The CSU will continue to work with state leaders and explore all options to meet the mission to provide access to an affordable, quality higher education.
The 2017–18 Support Budget plan lays out a vision for our students, faculty, staff and the state of California. However, even if the state fully funds the budget plan, there are a number of challenges faced by the CSU—now and over the long-term. Some of these challenges include: continued progress on graduation rates while maintaining access with limited incremental funding, a stagnant deferred maintenance backlog, and ongoing inflationary pressures.
Increasing Graduation Rates and Maintaining Access
While the 2017–18 budget plan supports a one percent increase in resident student enrollment (3,616 FTES), this is only a small step towards addressing California’s higher education demand. The Public Policy Institute of California continues to project a shortfall of more than one million bachelor’s degrees by 2030, and at the current rate of enrollment growth, the CSU cannot fulfill its role.
Additionally, an increase in students does not necessarily correspond with new enrollment, as one of the strategies of Graduation Initiative 2025 involves increasing the average number of courses students take during the academic year. This will raise the average unit load carried by students–-currently at 12.9 units per term. The minimum unit load for a full-time undergraduate student is 12 units per term to qualify for full financial aid, though to graduate within four years, a student must take at least 15 units per term.
Given additional state funding, the CSU could expand year-round operations to decrease time to degree and increase access to higher education. This would allow the CSU to offer a more robust summer/winter course schedule so students can make continuous progress toward degree. State funding for year-round operations could also allow the CSU to provide a level of financial aid for summer enrollment.
The CSU continues to experience increased enrollment demand from community college graduates, especially since the Student Transfer Achievement Reform Act (Senate Bill 1440) was enacted in 2010. The act required the CSU to guarantee admission for community college students who complete an associate degree for transfer. From fall 2005 to fall 2015, the number of new community college transfer students increased almost 40 percent, from 34,296 to nearly 48,000 students. The CSU is balancing demand for a CSU education from growing numbers of transfer students and increasing numbers of qualified high school graduates and supplying as many of those students as possible with an affordable, high-quality education.
Deferred Maintenance Backlog
One of the lingering effects of the Great Recession is the deferral of maintenance on buildings and the continued depreciation of facilities and utilities infrastructure beyond their useful life. The CSU operates about 43 million square feet of academic building space across 23 campuses statewide.
At many of our campuses, the utilities infrastructure is obsolete, built more than a half-century ago, and in need of upgrade or replacement. The CSU continues to squeeze more life out of many outdated and overworked academic buildings, despite the ever-increasing financial costs. Further, the continued use of antiquated facilities impedes the educational opportunities of students and the CSU’s ability to attract and retain faculty.
The backlog of maintenance and utilities infrastructure needs exceeded $2.6 billion in fiscal year 2015–16. With an infusion of one-time and recurring funds from the state in recent years, the CSU has been able to reduce the backlog to $2.0 billion, when funded projects are completed. This is good progress, yet the backlog continues to grow at an estimated $143 million per year as facilities continue to age. Even if the state were to approve the CSU’s request of $10 million in recurring funding for deferred maintenance and infrastructure, this amount would only allow the CSU to finance approximately $150 million for needed maintenance and infrastructure projects—just enough to maintain the backlog at current levels but not reduce it.
With limited funding, the CSU can only target the most critical renewal and repair projects in 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. The CSU has also prioritized the utilities infrastructure, which includes electrical distribution, 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 our 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.
Inflation
Like any other institution, the CSU will continue to experience inflationary pressures. Using the Consumer Price Index (CPI-Urban for California), the average rate of inflation for the past decade is approximately two percent per year. This percentage may not seem significant, but when placed in context of state appropriations to the CSU that fund enrollment growth and facility infrastructure on top of ongoing expenses, these inflationary increases have a detrimental impact. In recent years, the CSU has received an increase in general fund appropriations from the state of about four percent. This means most of the state general fund increase is already committed to inflationary increases before any of the augmentations laid out in each support budget request is funded.
In non-inflation adjusted dollars, state appropriations to the CSU have recovered to the 2007–08 pre-recession level of $2.97 billion. Yet when the 2007–08 appropriations are adjusted for inflation, state funding in 2016–17 is nearly $500 million less than $3.5 billion in 2007–08. Meanwhile, the CSU has 23,000 more resident FTES now than a decade ago and mandatory costs such as employee health benefits have risen faster than inflation.
Without an increase in the state appropriation, the CSU will continue to be challenged by inflationary realities that limit campus budget flexibility as well as the ability for campuses to dedicate as many resources as possible to achieve sustainable progress in Graduation Initiative 2025, compensation, infrastructure, and other areas vital to the CSU mission.