The CSU Board of Trustees recognizes salary and benefits for faculty, staff and management as a key element to the university's success. Continued investment in competitive salary and benefits is critical for the CSU to fulfill its primary mission of providing access to an affordable and high-quality education. A competitive compensation package is essential to the CSU's ability to recruit and retain the best faculty, staff and management employees.
The CSU proactively mitigated the impact to faculty and staff during the COVID-19 health crisis and the state budget reduction in 2020-21. Fortunately, furloughs or systemwide layoffs were not needed, and campuses and employees benefited from the use of various resources (e.g., reserves and federal grants). Moving forward following the recent budget restoration and transition back to normal operations, the CSU will keep its employees a priority in its budgetary decisions.
This budget plan calls for approximately $209.4 million to fund 2022-23 compensation increases for all employee groups. The compensation pool is subject to collective bargaining and contingent on the state providing the funding to support this. The 2022-23 cost of the compensation increases is based on 2021-22 final budget salaries and salary-related benefits (OASDI, Medicare and retirement).
Additional Information – Cost of One Percent
Permanent base budget costs associated with January 2022 employer-paid health care premium increases are over $13.9 million. Health care premiums are shared between the CSU and its employees, with the CSU funding a significant portion of the costs. The CSU is governed by California Government Code Section 22871 that defines the employer-paid contribution rates.
Additional Information – Health Care Premium Increase
Beginning with the 2013-14 fiscal year, the annual state budget placed a limit on the state's obligation to adjust CSU retirement funding due to annual changes in CalPERS rates. Although the state's statutory obligation to adjust retirement funding based on annual rates set by CalPERS continues (Government Code Section 20814), the salary base applied to the incremental rate change is annually set to the CSU 2013-14 pensionable payroll level in the state budget. Final 2020-21 pensionable payroll for the CSU was 31 percent above the 2013-14 frozen pensionable payroll level. The retirement increase amount above the frozen payroll level is an unfunded cost for the CSU, and it continues to increase each year when pensionable payroll or retirement contribution rates increase.
CalPERS retirement contribution rates decreased for 2021-22, the second consecutive year, due in part to advanced paydown of unfunded retirement obligations, so there is no request for additional retirement funding in 2022-23. However, the state's use of this budgeting practice is problematic and should be discontinued. Throughout the years that this budget practice has been in effect, the state or students ultimately covered the unfunded liability above frozen pensionable payroll because retirement costs are mandatory and unavoidable. While the rationale of this practice was to help reduce state funding increases and to examine more closely the cost of annual general salary increases and hiring of new employees, those have always been key considerations. The CSU must balance the need to serve students with the level of funding available to the university, particularly as tuition rates have remained relatively constant since 2011-12, with only a $270 per year increase in 2017-18. The CSU cannot hire additional employees or provide continued investment to ensure competitive salary and benefits without the proper level of state funding.
Additional Information – Retirement Adjustment
The Budget Act of 2021 included $2 million for the Chancellor's Office to evaluate the existing salary structure, issues of salary inversion and provide any recommendations for alternative salary models for CSU non-faculty staff. The Chancellor's Office, California State University Employees Union, Service Employees International Union and Teamsters Local 2010 partnered this past spring to advocate for state funding for this purpose. These organizations have long desired to find a mutually agreeable solution to address issues of inversion and salary structure.
The evaluation will be completed by April 30, 2022. The evaluation's recommendations could include solutions that would require additional funding. The Chancellor's Office, in partnership with these represented staff groups, may request additional funding for these purposes. The completion date of the evaluation is expected two weeks prior to the governor's 2022-23 May Revision. It will be extremely important for the Chancellor's Office and our represented groups to work together to obtain funding for this important purpose in the 2022-23 state budget.