2004/05 Support Budget

Appendix

Enrollment Growth

Enrollment GrowthThe Budget Act of 2003 included budget trailer bill legislation (AB 1756) indicating the Legislature’s intent to preclude any state General Fund support to CSU and UC for enrollment growth in 2004/05. This directive is difficult in an era of ever increasing enrollment demand. In 2004/05, the Department of Finance projects enrollment growth for the CSU to be 3% above current budgeted enrollment levels. To meet this projected enrollment demand at the marginal funding rate per full-time equivalent student (FTES) approved by the Legislature, CSU needs:

  • $69.5 million to fund 3% enrollment growth (10,047 FTES)

  • 5.8 million to fund the associated increase institutional financial aid
    for needy students

Marginal cost funding for enrollment growth addresses the following areas of need:

  • Instruction
  • Instructional Support
  • Instructional Equipment
  • Academic Support
  • Student Services
  • Institutional Support
  • Financial Aid

Department of Finance Enrollment Growth Projections

Campuses determine, through consultation with constituencies, how to best direct marginal cost resources within these program areas to achieve enrollment targets. Year after year, the impact of Tidal Wave II is felt among the campuses of the university. According to data compiled by the Department of Finance in 2002, the CSU is expected to grow to over 513,000 students by 2011.

Enrollment Growth - Funded Targets vs. Actual

To accommodate this growth each year, during an academic admissions process that occurs prior to the enactment of the state’s budget, an assessment of actual and projected enrollment data and trends is made in consultation with campus presidents to establish enrollment targets. As the chart above indicates, in six of the past seven fiscal years CSU has not only met, but exceeded its enrollment targets—demonstrating the great demand by eligible students for enrollment at the CSU.

In response to state pressures on funding, CSU has already made provisions to reduce 2003/04 enrollments by over 9,000 FTES by limiting Spring and Winter admissions. The university recognizes the direction by the state through the trailer bill language to halt increases in enrollment growth, but it must be acknowledged that the demand for enrollment access continues—as demonstrated by the 41,000 more applications in March 2003 over the number received in March 2002. The university will take the necessary steps to effectively manage its current enrollment level, protect the quality of instruction, and respect the Legislature’s directive; however, the CSU believes the university and the state will be breaking their promise to Californians with these actions.

Enrollment GrowthThe state provides funding for enrollment growth using the marginal cost funding methodology developed by the CSU, University of California, Department of Finance, and Legislative Analyst’s Office in 1996. This methodology takes into account specified budget factors and funded enrollment growth on an FTES basis using general fund dollars and student fee revenue.

Marginal Cost per FTES

The marginal cost funding approach serves the university well as a dependable and predictable source of revenues the university can use to plan for their burgeoning enrollments with flexibility and efficiency. The importance of this critical component of the Partnership Agreement within the overall funding plan of the university has been magnified in recent years as the state economy has declined, reductions in base budget operations have occurred, and student fees have increased dramatically.

Compensation

CompensationThe Budget Act of 2003 included budget trailer bill legislation (AB 1756) indicating the Legislature’s intent to preclude any state General Fund support to CSU and UC for compensation increases for 2004/05. However, in a competitive statewide and national marketplace, it is critical that CSU offers salary and benefit packages that assist efforts to recruit and retain highly qualified, motivated staff. CSU competes for qualified employees in local and nationwide private and public sector employment markets. The ability to offer a competitive compensation package is critical to CSU’s ability to recruit and retain faculty, staff, and management employees who contribute to CSU higher education excellence. The CSU Board of Trustees recognizes compensation for faculty, staff, and management as a key element of the university’s success. The CSU 2004/05 Support Budget includes:

  • 4 percent ($102.1 million) compensation increase for faculty and staff effective July 1, 2004. The actual distribution of the compensation increase would be determined by individual collective bargaining agreements negotiated with employees.

The cost of a 1 percent increase is based upon salaries and wages budgeted by campuses for 2003/04, which are then adjusted by the 2003/04 employer-paid retirement increases of $115.1 million, effective July 1, 2003. The CSU receives a mid-year appropriations adjustment from the state to cover the cost of the change in employer-paid retirement rates.

Compensation

CompensationOver the past several years, the university has not been able to address the State-recognized lag in faculty salaries based on compensation at public comparison institutions, and CSU did not receive any funds for employee salary increases in 2003/04. Funding for compensation increases in 2004/05 will enable CSU to offer competitive salaries and retain faculty and staff in a highly competitive employment market.

Long-Term Budget Need

CSU makes efforts annually to address its long-term budget needs— areas of expense that are too costly, or that have historical unfunded deficits that are too large to finance in a single budget year. The Partnership Agreement identifies funds equivalent to 1 percent of the CSU General Fund budget annually to increase support for areas of long-term need. Unfortunately, Partnership funding support has been eliminated in the past three budgets enacted by the state and CSU has been required to reduce existing levels of support previously dedicated to areas of long-term need. Consequently, deficiencies in areas such as deferred maintenance, library collections, and technology support have grown significantly.

Annual Investment Required for CSU Long-Term Budget Need

Long-Term Budget NeedThe total budget investment necessary to address long-term budget needs far exceeds the modest increase provided by 1 percent annual growth in CSU General Fund support. The amount of the total investment required for the budget year is determined by the annualized cost of the historical budget deficits and the yearly cost of ongoing needs such as replacement of fully depreciated instructional equipment.

The 1 percent commitment for 2004/05, $25.8 million, represents only one-fourth of the total investment required to fund total budget year long-term need. However, these funds will help make improvements in the following areas of the university’s budget:

Long-Term Budget NeedTechnology: Network Equipment and Operations The build out of the telecommunications infrastructure to serve students and bring the institution greater efficiency requires $69.7 million for related equipment and media elements that are vital components for network operations. The media component provides the cabling in the inter-building duct banks being constructed through the Capital Outlay Program. The equipment, or network electronics, facilitates an integrated computing environment with required client/server applications for our classrooms, laboratories, and operations.

CSU will use $5 million of its long-term funding to complete the establishment of a $20 million base to finance the equipment costs for this build out over four years. The first installment of $10 million was funded in the 2001/02 CSU Support Budget. An additional $5 million was proposed in the 2002/03 budget but subsequently was deleted as part of a one-time reduction. Once the $5 million for the 2002/03 budget is restored and an augmentation of $5 million is approved as part of the 2004/05 budget, the total augmentation of $10 million will complete the $20 million need. After the equipment and media purchases are complete, these funds will be redirected in subsequent years for the amortized costs of equipment and infrastructure refresh and replacement on a three-year basis as identified in the university’s technology plan to remain current with network technology advances. The CSU technology infrastructure plan was formally presented during the state budget process in 1999/2000 and has received state funding for capital and operating implementation in each of the past three fiscal years. This investment recognizes that technology is essential to CSU’s academic, financial, human resource and student service programs.

Libraries Structural budget deficiencies in campus libraries have grown as state funding dropped during the early 1990’s economic downturn. CSU calculates a structural deficiency of 132,000 volumes annually for library books, serials, and periodicals based on standard formulas. The cumulative cost to remedy this deficiency (since 1990/91) is estimated at $86 million. The university needs a permanent base of $12 million in order to halt and close the $86 million deficit.

Long-Term Budget The “deficit” this funding gap creates is best viewed from the standpoint of the libraries’ collections. The inability to purchase the full range of new books deemed basic to the curriculum creates holes in the collections. When students go to the stacks to find books on a particular subject, they often find that the books are too old to be useful. With restored funding, more current books can be purchased, but the cost of acquiring out of print books to fill the holes is significantly more expensive than had they been purchased upon publication.

In fiscal year 2000/01, the CSU used $3 million of its long-term commitment provided by the Partnership Agreement for systemwide electronic library resources, reducing the unfunded annual need to $9 million. No additional funds have been provided to address this ongoing need. CSU is requesting $9 million for campus libraries for this purpose.

For 2004/05, of the $9 million being requested,

  • $7 million will be allocated to campuses — $6 million for expansion and update of the collections of books, periodicals, and serial subscriptions as well as to acquire other non-print resources, such as sound recordings required to support academic programs, $1 million for programmatic factors and special acquisition needs determined on a campus by campus basis, and

  • $2 million will be allocated to systemwide programs for electronic information resources. This funding will provide further expansion of the Electronic Core Collection of bibliographic and full-text resources, for continued growth and enhancement of systemwide information access through the Pharos system of World Wide Webbased unified information access, and for other projects designed to increase effective use of information resources. With this funding, the annual need for libraries will be addressed for the first time in a decade.

Deferred Maintenance CSU deferred maintenance remains an area of significant budgetary deficiency. Deferred repairs were scheduled for work at one point, but due to project cost, timing, and/or lack of available resources these scheduled repairs were deferred to subsequent years. Historically, the CSU has also used the term to describe or include the delayed replacement of building systems that have exceeded their useful life as part of the funding deficiency.

Between fiscal years 1994/95 and 1999/00, the state and CSU provided permanent base budget resources for ongoing maintenance support to address funding deficiencies. However, during the 6-year period, the state supported only $61 million in one-time funds to address the deferred maintenance backlog. In 2000/01, the CSU used long-term funding provided by the Partnership Agreement to reduce the backlog by $2.8 million on an annual basis. Unfortunately, no funds were available to further reduce the backlog in 2001/02, 2002/03, or 2003/04. Consequently, not only has further reduction of the backlog been halted, but inflation and the continual aging of buildings havecaused the maintenance repair and replacement need to significantly increase. The university requests an augmentation of $6.7 million for 2004/05 to renew its effort to address this serious backlog.

Outreach: Student Academic Preparation

Outreach: Student Academic PreparationOver 60% of the nearly 40,000 first-time freshmen admitted to the CSU require remedial education in English, mathematics or both. These 25,000 freshmen all have taken the required college preparatory curriculum and earned at least a B grade point average in high school. The cost in time and money to these students and to the State is substantial. Moreover, these students, having done the right things in high school, are confused when they find out after admission to CSU that they need further preparation. Particularly important to California is that a disproportionate number of these students needing remediation are from populations who have been underrepresented in higher education.

CSU is requesting funding for outreach initiatives that will address 11th grade early assessment of readiness for college English and mathematics, bridge the gap between high school standards and college expectations in order to decrease the number of incoming college who require remediation in English and/or mathematics, and identify approaches for helping high school seniors who need additional preparation to meet CSU placement standards. In total, this effort will require $12.5 million and principally supports the following activities:

  • Early Assessment - $3.2 million
    This joint public school/CSU program will provide all college preparatory high school juniors with an opportunity to get an early signal about their preparation for college mathematics and English. For those who are not quite proficient in English and mathematics, there is the senior year to improve their skills and knowledge. For others who have taken and completed the college preparatory curriculum with a B average and who are assessed as proficient, there will be no need to take additional admission or placement tests for CSU.

  • CSU Campus Early Assessment and Academic Preparation
    Program - $2.3 million
    CSU has developed an early assessment program, Early Assessment Program (EAP) for 11th Grade Students, which incorporates the CSU’s placement standards into existing high school standards tests in augmented English and mathematics California Standards Tests (CST). The California State University’s Early Assessment Program (EAP) is the result of an extraordinary collaborative effort between the California State University (CSU), the California Department of Education (CDE), and the State Board of Education (SBE). CSU is also working with public school leaders to identify approaches for helping high school seniors who need additional preparation to meet CSU placement standards. The Academic Preparation Program (APP) for 12th Grade Students, a set of senior year programs, will be based in all California public high schools and will address directly the college preparation needs of those seniors assessed as eligible for admission to CSU but not ready for college-level study.

Outreach: Student Academic PreparationIn 2003/04, CSU allocated to each campus $100,000 to fund a campus Early Assessment and Academic Preparation Program coordinator and administrative costs associated with the 11th grade early assessment and the 12th grade academic preparation programs. An additional $100,000 per campus, a total of $2.3 million, is requested to provide sufficient administrative support to campuses to ensure adequate coordination of CSU’s 12th grade experience program with California’s 944 comprehensive public high schools.

  • CSU Student Tutors - $5.3 million
    This request funds CSU student tutors to help middle and high school students who need assistance in strengthening precollegiate English and mathematics skills. This level of funding, an amount equal to the level of support CSU previously provided in support of this program through 2002/03, will train approximately 3,000 CSU students to become tutors. In addition to its emphasis on raising skill levels in English and mathematics, CSU student tutors will encourage middle and high school students to take more rigorous courses, assist them to succeed in those courses, and raise their educational aspirations.

  • High School Faculty Training to Teach High School English Course - $1.7 million
    A task force under the aegis of the CSU English Council is developing a curriculum and teacher-training materials for an expository reading and writing course to be offered to high school students in their senior year. High school administrators and representatives of the California Department of Education have indicated that CSU will need to train high school English teachers to teach the expository reading and writing course. Therefore $75,000, totaling $1,650,000, will be allocated to twenty-two CSU campuses (CMA will not receive funding) to work with their schools of education and local high schools under the aegis of the CSU English Council to train high school English teachers to teach the expository reading and writing course developed by the CSU English Council.

ACR 73 Implementation

ACR 73 ImplementationIn the California State University and across the country, there is serious concern about the increasing numbers of temporary faculty, as opposed to permanent (tenured and tenure-track) faculty, in institutions of higher education. There is growing alarm that recent hiring trends in higher education, necessitated by budget deficiencies, have upset the appropriate balance between tenured/tenure-track faculty and lecturer faculty. The trend is important because tenured and tenure-track faculty bear the primary responsibility for student advising, program development and revision, and participation in shared governance. When their proportions decline, the quality of these efforts also wanes.

In response to legislation passed in May 2001, ACR 73 (Strom-Martin), the CSU Academic Senate, the California Faculty Association, and the CSU Office of the Chancellor, developed a plan to increase the percentage of tenured and tenure-track faculty over eight years. The final report and implementation plan contains the following features:

  • Sets a goal to achieve 75 percent tenured and tenure-track faculty to 25 percent lecturer faculty, measured in terms of Full-Time Equivalent Faculty (FTEF) systemwide,

  • Declares that the goal is the joint responsibility of the CSU administration, faculty, and the state,

  • Annual funding requirements for this plan range from $4.8 million to $35.6 million over the eight year period,

  • To achieve this goal, the CSU must conduct between 1,800 and 2,000 annual searches for new tenure-track faculty,

  • The state needs to provide expanded funding for recruitment and hiring, so CSU can compete in the national faculty marketplace and,

  • Provides compensation funding for new positions at least equivalent to the average of current CSU employment offers.

In response to this trend and concerns raised by the Legislature in ACR 73 (Strom-Martin), the 2004/05 CSU budget plan includes a request for $35.6 million to implement the first phase of an eight-year comprehensive effort to increase the percentage of tenured and tenuretrack faculty, the plan includes:

ACR 73 Implementation

Currently, the proportion of permanent faculty has declined to approximately 63 percent of the total full-time equivalent faculty (FTEF) positions. (FTEF is the unit of measure most typically used to express this ratio; it is the standard used by the California Community Colleges in achieving their target ratio.) The university’s goal is to achieve a proportion of 75% over eight years without jeopardizing the employment status of current lecturers, the CSU will need to add new tenure-track faculty beyond those required by projected enrollment growth. Thus the proposed plan requires additional state funding on an annual basis - starting with an initial phase-one implementation cost of $35.6 million, and annual increases thereafter ranging from $4.8 million to $12.4 million. Most of this funding would cover the compensation costs of new, permanent faculty positions and the recruitment and hiring costs associated with these new positions. While the CSU would like to move faster, the number of individual search processes that can be reasonably managed in an academic year is limited. In the past year, the CSU conducted slightly more than 1,150 faculty searches. The ACR 73 plan would require CSU to conduct between 1,800 and 2,000 annual searches-a significant challenge given the already heavy workload of CSU faculty and academic administrators.

Off-Campus Centers

Off-Campus CentersOff-campus centers are recognized as effective and efficient alternatives to building whole new campuses to accommodate student growth statewide and in key regions. Off-campus centers provide regular academic degree programs in geographic areas that cannot be served adequately by existing CSU campuses and often reflect partnerships with other higher education segments, especially the California Community Colleges. In order to establish new off-campus centers, compelling evidence must be provided to demonstrate substantial demand for academic programs that cannot be met by the regional campus or by other public or private higher education institutions in the area. As cost effective alternatives to whole new campuses or restricted access to higher education, off-campus centers should be a priority of the state. This budget requests approximately $3 million to support new fixed cost requirements at three campus offcampus centers: Bakersfield-Antelope Valley, Fullerton-El Toro, and San Bernardino-Coachella Valley.

Off-Campus CentersPublic support for off-campus centers has often been the key impetus for their development. The financial and civic commitments communities have made and the support these centers generate in the community are the core ingredients that ensure enrollments at these facilities will be sustained over time. Just as the communities and the universities have made major investments in the establishment of offcampus centers, the state shares a responsibility for the continued operation of a permanent facility once enrollment thresholds have been met. Traditionally, the state has recognized that there are fixed as well as variable costs associated with enrollment thresholds at off-campus centers.

Prior to fiscal year 1993/94, the fixed costs supporting the operational and facility space needs of the centers were funded by the state as ancillary support for the CSU academic program. Since that time, enrollments at CSU campuses have been growing at a pace that will soon outstrip current system capacity. CSU has implemented several management policies and procedures to accommodate all eligible students including year-round operations, extensive use of evening and weekend course offerings, as well as the use and development of offcampus centers. CSU assumes all variable costs for these centers until they reach the 500 FTES threshold, as outlined in California Postsecondary Education Commission (CPEC) standards. Once enrollment exceeds 500 FTES, the centers are eligible for permanent status and must be funded for associated fixed cost increases.

Off-Campus CentersUpon achieving permanent status at the 500 FTES threshold, there is general recognition by the CSU and the state that fixed costs related to satisfying the additional academic, student services, and facilities requirements—including additional personnel—must be funded. CPEC must review these costs as well as the core instructional value of the permanent center. Additionally, there is generally strong community support from local civic and governmental agencies associated with these permanent centers, and the fixed cost requirements typically include economic development and joint-use projects that benefit the academic mission of the center and the region it serves.

In January 2000, the CSU Board of Trustees adopted policies for the establishment of CSU off-campus centers with an enrollment threshold of 500 FTES and the expansion of existing centers above the 500 FTES threshold (REP 05-99-04). These policies included the expectation that campuses would be responsible for the fixed and variable cost enrollment needs of up to 500 FTES. These costs are borne by the campus through enrollment growth funding and academic and administrative staffing assigned from the home campus for program support. The additional fixed cost need at the 500 FTES threshold, including outlays for acquisition, operations, and maintenance of facility space, cannot be supported through the enrollment growth funding received from the state on the margin. Marginal cost funding from the state for enrollment growth discounts the fixed cost support needed to provide educational services above existing patterns of enrollment. Absent funding for these fixed costs above the 500 FES threshold from the General Fund, campuses would be forced to redirect resources from students at the main campus to these centers. In an era of tight budgets, this would be yet another cut in academic programs at our main campuses and a clear disincentive to explore partnerships and off-site locations to serve students.

Quality of Education

Quality of EducationThis budget plan contains the restoration of the net funds that were reduced during the 2003/04 budget year. This plan outlines the restoration of the following:

  • 2003/04 Net Fiscal Impact of $304 million, less $122.9 million that is being requested as other specific restorations for a total of $181.1 million in 2004/05.

For fiscal year 2003/04, the CSU was funded for a 4.3% increase in enrollment or 13,782 full-time equivalent students (FTES). Under the Partnership Agreement this funding amounted to a General Fund augmentation of $90.9 million or $6,594 per FTES. At the same time the university was assessed a net General Fund reduction of $394.4 million, consisting of a $326.1 million reduction from the Governor’s January Budget and a subsequent reduction by the Legislature in the final budget of an additional $69.5 million. These General Fund cuts included significant reductions to specific program areas, such as student services (-$53.2 million), academic and institutional support (-$58.1 million), student outreach (-$12.6 million), and an increase to the student-faculty ratio (-$53.5 million). To mitigate some of these reductions, student fees were raised by 30% in July 2003. This additional fee revenue amounted to $167.0 million, net the set aside of one-third of all new fee revenue for financial aid purposes.

Quality of EducationThe compounding of these factors and existing budget deficiencies have begun to affect the university’s ability to provide the high quality, and affordable education to the citizens of California. Looking at CSU’s budget in terms of funding per FTES, as in the following chart, over the past three fiscal years CSU has received less funding per FTES while enrollments continue to soar and operating costs increase. Also, the funding components for enrollment growth are shifting dramatically, with a higher dependence on student fees as the General Fund contribution is reduced.

Rising Enrollment with Reduced Funding

To help mitigate these reductions in General Fund dollars, the CSU has been forced to raise fees. Student fee increases cannot match General Fund reductions dollar for dollar. Given the unique nature of our mission and the composition of the university’s student body, students cannot be asked in good conscience to pay more and receive less. Thus, it is essential CSU receives additional General Fund dollars to fund enrollment at a level that is commensurate with the demand placed upon the university.

Quality of EducationWhen looking beyond the pure economics of General Fund reductions and increased student fees, the quality of education is at issue. As resources are removed from the budget, greater demands for service and access are added, and operating costs such as health benefits, workers’ compensation and energy costs increase, the quality of the education provided by the university begins to suffer. As funds are reduced and costs go up, services must be reduced, lecturers and professors are asked to teach more, equipment is used beyond its usual lifespan, class sizes increase, course sections are eliminated, time to degree increases, and there is diminished access to educational opportunity. Restoring 2003/04 budget cuts in areas of critical importance to quality will enable the university to continue its role as a leader in student-focused higher education and as the leading source of California’s skilled and professionally trained workforce.


Content Contact
Jo Ann Lumsden
(562) 951-4560
jlumsden@calstate.edu
Technical Contact
webmaster@calstate.edu

Last Updated: April 10, 2009