Uses of Revenue
The 2013/14 California State University Trustees' Support Budget 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 2013/14 fiscal year. These include increases for mandatory costs, employee compensation, the CSU Graduation Initiative and Student Success programs, enrollment growth, urgent maintenance needs, information technology infrastructure upgrade and renewal, instructional equipment replacement, and the Center for California Studies.
Mandatory Costs, $48,182,000
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 benefits, operations and maintenance of newly constructed space, and energy. 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 2013/14 support budget plan provides for the following increases in mandatory cost obligations.
|New Space (2011/12, 2012/13 & 2013/14)||$6,756,000|
The state has failed to fund approximately $147 million of mandatory cost increases since 2007/08, in addition to reducing the annual state appropriation by more than $900 million. This has exacerbated the impacts of the reduced appropriations. Given this history, each additional dollar of unfunded mandatory cost necessarily comes at the expense of vital programs and operations.
Graduation Initiative and Student Success, $58,000,000 (top)
The 2013/14 support budget includes $58 million to facilitate degree completion and student success to close achievement gaps at CSU campuses. The $58 million funding for the CSU Graduation Initiative and Student Success programs will allow the university to begin to restore critical services such as advising, and put in place additional programs focused on student success to build on the CSU's strong track record for outreach, access, and educational excellence, and focus on bringing every student to successful degree completion.
These funds will be used in three major program areas:
- Academic Advising - $13.8 million to provide significant enhancements to the current academic advising structure available to CSU students and clearer pathways to CSU graduation from the community college.
- Student Preparation – $35.7 million to provide essential support to help incoming freshmen attain college readiness before arriving on a CSU campus, and provide underserved CSU students with resources that greatly increase their likelihood to persist to a college degree.
- Academic Programs – $8.5 million for academic programs that have a positive impact on improving graduation rates, lowering the cost of textbooks, and closing the achievement gap.
Consideration will be given for campuses to fill vacancies in tenure/tenure-track faculty positions as a means of improving academic advising and academic programs, given the important roles these positions play in these areas.
As previously noted, 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. Studies by the Public Policy Institute of California have projected that California will have 1 million fewer college graduates than it needs by 2025, based on recent trends. Any hope of addressing this urgent problem depends largely 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. Thus, improvements in graduation rates at the CSU have the potential for maximum effect across the state. Relatively modest investments by the state, including this $58 million request, would improve the "degree productivity" of the state's higher education expenditures and would leverage major dividends for California's economic future.
3 Percent Compensation Increase Pool, $86,259,000 (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.
At this juncture, there are critical salary-related concerns across CSU employee groups that require attention by CSU leadership and in the collective bargaining process. Lack of funding and the necessary priority given to preserving academic programs, student services, and public safety have prevented the CSU from providing general compensation increases since June 30, 2008, in the case of faculty, and since July 1, 2007, in the case of all other CSU employees. Faculty and staff also experienced over 9 percent salary reductions during 2009/10 corresponding with a furlough program that fiscal year. The initial investment to make progress toward competitive salaries for faculty and staff will place the CSU in a stronger position to fulfill its primary mission of providing accessible higher education that maintains quality, which supports the state's ability to fill jobs and help the economy recover.
The CSU plans to use approximately $86.3 million to fund a 3 percent compensation pool, subject to collective bargaining, for all employee groups, effective July 1, 2013. A 3 percent pool is intended to strike a balance between this and other priority needs in an environment of constrained funding. The 2013/14 cost of each 1 percent compensation increase is based on 2012/13 final budget salaries and salary-related benefits (OASDI, Medicare, and retirement) and is summarized in the following table.
|Estimated 2013/14 Cost of 1 Percent Compensation Increase|
|2012/13 Final Budget
|2013/14 Cost of
|Cost of 3% Increase||$86,259,000|
1The 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 respectively, increased 2.328 percentage points and 2.882 percentage points, respectively from the 2011/12 composite rates of 18.175 percent and 27.415 percent to 2012/13 rates of 20.503 percent and 30.297 percent.
5 Percent Enrollment Demand/Growth, $154,930,000 (top)
The 2013/14 budget plan includes 5 percent enrollment growth of 16,586 California resident FTES from a 2012/13 California resident FTES base of 331,716.
|2013/14 Full-time Equivalent Students Enrollment Target|
|2013/14 Resident FTES Base||331,716|
|2013/14 Resident Student Enrollment Growth (5%)||16,586|
|2013/14 Total Resident FTES||348,302|
This enrollment growth will be funded using a marginal cost rate of $9,395 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 $155.8 million.
|Support Budget 2013/14 Marginal Cost Per FTES|
|Tuition Fee Revenue (net of Tuition Fee Discounts)||$2,891|
|Net Marginal Cost Funding per FTES||$9,395|
|x 2013/14 Projected Enrollment Growth||16,586|
|2013/14 Marginal Cost Funding for Enrollment Growth||$155,825,000|
Reductions in CSU General Fund appropriations for all other CSU state-funded programs exacerbate the loss of marginal funding received from the state General Fund. State funding for the marginal cost of enrollment growth in 2013/14 following CSU General Fund reductions of $750 million in 2011/12 has fallen to 60 percent of gross marginal funding need. This critical shift in CSU enrollment funding from the state has increased pressure on student tuition fee rates to meet the CSU's continuing enrollment demand, and it threatens the higher education Master Plan guiding principle that the state bear the preponderance of the cost of student access.
|CSU Marginal Cost Enrollment Funding History|
|Fiscal Year||State GF
|State Percentage Share of Gross Marginal Cost|
Urgent Maintenance Needs, $50,000,000 (top)
The 2013/14 budget plan includes funding to address the CSU's most urgent maintenance needs. The deferral of CSU maintenance needs have accumulated annually since 2003/04 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, with $462.9 million considered priority deferred maintenance. The $50 million funding in the 2013/14 support budget is necessary to address the most critical renewal and repair projects that are part of the priority deferred maintenance backlog.
This funding request only addresses the most critical renewal/repair projects with health and safety concerns at each campus (e.g., fire protection, structural repairs, roofing, electrical distribution, HVAC, and elevators) that are necessary 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.
|10-Year Priority Deferred Maintenance Backlog|
|Budget Year||Prior Year CA-CPI % Change1||Final Budget Funding Offset
|2013/14 Proposed Offset||$50.0|
1CA-CPI % source: CA Department of Finance, Planning Estimate Forecast, July-June (calculated using a formula developed by the CA Dept. of Industrial Relations)
Information Technology Infrastructure Upgrade and Renewal,
The 2013/14 budget plan includes $20 million for information technology infrastructure to meet the most urgent needs for campus network upgrade and renewal. This includes the need to maintain the campus baseline network infrastructure with advanced technology utilized by students. More than 10 years ago when the CSU network infrastructure was instituted, students accessed campus networks from a few wired locations such as libraries and computer labs. Today students access networks by wireless mode, putting exponentially higher demands on the network infrastructure. Further, CSU network resources for learning management systems, online courses, and smart classrooms have become standard, and a shift to Internet-based resources has increased traffic on the wide-area network infrastructure by more than 2,000 percent over the last 10 years.
While student demand has risen, constrained funding has diminished the reliability of the current network infrastructure, reduced system maintenance, and minimized equipment replacement. By July 2013, an estimated 83 percent of the mission critical core network devices and 23 percent of the non-core network switches will be obsolete. This increases the risk of network outages and security breaches, and typically increases costs.
The $20 million will be used to replace obsolete switches and increase the dependability and capabilities of student connections to networks. This is an ongoing cost as the useful life of network equipment grows shorter due to advances in technologies, changes in security requirements, and student need. Funding the upgrade and renewal of the network infrastructure will ensure that connectivity and access to library resources, educationally related video content, cohort conferencing tools, online courses, learning management systems, and other classroom technologies are available to CSU students.
Finally, this level of infrastructure upgrade and renewal is absolutely essential to efforts by the CSU to utilize online technologies as a means of making "bottleneck" courses available to more students and speed time to degree.
Instructional Equipment Replacement, $23,000,000 (top)
The CSU calculates annually the depreciation costs of its instructional equipment inventory. Based on annual depreciation, the cost for repairing and replacing obsolete instructional equipment is calculated in accordance with state-recognized standards developed for the University of California and the CSU.
Recognizing the gap between state support for equipment replacement and CSU need, $23 million is included in the 2013/14 budget to address the needs of the institution. This investment represents 94 percent of need and will assist campus efforts to provide essential equipment upgrades and purchases required for direct instruction, smart classroom interface, and instructional-related and educational support services.
In fiscal year 2006/07, the state agreed to address a portion of instructional equipment replacement need within the CSU marginal cost calculation for enrollment growth. This component was added to the marginal cost methodology in recognition of the need to sustain and upgrade instructional equipment for new enrollment. However, marginal cost funding was designed to provide only a small fraction of equipment replacement need associated with the change in need as students graduated and new students matriculated. Most of the instructional equipment replacement need for continuing students remains a critical long-range challenge for the university.
|Instructional Equipment Replacement (IER)|
|Reported Replacement Cost||Budget
|Anticipated Marginal Cost Funding||Unmet Equipment Replacement Need|
Center for California Studies, $504,000 (top)
Included within the 2013/14 support budget is an expenditure augmentation of $504,000 for the Center for California Studies. The center's General Fund appropriation—a stand-alone appropriation in the state's annual budget bill (currently $3 million)—funds direct costs and administrative expenses for the Assembly, Senate, Executive, and Judicial Fellows programs and center operations. 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. The additional funding will allow the center to maintain minimal operational levels and cover prior increases in the fellows' graduate student fees.