university systems. For three fiscal years—2005/06 through 2007/08—the Higher Education Compact provided revenue increases that permitted the CSU to address mandatory cost increases, enrollment growth, faculty and staff compensation increases, and other key priorities. This budget calls for the resumption of that revenue framework, which would result in an estimated further increase in state funding for the CSU of approximately $296 million (beyond the $305 million restoration) as broken out below:

  • 4% for General Operations ($103,216,000)
  • 1% for Core Academic Support Needs ($25,804,000)
  • Access to Student Services and Instruction ($56,035,000)
  • General Fund Augmentation in Lieu of 10% Fee Increase ($111,136,000)

The final necessary element of the revenue framework is recognition of the loss of student fee revenues associated with the current two-year effort to manage enrollments. Campus enrollment “targets” are being reduced by an average of 9.5 percent systemwide as a critically necessary response to severe state budget reductions as well as the high probability that reduced state funding levels could continue into 2010/11. Given the long lead times needed to plan campus operations and to manage admission cycles, reduced enrollment levels will be the reality in 2010/11. Each year, changes in enrollment patterns (between graduate, undergraduate, full-time, part-time, etc.) also affect estimated revenues. Thus, the CSU will realize an overall decline in State University Fee (SUF) revenue due to 9.5 percent decline in full-time equivalent students (FTES) and changes in student enrollment patterns that totals approximately $118 million net of financial aid adjustment.

  • SUF Revenue Adjustment from Change in Enrollment Patterns (-$14,504,000)
  • SUF Revenue Adjustment from 9.5 percent Enrollment Decline (32,576 FTES) (-$129,353,000)
  • Financial Aid Set-Aside Adjustment due to 9.5% FTES Decline ($25,769,000)
To summarize, the 2010/11 support budget plan net sources of funds increase is $483.1 million.
State General Fund Base Restoration ($305,000,000)
State General Fund Increase ($296,192,000)
SUF Revenue Adjustments (-$118,088,000)

General Operations Increase

In 2010/11, the CSU budget is 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 scheduled lease revenue bond payments.

For 2010/11, the 4 percent increase for general operations is calculated as follows:

2009/10 Final General Fund Budget $2,337,952,00011
Budget Restoration   $305,000,000
Lease Revenue Bond Payment   $(62,510,000)1
Total, CSU 2009/10 General Fund Base Budget $2,580,442,000
2010/11 General Fund Increase for Core Academic Support Needs
(2009/10 Base Budget x 1%)
$25,804,000
2010/11 General Fund Increase for General Operations
(2009/10 Base Budget x 4%)
$103,216,000
1Does not include post-final budget adjustments.

Funded within the 4 percent 2010/11 general operations increase is $122,000 for the Center for California Studies. The Center’s General Fund appropriation—a “stand-alone” appropriation in the state’s annual budget bill (currently $3 million)—funds direct costs and administrative expenses for the Assembly, Senate, Executive, and Judicial Fellows programs and Center operations. The Center for California Studies is a state-funded program within the CSU that promotes understanding of and effective participation in the political and policy processes that govern California.

Core Academic Support Needs (top)

For 2010/11, the Compact includes an additional 1 percent increase to the prior year’s base to address budgetary shortfalls in core areas critical to maintain the quality of the CSU educational program. These areas include instructional equipment, instructional technology, and libraries, as well as recognition of ongoing deferred maintenance needs. The funding was not available in 2008/09 or 2009/10 and is more necessary than ever in the 2010/11 budget to address structural deficiencies and strategic improvements in these critical areas.

For 2010/11, the 1 percent increase for core academic support needs is $25,804,000.

Access to Student Services and Instruction (top)

The 2010/11 budget plan includes a General Fund augmentation of $56 million to enhance student services and instruction at the CSU. The intent is to improve student progress toward a degree and increase the number of initial matriculates who, in fact, graduate. The CSU, through its accountability process, has designated this a high-priority long-term goal and reports progress to the CSU Board of Trustees, state policy makers, and the public.

The CSU is in the midst of a two-year effort to manage enrollments as a critically necessary response to severe budget reductions and the high probability that state funding could continue into 2010/11 at its current depressed level. Given the long lead times needed to plan campus operations and to manage admission cycles, reduced enrollment levels at the CSU will be the reality in 2010/11. For these reasons, this budget plan does not propose enrollment growth.

Although the 2010/11 CSU budget plan does not include the 2.5 percent enrollment growth outlined in the Higher Education Compact, the CSU has designated an equivalent General Fund increase in order to begin to restore and enhance CSU student services and instruction after incurring severe General Fund budget reductions in 2008/09 and 2009/10. The 2010/11 marginal cost General Fund support ($7,223) for an equivalent 2.5 percent enrollment growth (7,758 FTES) is $56 million.

In accordance with the Department of Finance’s marginal cost methodology, the 2010/11 gross marginal cost rate of instruction is $10,164. The General Fund share of this rate is $7,223 per FTES. The fee revenue share of this rate is $2,941, which would include one-third ($980 per FTES) financial aid set-aside if the CSU had enrollment growth.

2010/11 Total Marginal Cost of Instruction $10,164
Less: Fee Revenue (2,941)
General Fund Support $7,223

While beneficial marginal cost components were added in 2006/07, the state Department of Finance (DOF), the Legislative Analyst’s Office (LAO), the University of California (UC), and the California State University have yet to agree on a methodology that results in consistent marginal cost funding rates. The CSU will continue to participate in the review of the marginal cost calculation methodology with the DOF, LAO, and UC and strive for a consistent annual methodology that will adequately cover the cost of enrollment growth.

General Fund Augmentation in Lieu of Fee Increase (top)

The 2010/11 budget plan includes a General Fund revenue augmentation of $111.1 million to support CSU budget plan expenditures in lieu of a 10 percent increase in the State University Fee (SUF). With no change in CSU fee rates included in the 2010/11 budget request, additional state funding is needed to address critical needs associated with mandatory cost obligations and market-driven competitive salary requirements for the recruitment and retention of professionally trained and highly skilled employees.

Following are the 2010/11 CSU SUF rates, with no change from 2009/10 and what the rates would be if there was a 10 percent fee increase:

CSU STATE UNIVERSITY FEE RATES
STUDENT LEVEL   2010/11
SUF Rate*
Rates with
10% Increase
Undergraduate      
Regular   4,026 4,428
Limited   2,334 2,568
Credential Program Participants      
Regular   4,674 5,142
Limited   2,712 2,982
Graduate/Post-Baccalaureate      
Regular   4,962 5,460
Limited   2,880 3,168
*Rates with no change from 2009/10      

Undergraduate fees at the CSU continue to be among the lowest when compared to fees at the California Postsecondary Education Commission’s (CPEC) 15 public higher-education comparison institutions. (The 15 comparison institutions have historically been referenced for faculty compensation and student fee comparisons.) The average 2009/10 academic year resident, undergraduate student fees at the CSU are $4,893 (including campus-based fees) and at comparison institutions are $8,054. The total CSU 2009/10 systemwide and campus fees average is comprised of $4,026 in SUF (6.1 units or more) and $867 in average campus-based fees that must be paid to enroll in or attend the university.

State University Fee Revenue Adjustments (top)

Due to severe General Fund budget reductions in 2008/09 and 2009/10, the CSU 2010/11 resident full-time equivalent student (FTES) target is reduced 9.5 percent (32,576 FTES). This results in an estimated State University Fee revenue adjustment of -$129.4 million. Declining enrollment and fee revenue also would result in an adjustment (-$25.8 million) in the amount set aside for financial aid equivalent to one-third set-aside ($791 per FTES) of the student fee portion of the 2009/10 marginal cost of instruction.

Current-year SUF revenue adjustments due to changes in student enrollment patterns total -$14.5 million. This combines changes in resident student enrollment patterns from 2007/08 to 2008/09 and nonresident student enrollment changes during the same period.

The 2010/11 SUF revenue adjustment from the 9.5 percent enrollment decline and change in enrollment patterns is -$143.9 million. A $25.8 million adjustment in fee-funded financial aid will be made due to the 9.5 percent FTES decline. The net fiscal impact of the 2010/11 SUF revenue loss will be -$118.1 million.

9.5% Resident FTES Decline SUF Revenue Adjustment ($129,353,000)
SUF Revenue Adjustment from Change in Enrollment Patterns (14,504,000)
2010/11 SUF Revenue Adjustment (143,857,000)
Financial Aid Set-Aside Adjustment due to 9.5% FTES Decline 25,769,000
SUF Revenue Adjustment Net of Financial Aid Set-Aside (118,088,000)