Chancellor's Recent Speeches

Remarks by Dr. Charles B. Reed
Chancellor, California State University
AOA Conference
San Francisco, CA
January 10, 2012

Thank you very much. It is an honor and a pleasure to be here speaking to our auxiliaries. This is my 14th appearance at this conference, and I hope it is getting better every time.

Tonight I want to give you a brief overview of the budget, and then a short look at where we stand with our most pressing auxiliary issues.

Budget

The California State University was built on a mission of providing access to students. We strive to offer every qualified student an opportunity to attend the CSU. But each year, with California's growing budget crisis, providing access has become one of our greatest challenges. This is what many people are calling the slow death of California's Master Plan.

Last month, the governor announced that state funding support for the CSU will be cut by an additional $100 million for this year, on top of a $650 million reduction already in place. The additional cut reduces CSU funding to $2 billion and represents a 27 percent year-to-year reduction in state support.

For the coming year, the governor's 2012/13 budget calls for no change from this year's level of state support, as long as his tax initiative is passed by voters in November. If voters do not approve the tax measure, the CSU would be cut by an additional $200 million, which represents almost 27,000 students.

That would bring state support to $1.8 billion, which would be the lowest level of state funding since 1996/97.

For the past three years, we have carried out a number of cost savings measures including decreased enrollment, employee layoffs and furloughs, deferred maintenance, travel restrictions, better use of information technology and other efforts.

We previously announced that we will not raise tuition mid-year. So our campuses will have to draw on one-time reserves and delay equipment purchases and facility maintenance work. However, starting with next year, we will have to consider extremely difficult longer-term tradeoffs, including the possibility of additional cuts to academic programs or further increases in tuition.

Tuition increases are unpopular, to say the least. But just to put this in context: In two of the last four fiscal years, state funding to the CSU has been dramatically reduced, forcing the board to approve tuition fee increases. However, the increases in revenue from tuition hikes - after setting aside 1/3 for financial aid - have not kept pace with state funding cuts.

For 2011-2012, tuition increases raised approximately $300 million, but our budget has been cut by $750 million. We are left with an enormous gap - the size of which many public universities could never even begin to contemplate.

Can you imagine having to cut nearly a third from your household budget, after you've already been cutting back? What would you give up on? Restaurant meals? New clothes? Your car? Maybe you would even have to move to a smaller home. That gives you the picture of how these cuts have not left us with good options.

At times like this it is important to highlight all of the important progress we have made in our priority areas, in spite of these setbacks:

We continue to serve and graduate students despite crippling budget cuts: We serve 90,000 more students than we did with the same amount of funding in 1998/99. For 2010/11, the CSU graduated more than 98,000 students, more than half of whom were ethnic minorities.

We continue to provide leadership in high-need areas: The CSU has achieved its goal of doubling the number of math and science teachers it prepares. CSU campuses have increased the annual number of math and science teachers produced from 750 per year in 2003 to 1,502 in 2010.

We are earning recognition for our innovations: Our innovative CalStateTEACH program has now earned full accreditation. Approximately 6,800 participants have completed the CalStateTEACH program since it started in 1999, with candidates participating from each of California's 58 counties.

We are reaching new levels of achievement in collaborative partnerships: The results from the EAP (Early Assessment Program) show that California's high school juniors have made marked increases in their level of proficiency in both math and English. 

With six years of complete testing data available, we found significant increases in the students who take the test, and who reach proficiency. Currently 81% of all juniors enrolled in public high schools in the state take the voluntary assessment.

We are continuing to set a national standard for educational excellence and affordability: The CSU was recognized by a prestigious national organization, the Education Trust.

The Ed Trust ranked two CSU campuses - Fullerton and Long Beach - among the top five universities in the country for being the most affordable and accessible with high graduation rates. The Ed Trust also recognized the CSU for being "deeply, publicly committed to closing the access and success gaps between low-income and high-income students, and between whites and underrepresented minorities."

Many of you have worked under very difficult circumstances and continue to do remarkable things. I believe - in fact, I know that the California State University will succeed because we have talented and dedicated people who care and who make a difference.

I will continue to fight for our budget in Sacramento and make sure our message is heard: Investing in the CSU creates jobs, improves the state, and benefits everyone.

Auxiliaries

There has been a great deal of scrutiny about the role of auxiliaries in the last few years. The passage of SB 8 has reshaped the relationship between the university and its auxiliaries.

However, there are still important and legitimate reasons to maintain the separate character of the auxiliaries. Our auxiliaries do important work and improve the quality of the university experience for everyone on campus.

The recommendations from the Auxiliary Review committee have been implemented, and we are starting to live within the new rules:

    • We now have greater clarity on the management of funds held by auxiliaries and the rules on reimbursing the campus for costs expended on behalf of the auxiliaries;

    • We have identified the key knowledge and experience needed by the audit firms that audit auxiliary books;

    • We have ensured that we have student representation on auxiliary boards;
    • We have streamlined the operating agreements between the auxiliaries and the trustees.
Thank you all for your work on these issues. I want to add two special notes about the auxiliaries in light of our budget discussion.

One - I understand that these budget problems don't affect you as directly as our state-funded operations. However, I know there is some spillover. If I could advise you anything for this year, it would be to combine forces wherever possible and find out how you can collaborate and share services to save money across the board.

For example, we don't need multiple payroll or purchasing systems. If our auxiliary services can be more efficient, it helps out the entire university.

Two - I understand that some people - even members of our board - have been suggesting that we can solve some of our budget problems by taking funds from the auxiliaries. I want to assure you that I understand that this is not how these funds can be used, and we would not - and could not) - use auxiliary funds for those purposes.

With that, let me thank all of you for your hard work and another successful year at the CSU.

Our work helps to educate the next generation - while building the workforce of tomorrow and re-invigorating California's economy. That's something that we can all be proud of.

Thank you again. I will be glad to take any questions you may have.