Posted May 16, 2011 / *Last updated July 21, 2011
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THE STATE AND CSU BUDGETS, 2011–12
Q: What do we expect for the 2011-12 budget?
* UPDATED 6/29/11: Governor Brown and Democratic legislative leaders announced on June 27, 2011 they have reached an agreement on a budget plan. In the absence of the Republican legislative votes needed to extend temporary taxes, a budget proposal was advanced that can be passed with a simple majority vote. The budget entails a mix of additional budget cuts, revenue actions that can be passed with a simple majority, and various deferrals, and assumes higher projected tax revenues in 2011-12 of $4 billion backed by “trigger” mid-year budget reductions in the event these projected higher tax revenues do not materialize.
* The budget includes a cut in state support of $150 million each to the California State University (CSU) and University of California (UC) systems. This is in addition to the $500 million in reductions to each system previously approved by the legislature. Thus, the CSU budget is reduced by $650 million, a 23 percent reduction from 2010-11.
* In the event that the projected $4 billion in higher tax revenues are not realized, additional mid-year cuts to the CSU and UC systems may be triggered. The trigger cuts are in three tiers, based on how much of the projected revenue is realized.
- Tier 0 takes effect if $3 billion or more in additional revenue is realized. The state will impose additional budget cuts to some state agencies but no further budget reductions to either the CSU or the UC systems.
- Tier 1 takes effect if the state realizes $2 billion to $3 billion in additional revenue. The state will impose additional cuts to various agencies, including $100 million each to the CSU and UC systems.
- Tier 2 takes effect if the state realizes less than $2 billion in additional revenues. The state will impose further cuts but no further reductions to the CSU or UC systems.
* In a statement released June 28, 2011, Chancellor Reed stated, “The budget will cut the CSU by at least $650 million – nearly one-fourth of state operating support – and the effects will be felt throughout our 23 campuses and among our 412,000 students. The proposed ‘trigger cut’ of another $100 million is especially problematic because the trigger won’t be pulled until classes for our last semester of the fiscal year have already started and it is too late for campuses to respond in any practical way … If the trigger is pulled, our cut will total $750 million. State support for the CSU will be at its lowest level in 14 years, even though we currently serve 90,000 more students.”
* The California State University, Northridge share of system-wide budget reductions is approximately 7 percent. Thus, the Cal State Northridge share is anticipated to be $46 million in the event of a $650 million cut and $53 million in the event of an additional triggered mid-year cut.
* UPDATED 6/30/11: Governor Brown signed the 2011-12 state budget on June 30, 2011.
* For a chronology of the 2011-12 budget process, see previous posts below.
UPDATED 1/10/11: On January 10, 2011 Governor Jerry Brown released his 2011-12 state budget proposal, calling for a $500 million reduction in state support for the California State University, equal to an 18 percent reduction. The proposed $2.29 billion in state support for the CSU for 2011-12 is equivalent to 1999-2000 levels, the lowest in twelve years, even though the CSU system currently serves nearly 70,000 more students. The proposed reduction is in response to an anticipated $28 billion budget deficit in the state.
The proposed $500 million reduction in state support for the CSU is a “best case” scenario based on an extension of the personal income and state sales taxes due to expire at the end of the 2010-11 fiscal year and a vehicle license fee the Governor hopes voters will approve in a June 2011 special election. Voter approval would provide a projected $10 billion in revenue for California. If voters reject the tax extensions, the CSU will face additional cuts.
Overall, the governor’s budget proposal reduces state support for all of California’s higher education institutions by $1.4 billion. The University of California (UC) is also facing a proposed $500 million budget reduction, and $400 million is proposed to be cut from the California Community Colleges.
Chancellor Reed has stated that: “As we have before, [the CSU] will need to look at every option in order to develop a comprehensive plan to address a reduction of this magnitude. There will inevitably be difficult choices as we move forward, and no single solution will be enough to meet this challenge.”
The Governor's January budget proposal is annually revised in May based on updated revenue projections and a budget is supposed to be adopted by the Legislature by June 15. The 2011-12 fiscal year begins July 1, 2011.
UPDATED 1/18/2011: For more information, please see the communication sent to faculty and staff members on January 18, 2011 by President Koester.
UPDATED March 2011: The Cal State Northridge portion of the $500 million budget reduction to the CSU in the Governor's budget proposal is currently estimated by the CSU Chancellor's Office to be $21,145,000. This is net of additional revenue projected from the 10% increase in student tuition fees to take effect for the 2011-12 academic year.
Additionally, the CSU announced that in addition to reduced funding there will be $50 million in increased mandatory costs. These mandatory cost increases include increased energy costs and increased employee health premiums. Based on historical allocations, we estimate that Cal State Northridge's portion of this additional $50 million in cuts will be 7% or $3.5 million. Thus, as a "best case" scenario, the estimated net reduction in state funding for Cal State Northridge for 2011-12 is approximately $24.6 million.
UPDATED 4/21/11: For updated information on the 2011-12 state budget, including the impact for Cal State Northridge and considerations for meeting the budget reduction, please see the budget message sent to faculty and staff members on April 21 by Tom McCarron, Vice President for Administration & Finance and CFO.
UPDATED 5/16/11: Governor Brown’s May Revision of the state budget was announced on May 16, 2011. The May Revision proposes an additional reduction of $500 million in state funding support for the California State University system, bringing the total budget reduction for the CSU system to $1 billion, if the Governor’s proposal for temporary tax extensions is rejected. This represents a 36% year-over-year reduction in state funding for the CSU. The legislature had earlier approved an initial $500 million cut in state support to the CSU for the 2011-12 fiscal year.
The California State University system has outlined a budget contingency plan to address this level of budget reduction. The plan calls for asking the CSU Board of Trustees at its July 12, 2011 meeting to authorize a contingent tuition fee increase of as much as 32% on top of the 10% increase already approved by the Board of Trustees for fall 2011. The final amount of any increase will depend on the final outcome of the state budget. For full-time undergraduate students, a potential additional 32% tuition fee increase would mean an increase of $1,566 for a total of $6,450 in tuition fees per year.
This proposed tuition fee increase is estimated to generate approximately $400 million in revenue net of funding for financial aid, leaving an estimated $100 million overall budget reduction. Cal State Northridge’s portion of this is approximately 7% or $7 million, added to the previously planned-for reduction of $21.1 million discussed above. Vice President McCarron’s memo of April 21 explains the Cal State Northridge plan to manage a $21.1 million reduction. The additional $7 million potential reduction will be managed by using campus reserves, with no additional budget cuts to the University’s divisions for 2011-12, giving the campus time to plan for these base budget adjustments in 2012-13.
Q: Will there be additional student fee increases?
* UPDATED 7/13/11: At their July 12 meeting, the CSU Board of Trustees approved a 12 percent tuition fee increase effective for the fall 2011 semester. In addition, a 10 percent increase for fall 2011 was already approved by the Board of Trustees last November.
* The 12 percent additional increase raises tuition by $294 per semester for full-time undergraduate students, $339 per semester for credential program participants, and $360 per semester for graduate students. For a full academic year, the added amount is $588 for full-time undergraduate students, bringing the annual tuition fee to $5,472.
<p">* One-third of the revenue from the tuition fee increase will be allocated for financial aid. Nearly half of all CSU undergraduates will be fully covered for the tuition increase due to this provision and other grants and fee waivers.
* UPDATED 7/15/11: For more information, please read the message to students sent from Provost Harry Hellenbrand on July 14, 2011.
* POSTED 7/19/11 / UPDATED 7/21/11: For information about payment of fall 2011 tuition fees, please read the message to students sent from William Watkins, Vice President for Student Affairs and Dean of Students on July 19, 2011.
* According to a statement released by the CSU Chancellor’s Office on July 18, because of the precarious budget situation, the Board of Trustees will review at its meeting in November 2011 whether adequate funds have been provided by the legislature and governor in the Budget Act and determine if additional tuition fee increases will be required.
* For a chronology of recent fee actions November 2010 through July 2011, see previous posts below.
UPDATED 11/10/10: During the summer of 2010, the CSU Board of Trustees approved a 5 percent student fee increase for undergraduate, graduate, and professional programs which took effect for the fall 2010 semester. This 5 percent fee increase was based on the Governor's January budget proposal, which assumed a 10 percent fee increase, and was linked to the Legislature's intent to "buy out" the remaining 5 percent for a total increase of 10 percent. However, the 5 percent "buy out" was not implemented. In the absence of a “buy out” as discussed above, the CSU Board of Trustees approved a two-step fee increase at their November meeting to sustain enrollment, classes and services for current students.
The Board of Trustees approved a mid-year increase of 5 percent for 2010-11 effective for the spring 2011 semester. The increase raised student fees by $105 per semester for undergraduate students, $123 per semester for credential program students, and $129 per semester for graduate students. State university fees increased from $2,115 to $2,220 for the spring 2011 semester for full-time undergraduate students.
In addition, the Board of Trustees adopted a 10 percent annual increase for the 2011-12 academic year. The Board of Trustees requested state funding to "buy out" the proposed 2011-12 fee increase by providing adequate funding in the 2011-12 budget. If approved by the Governor and Legislature, these funds would make it possible for the CSU to rescind the fee increase. Without the state "buy out," full-time state university fees will increase effective fall 2011 by $444 per academic year for undergraduate students, $516 for credential program participants and $546 for graduate students. Undergraduate fees will rise from $4,440 to $4,884 per year. The fees for the Education Doctorate program are linked by law to the University of California graduate student rate.
One-third of revenue from these fee increases are set aside for financial aid. Approximately 50 percent of CSU undergraduate students will not experience the fee increases because of financial aid. The planned 2011-12 fee increase will generate approximately $121.5 million in revenue (net of financial aid) for the CSU to enable provision of adequate course sections and student services.
UPDATED 1/28/11: On January 25, 2011, the CSU Board of Trustees approved a 10 percent increase to the tuition fee for Doctor of Education (Ed.D.) programs for the 2011-12 academic year. Beginning in fall 2011, tuition fees for Ed.D. students will increase by $954 annually to $10,500 per year. California law permits the CSU to increase the education doctorate tuition fee to the level adopted by the University of California (UC) system, which for 2011-12 is $11,064. However, the 10 percent fee increase approved by the CSU Board of Trustees is consistent with increases set for undergraduate and other graduate students for fall 2011.
UPDATED 5/16/11: In anticipation of a possible $1 billion reduction in state support to the California State University system for 2011-12 – that is, a $500 million reduction introduced in the Governor’s January budget proposal and an additional $500 million reduction introduced in the Governor’s May Revision if the Governor’s proposal for temporary tax extensions is rejected – the CSU system has outlined a budget plan which includes asking the CSU Board of Trustees at its July 12, 2011 meeting to authorize a contingent tuition fee increase of as much as 32% on top of the 10% increase already approved by the Board of Trustees for fall 2011. The final amount of any increase will depend on the final outcome of the state budget. For full-time undergraduate students, a potential additional 32% tuition fee increase would mean an increase of $1,566 for a total of $6,450 in tuition fees per year.
* UPDATED 7/1/11: To address the additional $150 million to potentially $250 million budget reduction to the CSU included in the budget signed by Governor Brown on June 30, 2011 (which also includes a $500 million reduction to the CSU previously approved by the legislature), it was announced on July 1 that Chancellor Reed will recommend to the Board of Trustees at their mid-July meeting an additional tuition fee increase of 12 percent or $294 per semester effective fall 2011. This is in addition to a 10 percent tuition fee increase already approved for the 2011-12 academic year which increased undergraduate fees from $4,440 to $4,884 per year. If approved, the proposed additional 12 percent fee increase will increase undergraduate tuition fees to $5,472 per year.