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Budget Central

May 20, 2011

President's Letter to the Campus Community

CSULB Students, Faculty and Staff:

As the spring 2011 semester draws to a close and summer quickly approaches, the Resource Planning Process Task Force believes we should provide the latest status of the 2011–12 campus budget. Unfortunately, we still do not have definitive information to share due to the inability of the state legislature to pass a state budget, but the following summarizes our current circumstance.

Key Points

The key points listed below should be read remembering that our academic purpose remains "graduating students with highly-valued degrees."

  • CSULB anticipates that the state budget crisis and CSU funding will not be resolved any earlier than Fall 2011.
  • Potential CSU impacts appear to range from the $500 million budget cut proposed by the Governor in January to a $1 billion cut that might be included in an "all cuts" budget.
  • CSULB's impact ranges from a $36 million (18 percent) overall budget reduction to a nearly $72 million (36 percent) reduction. In addressing these massive reductions CSULB will have to use most of the 2010–11 fiscal year ?restoration? funding allocated by Governor Schwarzenegger last Fall to cushion budget impacts. This is assuming that we are facing the $500 million CSU budget reduction scenario.
  • The campus envisions a challenging multiple year budget strategy and forecasts the necessity for severe reductions for 2012-13, when the restoration funding is exhausted.

Details

We have used the term uncertainty to describe campus budget outlooks for the past several years. As of this writing, the 2011–12 budget outlook for the state, CSU, and our campus may be described as the worst case of uncertainty that we've ever experienced.

Historically, the CSU's proposed budget contained in the Governor's January 2011 Budget has been a fairly accurate starting point for the final budget. In fact, in previous years the January Budget has often been the "floor" (the lowest budget we would expect) for the CSU budget with small improvements realized by the time the final budget is signed. However, the 2011–12 Governor's January Budget, which required a June voter ballot on tax extensions, appears to be dead due to the legislature's failure to agree to a ballot measure. Because the anticipated revenues from these tax extensions may not be available as solutions to the state's budget crisis, increased cuts are likely. While the Governor has not formally specified the consequences, he has repeatedly mentioned the possibility of an "all cuts" state budget that could include doubling the cut to the CSU. Therefore, the $500 million budget cut to the CSU contained in the January Budget may actually be the "ceiling" (the highest budget we can expect) with no definitive indication as to where the floor may end up being for the CSU budget.

As a reminder and to provide some context to changes we've had to make to our planning, please see Budget Outlook 2011–12 and Beyond – March 2011 (aka Roadshow I). This document summarizes our planning parameters and potential impacts to the campus based on the $500 million budget reduction to the CSU.

However, as a cautionary measure and because the June ballot measure on tax extensions will not come to fruition in the 2010–11 fiscal year, it was decided that contingency planning was needed. The RPP Task Force and the operating divisions have been engaged in 2011–12 budget planning, albeit with many contingencies and unknowns. A comprehensive summary of this budget planning and potential outcomes can be found in the Budget Outlook 2011–12 and Beyond – April 2011 (aka Roadshow II). This document contains updated planning parameters, key budget considerations, budget strategies, potential actions to manage reductions, and potential consequences. Roadshow II has been presented to numerous groups across the campus during April and May to be as consultative, educational, inclusive, and transparent as possible.

May 2011 Update

The CSU is actively working to make the governor and legislative leaders aware of the vital connection between the CSU and the state's economic and social future, and the need to avoid damaging additional budget cuts. However, the CSU cannot wait on the state and its uncertain budget process and has an obligation to be prepared for an "all cuts" budget that potentially could reduce state support for the CSU by $1 billion. Accordingly, at its May 2011 meeting, the CSU Board of Trustees were presented a budget contingency plan of action to address this worst-case scenario.

The contingency plan is made up of two elements. First, all campuses will ?wait list? applications for winter and spring 2012 admissions by accepting applications for those terms but not making any admissions decisions until the budget is finalized. Under the worst case scenario, scores of qualified applicants would be turned away thus saving instructional costs. Second, the board would be asked to authorize a tuition fee increase of up to an additional 32 percent (on top of the 10 percent approved last November). The tuition fee increase would be contingent on whether the CSU receives additional cuts, and the size of the additional reduction. Making the tuition fee increase contingent on the budget outcome gives the CSU the ability to act quickly and flexibly once the state budget is finalized.

The recently released Governor's May Revision does not materially change our planning assumptions and parameters. As in the Governor's January budget proposal, the May Revision continues to count on voter approval of tax extensions as a state budget balancing solution. Although he was unable to secure enough legislative support needed to put tax extensions on a June ballot, the Governor continues to seek a voter ballot in the fall or next spring. Accordingly, the May Revision maintains the CSU reduction at $500 million but states that an additional reduction of $500 million will be necessary in the "all cuts" budget scenario if the proposed tax extensions are not enacted. There remains much uncertainty about the prospects of the tax extension proposal, particularly since the news of enhanced state revenue collections was released. Therefore, we must continue to plan for the possibility of an "all cuts" budget that includes a $1 billion reduction to the CSU. Unfortunately, we may not know anything definitive until well into the start of the fall semester.

In the past decade, the campus has made remarkable strides in quality and student success. The hard work of our faculty and staff has resulted in CSULB becoming a place of high quality and great educational experiences. Your many contributions are widely recognized and greatly appreciated.

Now, we are facing CSULB's greatest budget challenge. It is understandable that anxieties will rise with so much external uncertainty. In the midst of all this uncertainty, we will continue to persevere and defend what we have created in our university thanks to the hard work and dedication of our faculty and staff.

I, along with the Resource Planning Process Task Force, did not want the spring semester to close without providing the campus with a budget update, which we hope you will find helpful. Once again, as we end another academic year without knowing what our state budget will be in the coming year, the best way to summarize the external uncertainty that we face is that "everything is as clear as mud."

Be assured that we will continue to provide information as it becomes available.

Thank you and Go Beach!

F. King Alexander
President

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