Those who know the California State University know that its 23 campuses are struggling with the cumulative effects of more than $562 million in budget reductions in a three-year period. So how did there come to be criticism about the higher education funding agreement, known as the compact, that the CSU and the University of California system recently signed with Gov. Arnold Schwarzenegger? For all of the many benefits the compact holds for California's public university students, the agreement continues to be misunderstood.

The compact, which is similar to funding agreements reached with California's two previous governors, was designed to fulfill the three central tenets of California's Master Plan for Higher Education: quality, access and affordability. It addresses quality with the restoration of the system base funding levels; access with funding for a minimum enrollment growth of 2.5 percent per year; and affordability with gradual, predictable and moderate fee increases. The budget priorities represented in the elements of the compact are consistent with CSU's systemwide budget priorities that have been developed in consultation with students, faculty and staff.

Nothing in the compact precludes the Legislature or the governor from making greater investments in the CSU, as they did in the 1990s. And nothing precludes the CSU from continuing to ask the Legislature or the governor for increased investments. Rather, the compact sets a minimum funding level for the CSU within a realistic assumption of the revenues available to the state, giving campuses the ability to plan and manage access for students. The flexibility issue is key, given that the academic calendar does not coincide with the state's budget cycle. For instance, we need to hire faculty members in March and April, long before a final budget for the coming year is approved. The compact will allow us to make those kinds of commitments with confidence.

Some of the criticisms of the compact seem to have been directed more at the process of the agreement than the final outcome. But the suggestion that the compact negates the role of the Legislature is false. In fact, the Legislature's job of adopting a final budget for signature by the governor is specifically recognized in the agreement. In addition, the development of the compact was no secret: The CSU had advocated for such an agreement early and often, and had presented the elements of the compact agreement to members of its core constituency groups at its Systemwide Budget Advisory Committee meeting on April 26.

The most important issue is that the content of the agreement itself holds good news for students, faculty and staff at the CSU. Once the master plan promise of access has been restored, students will be able to regain confidence in the CSU's ability to serve them. In addition, the commitment to restoring the budget will allow campuses to preserve more faculty and staff positions, thus minimizing what had been predicted to be large numbers of layoffs. For example, two of our campuses, Humboldt State University and California State University, Hayward, have already said that the compact's promise of future funding means that they may have fewer staff layoffs this year.

In short, this is the right agreement at the right time. Let's hope that all those who want the best for the CSU will agree.

At a glance
Major features of the universities' compact with the governor:
* UC and CSU accept nearly $700 million in one-time cuts for fiscal year that starts July 1, including a 10 percent reduction to the fall 2004 freshman class

* UC and CSU agree to raise undergraduate student fees by 8 percent in 2005-2006 and again in 2006-2007; afterward, fees would rise at the rate of the state's per capita personal income growth up to a 10 percent cap. Both systems already raised undergraduate fees for the fall by 14 percent.

* UC and CSU agree to provide annual reports on accountability, such as increasing numbers of students who graduate in four years.

* Gov. Schwarzenegger promises 3 percent boosts to UC and CSU's base budgets in 2005-2006 and 2006-2007; 4 percent in 2007-2008; and 5 percent in 2008-2009 through 2010-2011 to pay for cost-of-living adjustments such as employee salary increases.

* Gov. Schwarzenegger promises a 2.5 percent boost in funding for enrollment growth, allowing for 5,000 additional full-time-equivalent students for UC and 8,000 for CSU starting in 2005.

Source: California Legislative Analyst's Office