Governor’s Budget Honors Compact with CSU

University campuses to receive enrollment funding, compensation increases and student financial aid

Contact: Clara Potes-Fellow, (562) 951-4800,

(Jan. 10, 2005) — Honoring the higher education compact with the CSU, Gov. Arnold Schwarzenegger has proposed $211.7 million in new revenue for the California State University’s 2005-06 budget, which funds fully the trustees’ budget request and increases by 4.4% the CSU's General Fund support. If approved, the proposed budget increase would provide state General Fund revenue of approximately $2.6 billion for the CSU.

The budget would provide a 2.5 percent increase for enrollment growth or $63.7 million to serve an additional 10,000 students (8,103 full-time equivalent students) in 2005-06.

“We are encouraged by the support the CSU is receiving from the Governor in this budget cycle,” said CSU Chancellor Charles B. Reed. “Funding for enrollment growth begins to restore student access from the previous year’s enrollment decreases and reductions in CSU operations. It also enables the CSU to continue producing job-ready graduates for a wide range of California industries, helping them to remain competitive in the global economy.”

The 2005-06 budget includes a general operations increase that will provide $88.1 million to support a 3.5 percent compensation increase for faculty and staff, effective July 1, 2005, and designates $23.3 million for financial aid, which brings the State University Grant funding to $232.6 million to support 101,200 state grants.

Based on the compact, the CSU would receive $101.2 million in student fee revenue generated by a student fee increase that will be effective in fall 2005. The budget requests an 8 percent increase for undergraduates and students enrolled in CSU teacher credential programs, or $186 and $216, respectively, for a full-time student. For graduate students, fees will increase by 10 percent, or $282. Under this budget, in 2005-06 undergraduate students will pay $2,520 annually, and teacher credential students will pay $2,922 annually. Graduate students will pay $3,102 annually. Even with the increase, CSU fees continue to be among the lowest in the country.

The Compact funding provided in the Governor’s budget begins to restore student access, employee compensation, and mandatory costs for health and dental benefits, new space, and increasing insurance and energy costs. Over the past three years, the CSU has seen a net budget reduction of $522 million that has resulted in enrollment reductions, cuts in student services, and an inability to make progress on a growing faculty and staff salary gap.

“Three years of budget reductions have not allowed the CSU to meet the overwhelming demand for student access,” said Richard West, CSU executive vice chancellor and chief financial officer. “This funding for the CSU is a sound investment for our students and California’s economic future.”

The Governor’s budget authorizes a $44.4 million increase for 2004-05 employer-paid PERS retirement benefits.

The budget has been reduced by $11.9 million to reflect lower charges for annuitant dental benefits and to remove one-time discretionary funding CSU received in 2004/05.

The higher education compact is a six-year agreement from 2005-06 through 2010-11. It promises to fund at least a 2.5 percent annual enrollment growth, allowing the CSU to stem enrollment decreases experienced in 2004-05. It also provides a 3 percent minimum General Fund increase in 2005-06 and 2006-07, and a 4 percent minimum increase in 2007-08 through 2010-11 for basic needs, including salary increases, health benefits, maintenance and inflation. For 2008-09 through 2010-11, the compact provides an additional 1 percent for core academic needs.

Next steps in the budget review process include the following dates:

  • February — Budget review by Legislative Analyst’s Office
  • March/April — Budget subcommittee meetings
  • May — Governor announces May revise to the January budget projections
  • June — Two-House Conference Committee. Official deadline for budget adoption.

The California State University is the largest system of senior higher education in the country, with 23 campuses, approximately 400,000 students and 44,000 faculty and staff. Since the system was created in 1961, it has awarded about 2 million degrees, about 82,000 annually. The CSU is renowned for the quality of its teaching and for the job-ready graduates it produces. Its mission is to provide high-quality, affordable education to meet the ever-changing needs of the people of California. With its commitment to excellence, diversity and innovation, the CSU is the university system that is working for California. See

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Last Updated: January 12, 2005

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