Higher Education Funding and Mission in Crisis
California’s near-term and long-run prospects for economic recovery and prosperity, and for social cohesion and harmony, depend on the ability of its higher education institutions to sharply boost the numbers of Californians attaining higher education degrees. Despite the state’s fiscal condition, the CSU has legitimate funding needs in order to carry out its critically important missions for California. The 2012/13 support budget is tempered by recognition of the state’s ongoing fiscal challenge, yet represents a credible statement of the university’s key funding needs.
The 2011/12 Budget Act cut the CSU General Fund appropriation by $650 million to a level of $2.10 billion. This funding level could fall further to $2.0 billion if a mid-year $100 million “trigger” reduction occurs. The 2011/12 level of funding is similar to 1998/99 (13 years earlier) when the CSU General Fund appropriation was $2.16 billion. However, this comparison makes no adjustment for inflation. Moreover, in 2011/12, the CSU is teaching 58,000 more California resident, full-time equivalent students (FTES).
State Appropriation and FTES from 1998/99 to 2011/12
|Fiscal Year||Full-Time Equivalent Students (FTES)||CSU State Allocation
The 2005/06 through 2010/11 Higher Education Compact between the governor, the University of California and the California State University was not fulfilled in the last three years of the compact. This results in a $1.7 billion gap in state funding for the CSU projected out to 2011/12 compared to the needs and funding levels envisioned in that compact.
CSU State Support Versus Higher Education Compact Funding Agreement
|Fiscal Year||State General
($s in billions)
Compact Funding Agreement
($s in billions)
The prolonged funding crisis has forced the CSU into an increasing reliance on tuition fees. However, increased tuition fee revenues have not fully covered state funding losses. For example, increased tuition fee revenues offset less than half of the $650 million state funding cut for 2011/12.
CSU campuses and the Chancellor’s Office have responded to the fiscal crisis with a wide range of efficiencies and cost-cutting measures, including enhanced use of technology and shared services. For example, implementation of a common financial system is saving about $1 million annually by eliminating duplicative technology upgrades and maintenance at 23 different locations. The CSU has recently started collaborative procurement systems and consortia, partnering with universities in California and other states, to leverage the combined buying power and secure better prices on a wide range of products. San José State University has converted its emergency dispatch/communication center into one shared operation with the California State University Maritime Academy and two local community colleges, at considerable annual savings. Similar savings are being achieved at CSU San Bernardino by sharing dispatch operations with three local community colleges. Throughout the system, campuses are reprioritizing faculty “release” time in order to allocate more faculty hours to instruction. These are just a few examples of appropriate steps being taken to do more with less.
In many cases, however, the measures that have been taken to reduce spending cannot be sustained indefinitely without negative impacts to the quality of instruction and services to students. This budget plan is based on continuing those cost-reduction strategies that are sustainable, while restoring resources where they are most needed to provide access and quality programs and services to students.
Studies by the Public Policy Institute of California (PPIC) have projected that California will face a shortage of approximately one million college-educated workers by 2025 unless very strong initiatives are undertaken to boost the production of college graduates. A 2009 PPIC report finds that “...colleges and universities in California would need to increase the production of baccalaureates by almost 60,000 per year (about 40 percent above current levels) to meet projected economic demand by 2025.” Any hope of addressing this urgent problem depends on the CSU, which currently awards almost one-half of all baccalaureate degrees in the state and almost one-third of all master’s degrees. The PPIC reports identify the critical economic need for state investment in higher education. As the 2009 PPIC reports observed, “as the state’s economy has become increasingly reliant on highly skilled workers, a confluence of trends—the retirement of baby boomers, and demographic shifts toward groups with historically low rates of college attendance—makes these investments all the more crucial to the state’s continued economic success.”
Public Policy Institution of California 2009 Report on Closing the Gap: Meeting California's Need for College Graduates
Graduates to 2025
Graduates to 2025
|8,100,000||1.0 Million Gap||9,100,000|