Uses of Revenue | 2016/17 CSU Support Budget Executive Summary | Budget | CSU
2016/17 Executive Summary

Uses of Revenue

Students in the hallway.The 2016/17 California State University Support Budget recommends an expenditure plan based on increasing state General Fund and tuition revenue due to greater enrollment in order to cover the cost of new expenditures. The new expenditures outlined in this proposal address the university’s fundamental priorities for the 2016/17 fiscal year. These include increases for mandatory costs, employee compensation, enrollment growth, student success and completion initiatives, and facilities and infrastructure needs.

Mandatory Costs, $42,970,000

Mandatory costs are expenditures the university must pay regardless of the level of funding allocated by the state, and which often increase independent of the state budget condition. These costs include increases for employee health and retirement benefits and the operations and maintenance of newly constructed facilities. Without funding for mandatory cost increases, campuses must redirect resources from other program areas to meet these obligations. In order to preserve the integrity of CSU programs, the 2016/17 support budget plan provides for the following increases in mandatory cost obligations.

Mandatory Costs
Health Benefits $35,080,000
Retirement Benefits $7,000,000
Maintenance of New Facilities $890,000
TOTAL $42,970,000

Two Percent Compensation Pool, $69,552,000 (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 is critical for the CSU to fulfill its primary mission of access to an affordable and high quality education. There continue to be salary-related concerns across CSU employee groups that require attention by CSU leadership and in the collective bargaining process. The first general salary increase in several years for faculty and staff occurred in 2013/14, with $38 million funding an average increase of 1.34 percent, distributed across employee groups. In 2014/15, an increase of $92.6 million provided an average increase of three percent. A two percent salary increase of $65.5 million was budgeted for 2015/16, subject to collective bargaining.

This budget plan calls for approximately $69.6 million to fund another two percent compensation pool increase, subject to collective bargaining, for all employee groups effective July 1, 2016. The 2016/17 cost of each one percent compensation increase is based on 2015/16 final budget salaries and salary-related benefits (OASDI, Medicare, and retirement) and is summarized in the following table.

Estimated 2016/17 Cost of 1 Percent Compensation Increase
  2015/16 Final Budget
Compensation (Adjusted1)
2016/17 Cost of
1% Increase
Faculty $1,727,350,000 $17,273,000
Staff 1,750,321,000 17,503,000
TOTAL $3,477,671,000 $34,776,000
COST OF 2% INCREASE $69,552,000

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 0.870 percentage points and 2.158 percentage points, respectively, from the 2014/15 composite rates of 24.280 percent and 36.827 percent to 2015/16 rates of 25.150 percent and 38.985 percent.

Funded Student Enrollment, $110,050,000 (top)

The 2016/17 budget plan includes three percent enrollment growth, which is equal to 10,700 California resident FTES (about 12,600 students) based on a 2015/16 enrollment base of 356,450 FTES.

2016/17 Enrollment Growth
2015/16 Resident FTES Base 356,450
2016/17 Resident Student Enrollment Growth (3%) 10,700
2016/17 TOTAL RESIDENT FTES 367,150

The cost to fund three percent enrollment growth is derived using a marginal cost rate of $10,285 per FTES. New enrollment requires new funds for direct instruction, academic support, student services, institutional support, and plant operations in the amount of $110.0 million.

Student Success and Completion Initiatives, $50,000,000 (top)

The 2016/17 support budget plan includes $50 million to support a variety of strategies and programs which have demonstrated success in improving graduation rates, shortening time-to-degree, and narrowing existing achievement gaps.

Continuing to support the strategic investment of significant funds in 2015/16, these funds will be used in six initiative areas:

  1. Tenure-track Faculty Hiring – Campuses have prioritized the hiring of additional tenure-track faculty and continue to improve the ratio of tenured and tenure-track faculty to lecturers, as well as to improve student/faculty ratios. Continued investment will augment enrollment growth funds and tuition revenue. These increases will provide opportunities to offer more high-demand courses, which will improve student retention and degree completion.
  2. Enhanced Advising – Through the hiring of more professional staff advisors on each campus and expanding the use of technology which provides clear and accurate roadmaps to graduation and can inform campus course scheduling and resource planning more effectively, the CSU has prioritized this critical component of student success. Investing in advisors greatly improves the advisor to student ratio, and when combined with useful eAdvising tools, gives students the best opportunity to shorten their time to degree while improving student services.
  3. Student Retention Practices – Funds invested in student retention will help scale up a range of successful “high impact” practices within and across campuses, including expansion of the number of students served through the Educational Opportunity Program at all 23 campuses.
  4. Data-Driven Decision Making – Continued investment in improving student information systems and their widespread use across campuses facilitates more strategic and intentional decision-making.
  5. Student Preparation – Building on the outcomes of the first year of new statewide high school assessments, the CSU will increase investment in the Early Assessment Program, Early Start Program, and other related efforts to help new students attain college readiness before their first semester on campus.
  6. Bottleneck Solutions – The CSU continues to expand the availability of online concurrent enrollment courses available to students at all CSU campuses. This expands options for students to add an additional class regardless of location or other scheduling conflicts.

These six areas of proposed funding are all directed at improving student success and completion. With $50 million spread across the system, an average allocation of $2.2 million per campus will allow each campus to prioritize the investments they make to improve graduation rates, reduce achievement gaps, and increase the number of successful degree completions at the CSU to meet the educational and workforce needs of California.

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

The 2016/17 budget plan includes $25.0 million to finance the CSU’s most urgent facilities maintenance and utilities infrastructure needs. The CSU’s backlog of maintenance and utilities infrastructure needs, even if restricted to the highest priorities, is massive and growing at about $136.8 million per year over the next decade. Annual support budgets will not be able to retire significant portions of the roughly $2.6 billion backlog without additional resources dedicated for this purpose. In light of the backlog of infrastructure renewal needs, the CSU continues to focus on needed improvements to our utilities, technology network, 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 in this plan will be used for projects on a pay-as-you-go basis and/or to finance larger projects.

This funding will address the most critical renewal and repair projects that are part of the 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.

Additionally, at many of our campuses, the utilities infrastructure is obsolete, dating back more than a half century and in need of upgrade or replacement. Because the utilities infrastructure is a core system to the CSU, new funding 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 and sewer drain lines, and plumbing and water systems. Any interruptions, shutdowns, or failures in any of the infrastructure areas will impede the CSU’s ability to provide educational services in a safe environment for students, faculty, and staff, and potentially result in additional damage to already stressed systems and infrastructure.