Uses of Revenue | 2015/16 CSU Support Budget Executive Summary | Budget | CSU
2015/16 Executive Summary

Uses of Revenue

Students in the hallway.The 2015/16 California State University Support Budget plan recommends an expenditure plan based on General Fund and tuition fee revenue increases from higher enrollment to cover the cost of expenditure augmentations. The expenditures outlined below address the university’s fundamental priorities for the 2015/16 fiscal year. These include increases for mandatory costs, employee compensation, enrollment, student success and completion initiatives, information technology infrastructure upgrade and renewal, the Center for California Studies, and maintenance and infrastructure needs.

Mandatory Costs, $23,077,000

Mandatory costs are expenditures the university must pay regardless of the level of funding appropriated by the state. These costs include increases for employee health and retirement benefits and operations and maintenance of newly constructed space. Without funding for mandatory cost increases, campuses must redirect existing resources from other program areas to meet these obligations. In order to preserve the integrity of CSU programs, the 2015/16 support budget plan provides for the following increases in mandatory cost obligations.

Mandatory Costs
Health Benefits $11,040,000
Retirement Benefits $7,000,000
New Space Maintenance $5,037,000
Total $23,077,000

Two Percent Compensation Pool, $65,528,000 (top)

The CSU Board of Trustees recognizes compensation for faculty, staff, and management as a key element of the university’s success. The ability to offer a competitive compensation package is essential to the CSU’s ability to recruit and retain faculty, staff, and management employees who contribute to the CSU’s mission of excellence.

Continued investment to make progress toward competitive salaries for faculty and staff are needed to place the CSU in a stronger position to fulfill its primary mission of providing accessible higher education that maintains quality and supports the state’s ability to fill jobs and support the economy. There continues to be critical salary-related concerns across CSU employee groups that require attention by CSU leadership and the collective bargaining process. The first general salary increase in several years for faculty and staff occurred in 2013/14 with $38 million, representing an average increase of 1.34 percent, distributed across employee groups. A three percent compensation pool increase has been budgeted for 2014/15, subject to collective bargaining.

This budget plan calls for approximately $65.5 million to fund a two percent compensation pool increase, subject to collective bargaining, for all employee groups effective July 1, 2015. A two percent pool is intended to strike a balance between competing priorities. The 2015/16 cost of each one percent compensation increase is based on 2014/15 final budget salaries and salary-related benefits (OASDI, Medicare, and retirement) and is summarized in the following table.

Estimated 2015/16 Cost of 1 Percent Compensation Increase
  2014/15 Final Budget
Compensation (Adjusted1)
2015/16 Cost of
1% Increase
Faculty $1,650,399,000 $16,504,000
Staff 1,626,040,000 16,260,000
Total $3,276,439,000 $32,764,000
Cost of 2% Increase $65,528,000

1 The compensation base is adjusted for changes in employer-paid retirement rates. The CalPERS member categories for State Miscellaneous-Tier 1 and State Peace Officer/ Firefighter increased 3.077 percentage points and 5.507 percentage points, respectively, from the 2013/14 composite rates of 21.203 percent and 31.320 percent to 2014/15 rates of 24.280 percent and 36.827 percent.

Funded Student Enrollment, $103,218,000 (top)

The 2015/16 budget plan includes a three percent funded student enrollment increase of 10,382 California resident FTES from a 2014/15 California resident FTES base of 346,050.

2015/16 Full-time Equivalent Students Enrollment Target
2015/16 Resident FTES Base 346,050
2015/16 Resident Student Enrollment Growth (3%) 10,382
2015/16 Total Resident FTES 356,432

This enrollment increase will be funded using a marginal cost rate of $9,942 per FTES. The total funding required to sustain direct instruction, academic support, student services, institutional support, and plant operations related to the proposed enrollment growth is $103.2 million.

Student Success and Completion Initiatives, $38,000,000 (top)

The 2015/16 support budget includes $38 million for a variety of efforts and strategies to close achievement gaps and facilitate student success and degree completion.

These funds will be used in six initiative areas:

  1. Tenure-track Faculty Hiring – $11 million for campuses to hire tenure-track faculty and continue reversing the declining ratio of tenured and tenure-track faculty to lecturers, as well as to improve student/faculty ratios. These funds would augment state funds and tuition fee revenue related to new enrollment and savings from retiring faculty, to enable campuses to hire more tenured and tenure-track faculty systemwide. More faculty, added to current faculty numbers, mean more sections of high-demand courses taught and more faculty mentoring/advising of students.
  2. Enhanced Advising – $7 million, with $4 million to hire more professional staff advisors systemwide, and $3 million to leverage the work already underway with various e-advising technologies that provide clear and accurate “real time” information for students and advisors related to graduation and major requirements and the efficient scheduling of classes.
  3. Augment Bottleneck Solutions Initiative – $1.5 million to expand the initiative to $11.5 million. The added funding would support more online concurrent enrollment courses.
  4. Student Preparation – $5 million augmentation to help incoming freshmen attain college readiness before arriving on CSU campuses.
  5. High-Impact Practices for Student Retention – $9 million to “scale up” a wide range of successful “high impact” practices, including service learning projects, undergraduate participation in applied research, first-year learning communities (a cohort or shared academic focus for groups of first-year students), and peer mentoring (upper division students mentoring lower division students).
  6. Data-Driven Decision Making – $4.5 million for the Data Dashboard, a project currently underway at the CSU to provide all 23 campuses with the type of data they need to make important decisions related to time to degree and term-to-term retention. Growth and wide-spread adoption of the use of data, and the mechanism to report and display this data in an accessible way for faculty and staff, will dramatically improve decision-making at the campuses and the system and improve overall effectiveness and efficiency of the university’s programs. CSU campuses will also use this data to give faculty and staff a basis upon which to make decisions about graduation pathways and measure the success of academic and student success programs including high impact practices.

These six areas of funding are directed at improving student success and completion. Improvements in graduation rates and the number of successful degree completions at the CSU have the potential for maximum effect across the state.

Information Technology Infrastructure Upgrade and Renewal,
$14,000,000 (top)

Under the 2015/16 budget plan, $14.0 million of financing proceeds would be prioritized for information technology infrastructure to meet the most urgent needs for campus network upgrade and renewal. Specifically, these proceeds will be used to replace the data network equipment at each campus on a 4 to 5 year replacement cycle.

More than 13 years ago when the CSU Common Network Initiative was instituted, members of the campus communities accessed relatively few online resources from a handful of wired campus locations such as libraries and computer labs. Today students, faculty and staff wirelessly access a seemingly infinite set of data and information repositories located on campus and across the globe. They communicate via digital video and access an ever-expanding number of network-enabled devices locally and globally to aid teaching and learning and to conduct research. The result has been a 2,000 percent increase in network traffic, and zero-tolerance for operational disruption. In short, this infrastructure represents the “line” in online learning, and it is critical to the future mission of the CSU.

Unfortunately, while the criticality of this infrastructure has increased, financial resources to maintain and periodically replace obsolete components have been steadily reduced since 2010. Today, the CSU has a growing inventory of critical network equipment that is no longer supported by the vendor, rendering it effectively obsolete. Specifically, as of June 30, 2014, 86 out of 138 (62 percent) mission-critical core routers and 2,547 out of 4,044 (63 percent) network access switches across the CSU are obsolete. In addition, by December 2015, 7,523 out of 12,573 (60 percent) wireless devices also will be obsolete. This has resulted in diminished network reliability, and increased risk of information security breaches because vendors are no longer providing related software security patches.

Assuming an ongoing annual allocation, the requested funds will be used to replace the remaining obsolete switching and routing hardware, wireless access points and controllers, and network security devices at all campuses. After the initial refresh, funds will be used to refresh this equipment on 4 to 5 year cycles (4 to 6 campuses per year) to ensure that such obsolescence does not occur in the future.

Center for California Studies, $204,000 (top)

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. Included within the 2015/16 support budget is a 6 percent augmentation of $204,000 for the Center. The Center’s General Fund appropriation, a stand-alone appropriation in the state’s annual budget bill (currently $3.5 million), funds direct costs and administrative expenses for the Assembly, Senate, Executive, and Judicial Fellows programs and other programs consistent with the Center’s mission. The augmentation would help to alleviate mounting cost pressures that continue even after implementing operational efficiencies and cost saving measures. The augmentation would be used to (1) cover anticipated increases in personnel costs due to systemwide collective bargaining agreements, (2) maintain financial access to the Fellows and other programs by modestly increasing stipends, and (3) fund other inflationary increases.

Maintenance and Infrastructure Needs, $25,000,000 (top)

The 2015/16 budget plan includes $25.0 million of funding to finance the CSU’s most urgent facility maintenance and utilities infrastructure backlogs. The CSU’s backlog of facility maintenance and infrastructure needs, even if restricted to the highest priority needs, is massive and growing. Even with the state statutorily changing the way it handles CSU academic-related infrastructure needs by providing the CSU with the autonomy to self-determine its capital program, the state did not provide sufficient funds for the CSU to capitalize the new program. Consequently, annual support budgets will not be able to retire significant portions of the $1.8 billion maintenance backlog for many years without additional resources being allocated for this purpose. In light of the backlog of infrastructure renewal needs, the program continues to focus on needed improvements to our utilities, technology network and building infrastructure, and seismic upgrades, followed by major building replacements/renovations and new buildings to accommodate the growing student population. The Systemwide Infrastructure Improvements program is the highest priority for the use of CSU financing as the program provides funds across all campuses. The $25.0 million of funding could be spent to pay for projects on a pay as you go basis, or be used to finance projects.

The 2015/16 budget plan includes funding to address the CSU’s most urgent maintenance needs. The deferral of CSU priority maintenance needs have accumulated annually due to insufficient funding to address scheduled maintenance requirements in CSU final budget appropriations. This lack of funding has resulted in a backlog of systems and facilities past their useful life. Funding in the 2015/16 support budget is necessary to address the most critical renewal and repair projects that are part of the priority deferred maintenance backlog, including health and safety concerns at each campus (e.g., fire protection, structural repairs, roofing, HVAC, and elevators) to avert building and campus shutdowns. Facilities shutdowns will interrupt education services to students and impede the CSU’s ability to provide a clean and safe work environment for faculty and staff. Without funding to begin addressing this need, emergency failures will continue to drive up deferral costs and CSU critical renewal needs will multiply.

At many CSU campuses, the utilities infrastructure is obsolescent, dating back more than a half century and in need of upgrade or replacement. The cost of repairing this infrastructure is high as electrical, gas and water systems continue to age. Because the utilities infrastructure is a core system to the CSU and its ability to educate its students at functioning, reliable campuses, funding included in the 2015/16 support budget is imperative to address the most critical projects that are part of the infrastructure backlog, including electrical distribution, utility system retrofit, natural gas piping, storm/sewer drain line, and plumbing and water systems. Power or water service interruptions and failures impede the CSU’s ability to provide education services in a safe environment for students, faculty and staff. Without funding, failures and potential building and campus shutdowns will occur producing additional costs and the potential for further damage to systems and infrastructure.