Overall, the proposed increase in state support for the CSU would bring state funding levels to $2.3 billion for the support of university programs and operations. At their March board meeting, CSU Trustees reviewed an expenditure plan based on the proposed funding that addresses three major areas of need - student access and success, faculty and staff compensation and mandatory costs. Trustees will discuss additional details of this expenditure plan and the revised budget proposal at the upcoming May board meeting.

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“After struggling through one of the toughest times in CSU history, the system is now in a position to address some of its critical needs,” said Robert Turnage, assistant vice chancellor for budget. “Putting students first, the CSU’s budget plan strikes a balance among the many legitimate claims for available resources.”

Overall, the proposed increase in state support for the CSU would bring state funding levels to $2.3 billion for the support of university programs and operations. This reverses the trend of dramatic state support declines that cut more than 30 percent of state funding – or nearly $1 billion in annual support – from the system over five years.

Student Access and Success
Based on the Governor’s proposal, the CSU has no plans for any tuition fee increases for the 2013-2014 academic year.

The system will also begin to address the unprecedented demand for a CSU education. An investment of $21.7 million will allow the CSU to grow by almost 6,000 students across the system. All campuses will be allocated funding for growth with some smaller campuses receiving additional funds in order to sustain programs. The higher enrollment level is still far short of what is necessary to accommodate the more than 300,000 high school and community college students that have applied to the CSU for fall 2013, which highlights the overwhelming demand to attend the CSU.

Additionally, the Governor’s budget directs $10 million for online strategies to get more students through so-called “bottlenecks.” These funds will support clearer degree pathways while expanding and improving course offerings, advising and course scheduling through the use of technology.

Finally, the CSU will continue to invest in student success by directing $7.2 million to further efforts to reduce time to degree, close the achievement gap and improve graduation rates.

Faculty and Staff Compensation
A modest compensation pool will provide resources to begin addressing the pressing need to recognize the work of faculty and staff as they serve students. The $38 million proposed for this purpose amounts to 1.2 percent of CSU compensation. System and campus executives as well as campus presidents are not included in this compensation pool. Issues related to distribution will be addressed through the collective bargaining process.

Mandatory Costs
Certain costs must be paid by the university in order to maintain operations across the 23 campuses. A total of $48.2 million will cover mandatory increases for employee health benefits, operation and maintenance of new space, and energy costs.

Next Steps
In May, the governor will issue a revised budget that will provide clarity on state revenue levels and funding priorities. The legislature is expected to pass a budget by June 15. The new fiscal year begins July 1. The CSU will continue to monitor and respond to budget developments throughout the process.

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The presentation highlights:
*the projected general fund appropriations until 2016
*2013-14 general fund appropriation adjustments
*CSU 2013-14 state funding budget request

(January 10, 2013) – Governor Brown today released his 2013-2014 state budget proposal that signals a renewed investment in higher education with the addition of $125.1 million in state funding for the California State University. The Governor’s budget also reinstates $125 million that was cut from last year’s budget and was due to be reimbursed in this year’s budget following the successful passage of Proposition 30.

“We appreciate the Governor’s recognition that California will benefit from the investment of state funds into higher education,” said CSU Chancellor Timothy P. White. “The proposed budget heads us in the right direction,” continued White. “It will allow the CSU to address the unprecedented demand for high quality education at our institutions, as well as areas of critical need. We still face many fiscal challenges and will continue efforts to operate efficiently and effectively, and seek out additional innovative ways to control costs.”

Overall, the increase in state support for the CSU brings state funding levels to $2.2 billion for the support of university programs and operations. As part of its 2013-2014 budget ask of the governor and legislature, CSU had requested a total of $371.9 million over its current baseline budget that includes state funds, tuition and systemwide fees.

As part of the additional $125.1 million in proposed state funds, $10 million has been directed in the Governor’s budget for online strategies to get more students through so-called “bottleneck” courses. These are courses across the system that cause many students to slow their time to degree until they can find a “seat” in that particular course. They are either lower-division general education requirements, pre-requisites for majors or high demand classes. The directed funds would be used for a multi-pronged approach incorporating technology-enhanced learning, student advising and course redesign to ensure student success. Together, all of these efforts are expected to provide thousands of students more access to classes and help them progress to degree.

Over the past several years, state support of the CSU has been dramatically decreased with more than 30 percent of state funding cut for the system. The loss of state support forced the CSU Board of Trustees to approve sizable tuition fee increases. However, increases in available revenue from tuition hikes did not keep pace with state funding cuts. Consequently, to manage the massive budget reductions, CSU instituted a number of cost saving measures including decreased enrollment, employee layoffs and furloughs, deferred maintenance, travel restrictions, better use of information technology, and other efficiency measures.

“The CSU has certainly been challenged over the past several years with the drop in state support due to the state’s lingering recession,” said White. “However, with finances more stable in the near term now that Proposition 30 has passed, we are cautiously optimistic that the CSU’s budget will begin to turn around. We look forward to working with the Governor and legislature during the upcoming budget hearings.”

State funding for higher education represents approximately seven percent of the overall state budget and is set at discretionary levels.

The budget plan identifies increased funding needs of $441.8 million, and asks the Governor and the legislature for a total increase of $371.9 million in state support funds. The enrollment demand item will accommodate an increase in the number of students admitted, as well as additional courses for current students.

Specific funding requests include:
• Mandatory costs (health benefits, new space, energy) $48.2 million
• Compensation increase (3 percent “pool”) $86.3 million
• Graduation Initiative/Student Success $58.0 million
• 5% enrollment demand $155.8 million
• Urgent maintenance needs $50.0 million
• Information technology infrastructure upgrade $20.0 million
• Instructional equipment replacement $23.0 million
• Center for California Studies $0.5 million

The expenditure plan would bring annual spending for support of the CSU to approximately $4.5 billion, including student fee revenues. Approximately $69.9 million in revenue will come from tuition fee revenue associated with enrollment growth of approximately 20,000 additional students. The budget also includes funds for a 3 percent compensation increase pool for faculty and staff (subject to collective bargaining for represented employees), funding for the Graduation Initiative, as well as funding for urgent maintenance needs and increased mandatory costs (health care benefits, energy).

(November 7, 2012) – The California State University will avoid a $250 million mid-year budget cut after voters’ approval of Proposition 30, and will start the process of rescinding the $249 per semester tuition fee increase already in place. With the passage of Proposition 30, CSU’s budget will essentially remain flat for the remainder of this fiscal year, but state funding is still approximately $1 billion less than several years ago.

“We are hopeful that the passage of Proposition 30 will be the beginning of the state’s reinvestment in higher education,” said CSU Chancellor Charles B. Reed. “The long term benefits of additional revenue can only be realized if higher education is once again a priority. The state needs to start making up for the devastating budget cuts of the past several years, and focus on higher education as a driver of California’s economic future.”

The CSU Board of Trustees had previously approved a contingency plan to rescind a $249 per semester tuition fee increase that took effect for the fall 2012 term. Annual tuition fees for full-time undergraduate students will now revert back to $5,472 – the same rate as in the 2011-2012 academic year. Students will either be credited, refunded or receive a reconfigured financial aid package to account for the revised tuition fee rates.

Campus enrollments will also remain constant for fall 2013. The system had held applications from new students pending the outcome of Proposition 30, which has a direct impact on funded enrollment targets. Campuses will immediately begin to review applications for new student admissions for the fall.

UPDATE: (November 13, 2012) California State University Trustees have postponed reviewing a plan to improve access and reduce time to degree. The proposal to modify the current undergraduate fee structure was part of the agenda for today’s Board of Trustees meeting and will now be reviewed at a later date after Trustees gather additional information and input from stakeholders.

(November 8, 2012) – Up to 18,000 additional students could be admitted to the California State University and thousands of new seats opened up in classes for current students under a plan to improve access that will be considered by the trustees at the November 13/14 board meeting. The plan - a slight revision of the plan presented to Trustees in September - is intended to help students get the courses they need, allow campuses to admit additional eligible students, and shorten the time it takes students to graduate. At the heart of the proposal is a focus on changing student behavior by modifying the current systemwide fee structure for undergraduates.

“It is critical that we provide additional opportunities for eligible students to be admitted to the CSU,” said Ephraim P. Smith, CSU executive vice chancellor and chief academic officer. “With massive budget cuts, we have had to deny admissions to over 20,000 students who did everything right. These changes are meant to provide more access for incoming freshmen and transfer students by helping current students to graduate in a more timely manner. Also, these provisions will free up more seats for current students to make better progress to a degree.”

The modifications to the fee structure include:

A graduation incentive fee. More than 80 percent of CSU degree programs require 120 semester units to graduate. About six percent of seniors or 9,000 students are “super seniors” – students that have completed at least 150 units of coursework. In 2013, students who have earned 160 semester units/240 quarter units or more at the CSU– the equivalent of more than one academic year of full-time coursework beyond what is required to graduate – will pay a supplemental fee for units beyond 160. The 160 unit threshold will be reduced to 150 units in fall 2014.

Under this modification, every student who entered the CSU as a first-time freshman will be able to earn 150 units – Advanced Placement credit and credit earned from military service will not count against the threshold – and every upper-division transfer will be allowed to earn 80 units (75 in 2014) at the CSU before the graduate incentive fee is charged.

The graduation of this group of “super seniors” would open admission slots for an estimated 9,000 other eligible CSU applicants while also increasing graduation rates.

Third-tier tuition fee. CSU sets its tuition fees not on a per-unit basis, but in two tiers with students paying one rate to take six semester units or fewer and another rate to take more than six units. Systemwide, the average student load is 12 units per term. Under the plan, a third tier tuition fee would take effect beginning with the 18th unit and would be assessed for that unit and every additional unit. This could free up 32,000 seats in courses each year for current students or the equivalent of enrolling 4,000 new students.

Course repeat fee. CSU estimates that there are 10 course repeats per 100 undergraduates each term. This means there are more than 40,000 seats in state-supported classes that are occupied by students who have already taken the course. As part of the plan, students who repeat a course would pay an extra fee. This is aimed at helping students to make careful decisions, and allow more access for students who have not taken the course. If the CSU reduced course repeats by half, it would be the equivalent of admitting 5,000 new students.

Ultimately, it is expected that relatively few CSU students will end up paying any of these three proposed fees. Instead, the “price signals” are expected to lead to better decision-making by students when registering for courses. This frees up “seats” and allows current students to get the courses they really need to graduate. In addition, each semester saved in shortened time-to-degree represents more than $4,000 in savings to students for tuition fees, campus-based fees, books and supplies.

All three of the new fees will be assessed on a per-unit basis and no student will be assessed more than one of the three fees in a given term. There will also be exceptions made for individuals who face unanticipated circumstances.

If approved by the board, the modifications to the fee structure will be implemented in fall 2013 and CSU will begin communicating and providing advisement on the new policies to students immediately. The Board of Trustees will also receive a report detailing the outcomes for students at the end of each of the next two academic years.

(September 19, 2012) – The California State University Board of Trustees today adopted budget contingency measures based on the outcome of Proposition 30 on the November 6 ballot. The board voted 11 to 3 to raise tuition fees by $150 a semester or 5 percent if the Governor’s tax initiative fails and a $250 million “trigger” budget cut to the CSU goes into effect. Alternatively, the board also voted to roll back the 9.1 percent tuition fee increase already in effect for fall if voters approve the tax measure. Faculty trustee Bernadette Cheyne, student trustee Jillian Ruddell and Superintendent of Public Instruction Tom Torlakson voted against the resolutions.

“It is clear that we cannot simply cut our way out of another $250 million hit to our budget,” said CSU Chancellor Charles B. Reed. “We need to take a balanced approach in terms of cost reductions and revenue enhancements. That is reflected in the contingency plans approved by the board.”

Over the past six months, CSU has been meeting with stakeholder groups to receive input about how to address the potential cut, which would bring the total loss in state funds to $1.2 billion over the past several years. The university system has already implemented numerous measures including enrollment cuts, workforce reductions, employee furloughs, deferred maintenance and a host of other steps to address massive funding losses from previous state cuts.

Tuition Strategies
As part of the contingency package if voters approve Proposition 30, the board will rescind the 9.1 percent or $249 per semester tuition fee increase that is already in place. This is in response to legislation passed by the legislature and governor as part of the state budget. It would mean a reduction of $132 million in revenue for this year, and require the system to reprocess financial aid packages, grant tuition credit or issue refund checks.

To help bridge the gap for this year, approximately $50 million of the one-time revenue loss would be made up through the use of one-time balances under the Continuing Education Revenue Fund using authority granted by recent legislation. In addition, if the tuition fee is rescinded, CSU will receive a $125 million state appropriation as part of next year’s budget.

“Trigger on the Trigger”
If Proposition 30 fails and CSU’s budget is cut mid-year by another $250 million, tuition fees will increase by $150 a semester effective January 2013. That would bring undergraduate tuition for one semester to $3,135 and provide approximately $58 million in revenue for 2012-2013. There would be no incremental set aside for financial aid since that would require a $225 per semester increase to generate the same net revenue and would result in a larger burden for students without significant financial aid. The CSU already provides almost $700 million in tuition subsidies for students with the greatest financial need. Comparable amounts of tuition subsidies are also available through state Cal-grants, federal Pell grants, tuition waivers and federal tax credits.

In addition, the board approved an increase in the additional per-unit tuition for nonresident students who account for approximately 4 percent of CSU’s total enrollment. The contingency plan recommended a 7 percent increase or $810 per year to the tuition supplement such students already pay.

University officials estimate that the outcome of Proposition 30 will determine whether or not 20,000 additional students will be admitted next fall, translating into 165,000 course “seats”, 5,500 course sections and 1,500 faculty and staff jobs.

More information on how Proposition 30 would impact tuition fee rates can be found here.

The finance committee voted to postpone a decision until November on several additional fee policy changes impacting access to classes and reduced time to graduation

The board also approved a number of cost reduction strategies as part of the overall budget plan including targeted changes to employee health care premium costs, continued administrative efficiencies, and ongoing campus cutbacks.