January 28, 2002 Vol. VI, No. 9

Governor Proposes Increase in CSU General Fund Budget

Fiscal Outlook for Remainder of Year Remains Uncertain Given State Budget Deficits

With the release of his 200203 state budget plan earlier this month, California Gov. Gray Davis has proposed a $116.9 million, or 4.5 percent, general fund state support increase for the California State University system. The proposed budget provides full funding for CSU enrollment growth.

Cal State leaders welcomed the governor's budget proposal, but remained cautious about the fate of the budget document in the months ahead. The 4.5 percent adjustment reflects funding under the terms of the partnership agreement between the CSU system and the state.

"This budget reflects how important higher education is to the future of our state, especially at a time of great economic uncertainty," said CSU Chancellor Charles B. Reed. "Fully funding our enrollment growth will be the key to providing educational opportunity to future generations of Californians."

The governor's proposed increase for the CSU, when combined with $20.9 million in projected fee revenue from enrollment growth, would bring the total CSU base state budget to more than $3.5 billion.

The governor's proposal includes an $87.9 million increase requested by the CSU to fund an additional 12,030 full time equivalent students (FTES) expected to enroll in 200203. The enrollment funding ensures the CSU will be able to serve its new students with the faculty, staff and course offerings they need.

Even so, the CSU did not receive the funding it had requested for several priority areas. Although the system requested a 4 percent employee compensation increase, the governor's budget allows for only $22.4 million, or a 1 percent increase.

"This budget proposal, while responsive during these difficult times, still leaves us with certain unmet needs," said Richard West, the CSU's executive vice chancellor and chief financial officer. "We will continue to make the case for those needs in the context of the state's resources."

In other areas, the governor's proposal would fully fund year-round instruction at only one additional CSU campus, Chico. The proposal would allow the system to meet mandatory cost obligations for operating and maintaining 1.5 million square feet of new building space (and property insurance increases), and provide $5 million to support required equipment for the CSU's Integrated Technology Strategy initiative.

For the eighth year in a row, the budget does not include any increase in student fees. However, unlike recent years, the budget proposal also does not provide the funding necessary to "buy-out" such an increase ($27.8 million was requested in the trustees' budget for this purpose).

The proposal includes three targeted reductions in CSU's budget: $6.5 million in the Education Technology Professional Development Program; $14.5 million in excess financial aid funds provided in prior years when fees were at a higher level (which amounts to a reduction in the State University Grant); and a $5 million reduction in the Cal-Teach Teacher Recruitment Program.

In capital outlay, the budget gives $258.8 million from future general obligation bonds, including $110.4 million for continuing 20 previously approved projects at 15 CSU campuses, and $128.4 million for 10 new projects at nine campuses. Also provided is $20 million for minor projects systemwide. The total amount is consistent with the trustees' capital priorities.

For Northridge, the capital portion of the governor's proposal includes $14.7 million for preliminary planning, working drawings and construction of the Engineering Building renovation project, phase II.

Although the proposed budget for the CSU does not fund all needs (including lags in faculty and staff compensation, long-term deficiencies in libraries, instructional equipment, and deferred maintenance), the governor's package does continue to make a commitment to access during an exceedingly difficult budget year.

The final outcome for the CSU budget will remain uncertain, with the governor and the Legislature struggling to find ways to close an estimated $12 billion state budget deficit.

The next steps in drafting the 200203 state budget will include the release of a budget analysis by the Legislative Analyst's Office in February and a series of legislative budget hearings from March through May.

In May, the governor will submit a revised budget request based on the April forecast of state revenues (known as the "May Revision" or "May Revise"). After completion of hearings and votes in each chamber, the Legislature will then pass a budget bill for the governor's signature.

As the state budget discussions head toward the "May Revise," the CSU system's priorities for increased funding will be employee compensation and, as needed, increased access through additional funding for enrollment.

The governor is set to approve the budget by July 1, the first day of the new fiscal year. For more information, see http://www.dof.ca.gov/HTML/ BUD_DOCS/Bud_link.htm or http://www.calstate.edu/budget/.

@csun | January 28, 2002 issue
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