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FAQs on 2008-09 and 2009-10 Budget Situation
Updated April 21, 2009
Q: I heard California received Federal stimulus money to be passed on to state universities. What does this mean for the CSU?
A: The CSU did receive funds, but because they were already
specifically anticipated, they do not represent significant changes to our
overall budget. The 2009-10 budget amendment enacted in February included $255
million of Federal stimulus money to offset a $255 million reduction in the
state appropriation for the CSU’s base budget. Earlier in the month,
Governor Schwarzenegger filed an application with the Federal government to
receive the funds. Because these funds were part of the already-approved budget,
they are not new and do not change the CSU’s budget situation. However,
the Governor also requested an additional one-time $13.5 million which may
somewhat offset the $50 million that had been planned for the 2009-10 budget.
Updated March 27, 2009
Q: The February 20 budget amendment enacted by the Legislature and the Governor contained several contingencies which might result in possible further budget cuts. Do we have any updates on any of these contingencies?
A: One contingency in the budget amendment was that if the Federal Economic Stimulus package did not provide a certain threshold of funding to California ($10 billion), the CSU System will face an additional $50 million budget cut in 2009-10.
More specifically, the budget amendment required that the State Treasurer and the Director of the Department of Finance make a determination, on or before April 1st, as to whether the state would receive at least $10 billion of federal funds by June 30, 2010 that would be available to offset state General Fund expenditures. A determination that this $10 billion would be reached would trigger the State Controller restoring $948 million to specific programs, including $50 million to the CSU.
Today, Friday March 27, the State Treasurer and the Finance Director announced their joint determination that the $10 billion threshold will not be reached. This means that the CSU will experience the $50 million “contingent” reduction in its 2009-10 budget. Our portion at Cal State Northridge is estimated to be approximately $3.5 million (seven percent).
It is understandable to feel some disappointment in this development. On the other hand, the decision does at least resolve one element of uncertainty as we plan our 2009-10 campus budget.
Additionally, the California State University Board of Trustees this week
Propositions 1A through 1E, which will go to the voters in the May
19 statewide special election. Three of these propositions have direct implications
for the California budget.
Updated February 27, 2009
Q: Do we have any further news on when construction can resume on the Valley Performing Arts Center? What has the suspension done to the start date?
A: Yes, California State University, Northridge will restart
construction of the Valley Performing Arts Center on March 2, 2009. This was
one of the State bond-funded projects suspended in December 2008 as a result
of the State’s
budget/cash crisis. The California budget amendment was approved on February
20, clearing the way for construction to resume.
University staff are working with the contractor to assess how the 62-day construction
suspension will impact project cost and completion, originally scheduled for
late spring 2010.
Updated February 20, 2009
Q: I heard the state now has a budget. What does it mean for the CSU and for Cal State Northridge?
A: On Friday, February 20, 2009, Governor Schwarzenegger signed a budget amendment covering the next 17 months, i.e., the balance of the current fiscal year 2008-09 and the fiscal year 2009-10.
This budget amendment reduces the budget for the CSU System as a whole for 2008-09 by $97 million. This includes the $31.3 million mid-year cut already enacted in October and the additional $66.3 million mid-year cut proposed by the Governor shortly thereafter. (These actual and proposed budget reductions were discussed in earlier updates to this FAQs document.) However, the budget amendment restores $31.3 million to the CSU for 2009-10. Thus, the budget for 2009-10 is $66.3 million less than the original budget approved for 2008-09.
The state budget further assumes that the CSU Board of Trustees will increase student fees by 10 percent in 2009-10, that the University will absorb cost increases such as health benefits and energy costs without additional funding, and that enrollment will be reduced (by approximately 1,800 full-time equivalent students at Cal State Northridge).
There are contingencies in this plan. First, if the Federal Economic Stimulus package does not provide a certain threshold of funding to California, the CSU System faces an additional $50 million budget cut in 2009-10. We expect to have a better understanding of how this will be determined in the next six weeks. Second, major pieces of the overall budget will depend on actions by the voters in a special election scheduled for May 19. Perhaps most uncertain, and actual state revenues over the next 17 months will be sensitive to the course of California’s economy. If state revenues over the coming months are less than anticipated, the CSU could face additional budget reductions.
Specifically for Cal State Northridge, our budget for 2008-09 already incorporated our share of the $97 million cut (approximately $6.6 million). Thus, no additional budget adjustments for Cal State Northridge are necessary for the remainder of this fiscal year. We will start building our 2009-10 budget based on the approved California budget which will incorporate our share of the $66 million cut ($4.6 million for Cal State Northridge) and the contingent $50 million cut (a possible $3.5 million for Cal State Northridge).
It is also important to note that the 2009-10 budget, for the second year in a row, does not include the $217 million compact funding which would have provided funding for enrollment growth of 2.5 percent, increases in employee compensation, and coverage of other inflationary increases to the CSU’s operating costs.
Q: What does this budget agreement mean for our suspended construction projects?
A: We are unsure how long it will be before there is sufficient cash flow
from the state to resume construction on the Valley Performing Arts Center
project. We await approval from the Chancellor’s Office to resume construction.
The campus successfully made the case to continue construction on Chaparral
Hall (Science 5) in January and February and so this project remains on schedule
to be completed for the Fall 2009 semester.
Updated February 2, 2009
Q: Did the state impose mid-year budget cuts on the CSU for 2008-09? What do we know so far about 2009-10?
A: In October 2008, Governor Schwarzenegger announced a mid-year budget cut to the California State University system of $31.3 million (about 1.1 percent of money the CSU receives from the state). This budget reduction action was within the Governor’s executive authority and required no legislative approval. Our share at Cal State Northridge was $2,160,700.
Governor Schwarzenegger later proposed a second mid-year cut to the California State University system of $66.3 million. This proposal was part of a broader plan presented before special sessions of the state Legislature. It requires passage by two-thirds of both the state Senate and Assembly before becoming law. To date, the Legislature has not yet agreed to this mid-year budget adjustment or to the broader plan presented.
On December 31, Governor Schwarzenegger released his Budget Proposal for 2009-10, which is a plan for revenue adjustments, spending cuts, and borrowing to achieve over the next 18 months a balanced budget with a $2 billion reserve. For the CSU, the budget proposal restores the $31.3 million budget reduction enacted in 2008-09. However, the proposal permanently cuts the CSU budget by $66.3 million, the same amount as the second proposed mid-year cut for 2008-09. The Governor’s budget also assumes the CSU will increase student fees by 10 percent, one-third of which would be set aside for student financial aid. Finally, when taking into account the mandatory cost increases (e.g., health benefits and energy costs), enrollment funding, and financial aid costs required for 2009-10, the net result is a reduction of $15.8 million to the CSU in General Fund availability. Our share at Cal State Northridge is approximately seven percent. Thus, if enacted as is, the net effect to Cal State Northridge of the Governor’s 2009-10 Budget Proposal is a cut of approximately $1 million.
The CSU’s compact funding of $217.3 million for increased operating costs and 2.5 percent enrollment growth is not funded in the Governor’s 2009-10 Budget Proposal.
This information remains tentative. Further information will be provided as budget news from Sacramento is released.
Q: I have read Chancellor Reed’s e-mail to all CSU employees, dated January 2, 2009 and titled “Cost Saving Measures and Budget Update.” His email says that the CSU has been forced to suspend and shut down state-funded design and construction projects on all campuses. What does this mean for our campus?
A: During the holiday break, in response to the state’s cash-flow crisis, the Department of Finance ordered all state agencies, including the CSU, to suspend work on state-bond funded construction projects.
At Cal State Northridge, this affected construction of the Valley Performing Arts Center, Chaparral Hall, and several minor capital improvement projects. In a campus-wide email sent January 2, I informed the campus community that work has been temporarily stopped on the Valley Performing Arts Center project (the email is available at the President'sOffice website here.). Although we do not know how long this suspension will last, we were directed to inform contractors to expect a 90-day suspension. Because Chaparral Hall is close to completion, we are working with the Chancellor’s Office to identify potential alternative sources of funding for continued construction.
Non-state-funded construction projects, including our G3 parking structure and new student housing, were not affected. The G3 parking structure opened January 29, 2009, and the student housing construction has continued as planned.
Q: Chancellor Reed’s email (see above) also mentioned other mandatory cost saving measures – cancellation of all non-critical equipment and supply purchases, a hiring freeze on all positions except those essential to the operations of the university, and travel restrictions for employees. What does this mean for us at Cal State Northridge?
A: We have anticipated for some time that the state’s financial situation would be difficult during this fiscal year. The Chancellor’s announcement was anticipated. As such, our campus vice presidents have individually and collectively planned for these financial circumstances, and have put into place processes and procedures to ensure prudent budgetary decisions.
As part of this effort, divisional leaders will continue, as they have for the past 24 months, to carefully review and evaluate equipment and supply purchases, limiting purchases to those judged essential for the continued and effective functioning of the University. Similarly, over the past year and in anticipation of the need to reduce spending, positions have been held vacant in all divisions. Many of these positions will remain unfilled over the coming year, but the vice presidents will continue to approve hiring deemed essential for the effective functioning of the University. Travel requests have been, and will continue to be, evaluated by divisional leaders based on the mission-driven needs of the University.
Q: I have heard that our campus is “impacted” for the 2009-10 academic year. What does this mean?
A: Due to budget concerns, Chancellor Reed and the Board of Trustees last November declared systemwide impaction for the 2009-10 academic year. This means that the 23 CSU campuses were asked to reduce their enrollments or manage them to lower target levels, largely by limiting the number of first-time freshmen accepted for the fall 2009 semester. Our campus target enrollment for 2009-10 is the same as for 2007-08.
For Cal State Northridge, most prospective students from Los Angeles and Ventura Counties were not directly affected by the impaction. As in prior years, all high school graduates from what is called the “Tier I Local Guaranteed Admissions Area” who met the California State University (CSU) admissions criteria were admitted. These applicants have already been notified of their acceptances. The Tier I area includes public and private high schools within 21 school districts in Los Angeles County and nine school districts in Ventura County. For a complete list of these school districts, visit http://www.csun.edu/anr/impaction.html.
For applicants graduating from California high schools located outside this area (further from our campus) – known as Tier II – impaction means that additional admissions criteria are considered. The applications of these prospective students are reviewed and ranked using the CSU Eligibility Index, which is based upon high school grade point average and SAT/ACT scores. Thus, depending on the number of applicants from both Tier I and Tier II regions, we may not be able to admit all CSU-qualified Tier II applicants to this campus for fall 2009. Prospective students from Tier II areas have been encouraged to apply to other CSU campuses as a back-up.
Additional actions to manage enrollments in keeping with impaction included an earlier deadline for freshmen applications, and all accepted freshmen planning to enroll in Fall 2009 must complete their EPT and ELM tests by an earlier date. Enrollment also will be managed through careful advisement (particularly for students who have enough units to graduate), enforcement of University policies regarding disqualification, and some reduction in summer offerings.
The University is still accepting applications from community college transfer students through mid-February, and continues to accept applications from prospective graduate students and credential students until the deadlines set by the specific degree programs to which they are applying.
Updated December 5, 2008
Q: How are we doing so much building on campus when we are experiencing budget cuts? Where does that money come from?
A: Funding for academic buildings currently under construction (i.e., Chaparral Hall, and much of the Valley Performing Arts Center project) was provided by general obligation bonds approved in previous years. Such funding was most recently acquired through passage of Proposition 1D, the Kindergarten-University Public Education Facilities Bond Act of 2006, which voters approved in the November 2006 election. The Valley Performing Arts Center construction is also funded by gifts from donors. Some construction projects are funded by specific campus revenues allocated for that purpose. Our new student housing and parking structure construction projects are funded through bond financing previously approved, with bond repayment funded, respectively, by ongoing housing rental revenue and parking fees. In spring 2007, students passed a referendum approving increases to University Student Union fees to fund a new Student Recreation Center. (Design of the new Student Recreation Center began in early 2008.)
The budget cuts proposed by the Governor affect the amount of General Fund money the CSU receives from the state. Construction projects are not funded by General Fund money. Construction projects also are not funded by State University Fees paid by students.
Updated November 13, 2008
Q: I have heard the Governor intends to cut the budget further. What exactly is going on?
A: Governor Schwarzenegger has proposed a second mid-year cut to the California State University system of $66.3 million. This is in addition to the $31.3 million cut announced in October. Our share at California State University, Northridge is approximately seven percent of the $66.3 million total, or approximately $4.6 million. Together, our share of the two mid-year cuts is approximately $6.8 million.
This proposal is part of a broader plan presented before a special session of the state Legislature last week, and involves both additional cuts to other state services and new revenues. The plan must be passed by two-thirds of both the state Senate and Assembly before becoming law.
If implemented, these two mid-year cuts will together reduce the CSU overall General Fund budget for 2008-09 by a total of three percent, and take us back to the Governor’s initial budget recommendation for 2008-09 proposed last January. That is, it eliminates the $97.6 million which was originally cut from the CSU budget but reinstated in the May revision and the state budget approved by the Legislature in September.
Q: I have heard the Governor intends to impose a furlough on state employees. What is this, and does it affect us?
A: The Governor proposed to the Legislature that all state employees be furloughed (not work) one day each month for the next year and a half, a total of 19 days. That is, employees would not be paid for these 19 days, resulting in a pay cut of five percent. Additional changes to holidays and overtime on holidays also were proposed.
The Chancellor’s Office has stated that CSU employees will not be required to take furlough days as proposed by the Governor, and any changes to state holidays would need to be renegotiated with our labor unions.
Updated October 23, 2008
Q: I have heard there will be mid-year budget cuts. What does that mean to us?
A. Governor Schwarzenegger has announced a mid-year budget cut to the California State University system of $31.3 million (about 1.1 percent of money the CSU receives from the state). This budget reduction action is within the Governor’s executive authority and requires no legislative action. Our share of the budget cut at Cal State Northridge is $2,160,700. Based on state revenues that are less than projected, the Chancellor’s Office also anticipates additional mid-year cuts from the state by January 2009. The Governor has called for a special legislative session next month.
As the campus planned for 2008-09, we anticipated the likelihood of mid-year budget cuts and factored them into our budget planning. Because of these recent and anticipated cuts, we will control the number of qualified students we accept and be frugal in our spending, certainly postponing or scaling back some expenditures, but we will also continue to move the campus forward and support our faculty and staff and provide high quality education for our students. Additionally, these budget cuts underscore the necessity of continuing our efforts to cultivate sources of non-state funding.
Originally posted October 17, 2008
Q: I read that California finally has a state budget for 2008-09. What does that mean for the CSU system?
A: The CSU as a whole is receiving a total budget from the state General Fund of $2.97 billion. Projected student fee revenue contributes another $1.5 billion to the total budget.
This is the same funding that was allocated to the CSU in the Governor’s May Revision. It includes $97.6 million which was originally cut from the CSU budget in the Governor’s January budget proposal but which was reinstated in May.
Q: The Chancellor’s Office has said that this level of funding will restrain enrollment growth. What does that mean?
A: The state appropriation is $215 million less than what the CSU requested. This additional money was requested to cover inflationary costs and to fund a 2.5% enrollment increase for the system as a whole.
Q: What does this mean for our campus and our enrollment?
A: Since the CSU did not receive funding for enrollment growth, campuses are funded at the 2007-08 target enrollment level with no additional funding for new enrollment.
Q: So, if we are funded for 2007-08 enrollment levels, does that mean our actual enrollment will stay the same as in 2007-08?
A: No. We are already well into the 2008-09 academic year and have the highest total enrollment in our history – 36,208 students, which is 762 more than last year. We also have the largest freshmen class ever – more than 4,600. Though we are not fully funded for this enrollment growth, our campus does receive the state university fees from these students.
Colleges and academic departments have accommodated enrollment growth, sometimes by adding course sections taught by temporary and part-time faculty and sometimes by increasing enrollments in course sections. This of course creates challenges for faculty who teach the classes, department chairs who schedule the classes, and staff who provide student support services.
The fact that there is little new money from the state also means we must rely more on non-state sources of funds. Some programs are aided by funding from external donors, alumni gifts, and other fundraising. Some academic departments have formed partnerships with the Tseng College of Extended Learning and offer self-support programs. We must continue to cultivate non-state revenue sources. We also have a healthy proportion of non-resident students (out-of-state or international) who pay higher non-resident student fees. These students are attracted to Cal State Northridge by our quality academic programs.
Q: What do we intend to do about enrollment in 2009-10?
A: It is our hope not to turn away qualified students. Our enrollments have remained robust because of many positive factors – the high quality of our academic programs which have made Cal State Northridge the campus of choice for many students; our outreach efforts to the prospective students of this region, many of whom are from traditionally underserved communities; and our continuing commitment to serve the needs of this region.
For 2009-10 we will take some administrative steps as an attempt to limit the number of new students. One is that we will close the application period earlier, by November 30. Another is that we will require that prospective students take the English and mathematics placement tests by an earlier deadline. We are communicating these deadlines to high school counselors now. However, qualified students who meet the deadlines will be admitted and we will educate them here.
Q: How will we get through this time?
A: We should keep in mind that budgets go through cycles. Most of us in the CSU have been through one, two, three, or even more budget downturns, and yet we are still here and the University is still here, successfully carrying out our mission. This does not mean that there won’t be challenges and difficulties. We have essentially been asked to accomplish our work with the same level of funding we have received in the past, even as our costs continue to increase. We may have to postpone or scale back some of what we would like to do. But we have become very adept at planning, operating efficiently, and spending prudently. We have anticipated this time of budget downturn for a long time, and have planned accordingly.
Q: With increased enrollments, will we hire more tenure-track and tenured faculty?
A: The University as a whole has done quite a lot of new faculty hiring in recent years. 43 new tenure-track and tenured faculty members joined us at the beginning of this academic year. Over the past ten years (since the 1999-2000 academic year), 528 new tenure-track and tenured faculty have been hired while 437 have retired (including FERP) or departed for other reasons.
As the colleges receive their budgets from the Academic Affairs Division and in turn make allocations to the academic departments, they will continue to evaluate whether it is prudent to hire. This will depend on the specific situation. Some deans and departments may decide they must hire new tenure-track faculty to deal with their workload, while others will cope in the short-term by hiring temporary and part-time faculty and/or by adding more students into each course section.
Q: Will there be layoffs?
A: Our basic values and mission demand that we protect tenured and tenure-track faculty and permanent staff, and that we educate as many students as we can while maintaining quality. We are committed to tenured and tenure-track faculty and permanent staff, and feel strongly that it is not in the long-term interest of the University and our students to have layoffs. Universities that do so typically regret such action because they lose the valuable expertise of experienced faculty and staff, and eventually must hire new people to replace those who were lost. Such hiring is costly.
We will also continue to employ part-time and temporary faculty as needed to meet demand for course sections in line with our enrollments.
Q: Will employees get raises this year?
A: We don’t yet know. Salary increases for most employees result from negotiations between their unions (bargaining units) and the CSU. In the case of some union negotiations, the amount of salary increase negotiated for 2008-09 was made contingent on a higher level of state funding than the CSU received. Decisions about whether the CSU and these unions will return to the bargaining table will come directly from the CSU Chancellor’s Office and union leadership. For example, the California Faculty Association (CFA) newsletter dated October 15 announced that CFA received official notice from the Chancellor’s Office of intention to reopen bargaining on pay raises in the faculty contract for this fiscal year.
Those represented by the faculty union received a 2% increase effective late in the 2007-08 fiscal year. This increase associated with 2007-08 is already included in paychecks and is not subject to additional negotiation
Q: What can I expect in my college or department?
A: The vice presidents of all the divisions will take steps to carefully manage resources while still carrying out priority initiatives. As a campus, we will be frugal but we will also continue to move the campus forward and make expenditures necessary to support our faculty and staff and provide a quality education to our students.
The vice presidents, deans, managers, and other leaders will no doubt carefully evaluate open positions, and may decide to postpone filling some positions. They will no doubt consider carefully the purchase of new equipment and supplies, perhaps postponing or scaling back some purchases. They will no doubt carefully prioritize travel and professional development requests. Still, the work of the campus will continue, and at a level that ensures we effectively carry out our mission. It is likely that expenditures at the divisional, college, and departmental levels will be reduced in some areas while they remain the same or are even increased in areas of greatest need or priority.
Q: What is happening on other CSU campuses?
A: Every campus is different. The 23 CSU campuses enter this time of budget challenge with different basic financial positions, different enrollment histories, different opportunities, and different levels of non-state resources. Further, though we share common values, the leadership of other campuses may have different approaches to managing budgets, setting priorities, and making decisions. You may hear news from other campuses in the CSU. Do not assume that what happens on one campus will happen here.
Likewise, do not assume that what is happening in one college, department
or other unit here at Cal State Northridge will necessarily happen in your
Q: What can we expect in the future?
A: The future is hard to predict, but we do know that state budgets tend to be cyclical. Still, in the short-term we anticipate challenges.
The CSU requested money to cover increasing costs that the state did not provide. We have been asked to accomplish our work with the same level of state funding we received in the past, even as our costs continue to increase. Higher utilities costs, increasing costs for health care benefits, and other mandatory rising costs must all be covered without commensurate increases in our level of state funding.
Further, if state revenues fall short, it is likely state agencies including the CSU will be hit with mid-year budget cuts. Though we certainly hope this will not happen, we have factored potential cuts into our budget planning on this campus. Likewise, as I’m sure you have surmised from media and other reports, most are not optimistic about the 2009-10 state budget. We will continue to prudently manage our resources and cultivate sources of non-state funding as we prepare for the future. Even if we have mid-year cuts or a major budget reduction next year, we intend to protect the jobs of tenured/tenure-track faculty and permanent staff. Our faculty and staff are vital to carrying out our mission of educating the students of this region.
It is important to realize, however, that some of the changes over the past decade or more that we have associated with budget challenges – higher student/faculty ratios, more classes taught by temporary faculty – are also long-term national trends. It seems unlikely that these will reverse on a national level or in California.
Q: What can I do?
First, educate yourself about the facts. (We have provided this list of FAQs to assist you with that.) In conversations with others, share facts and try to dispel unfounded rumors. If you hear something that is distressing to you or if you are uncertain whether something is fact or rumor, ask your supervisor, department chair, dean or other divisional leadership to clarify.
Second, remain calm. Budgets go through cycles and we are adept at planning for and operating through the cycles. The University has survived previous downturns while providing quality education to our students. Also, recognize that you are here because the work you do is important. The University’s ability to carry out its mission in both the short-term and the long-term depends on our tenured/tenure-track faculty and permanent staff. We intend to protect jobs.
As you continue your work at the University, give thought to opportunities for improved efficiency without loss of effectiveness. If you make or approve purchases, be mindful of priorities and prudent in committing funds. However, be assured that a lean budget year does not mean that the University will not spend any money. We must continue to serve our students, support and develop our faculty and staff, and move the University forward.
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