2017-18 RPP Task Force Budget Recommendations
CALIFORNIA STATE UNIVERSITY, LONG BEACH
TO: Jane Conoley, President
FROM: Brian Jersky, Provost and Senior Vice President for Academic Affairs
Scott Apel, Vice President for Administration and Finance
Co-chairs, 2017-18 Resource Planning Process (RPP) Task Force
DATE: June 14, 2017
SUBJECT: 2017-18 RPP Task Force Budget Recommendations
This memo transmits the budget recommendations of the 2017-18 Resource Planning Process (RPP) Task Force. While CSU final campus allocations will not be known until later this summer after the state budget is enacted, the RPP Task Force believes it is important to communicate budgetary plans to the campus based on what we currently know.
Consistent with the governor’s multi-year funding plan, the CSU will receive an increase in the system’s budget. The governor’s budget supports continued investment in higher education with the expectation that colleges and universities will work together and implement new and creative practices that consider the cost of instruction, better support student success and completion, and expand access to higher education for more Californians.
The following summarizes our understanding of the current budget situation:
- The governor’s 2017-18 budget invests new General Fund resources in higher education, consistent with the multi-year budget plan he set for the system in 2013-14.
- The governor’s budget includes $157 million in additional operational funding for the CSU. While this funding increase is welcome, it still falls short of the $344 million requested by the Board of Trustees.
- In order to mitigate this funding shortfall, the CSU Board of Trustees approved a tuition fee increase of $270 per year for full-time undergraduates and comparable increases for graduate and non-resident students. It is anticipated that this tuition fee increase will generate gross incremental revenues of $119 million ($79 million after the financial aid set-aside).
- Taken together, the total 2017-18 funding increase for the CSU is projected to be $276 million.
- The Chancellor’s Office has provided budget allocations to the campuses for this entire $276 million funding increase. A total of $21 million for mandatory cost increases (healthcare, retirement, and new space), $75 million for the Graduation Initiative 2025, $39 million for financial aid, and $141 million for compensation increases for all represented employees.
- CSULB’s estimated share of the funds allocated by the chancellor is approximately $19.1 million. Unfortunately, all $19.1 million is earmarked for specific purposes -- $.2 million for mandatory cost increases, $4.4 million for Graduation Initiative 2025 (see details below), $3.3 million for financial aid, and $11.2 million for compensation increases (see details below).
- CSULB relied on just over $1 million in one-time funds during 2016-17 to cover compensation increase costs. Because no new discretionary funds are available to the campus in 2017-18, a funding source for this permanent cost obligation is yet to be identified. RPP recommends that one-time funds again be utilized in 2017-18 to cover this permanent cost obligation. Should any discretionary base funds become available during the remainder of the budget cycle, RPP recommends that base funding be directed to satisfy this obligation.
Campus budget planning by RPP was based primarily on the Governor’s January Budget for a $157 million CSU funding increase and the incremental revenue generated by the tuition fee increase. While the May Revise included a small funding reduction (see below) to the CSU, the final state budget will not be finalized until later this summer. Therefore, RPP budget planning concluded at the end of the spring semester based on the best estimate that was available.
Current Budget Outlook
The May Revise budget projected that state revenues will be $2.5 billion higher than the January Governor’s Budget estimate. The governor proposed allocating the majority of this increase to K-12 education, with lesser amounts for county health services and child care services. Unfortunately, the May Revise included a funding reduction of $4 million from the CSU’s January budget. The governor redirected the $4 million to the Student Aid Commission to cover additional financial aid required due to the CSU tuition fee increase.
While the proposed CSU budget is short of the Board of Trustees’ request, we are grateful for the addition of new funds and the ongoing support of the governor and legislature. It is anticipated that a final CSU budget will not be available until sometime in July.
Graduation Initiative 2025
The CO budget allocation includes $4.4 million in base budget allocation for Graduation Initiative 2025. The allocation methodology acknowledges that while all campuses have ambitious graduation rate targets, in order to eliminate equity gaps, differing levels of financial investment will be required. The allocation methodology is not intended to serve as a campus expenditure plan. Each campus may use these funds in support of their individual graduation initiative plan, including system-wide priorities of increased tenure-track faculty hiring, offering additional high-demand course sections to increase average unit load for undergraduate students, and providing additional academic and student support services that support reduced time to degree. For CSULB, this will enable the divisions of Academic Affairs and Student Affairs to plan strategically and implement strategies to meet these system-wide priorities. For Academic Affairs, the priority is to secure funding for the 42 new tenured/tenure track positions. In addition, Academic Affairs will expand and continue the efforts that began in 2016-17 in support of the 4-year Graduation Initiatives by Colleges, Highly Valued Degree Initiative 2025 Task forces, Faculty-led Research on Timely Graduation, and Data Informed Decision Making. We also plan to offer additional courses to reduce bottleneck in 4-year plans. For Student Affairs, the funding will enhance student support services.
Status of Compensation Increases
The California Faculty Association (CFA) and the CSU reached a multi-year agreement in April 2016. Under the agreement, faculty employees will receive a 3.5 percent general salary increase (GSI) on July 1, 2017. The agreement also includes a 2.65 percent service salary increase (SSI) for all eligible faculty employees in fiscal year 2017-18.
All staff bargaining units (CSUEU, APC, SETC, UAW, SUPA, and the Physicians unit) will receive a 2 percent GSI effective June 30, 2017. At this writing, salary increases for Confidential employees and Management Personnel Plan (MPP) employees have not been determined. Also unknown at this time is what rate of increase, if any, staff bargaining unit employees may be awarded effective July 1, 2017.
As a reminder, CSULB had a 2016-17 compensation funding shortfall of approximately $1 million that required one-time campus funds. Since compensation increase costs are permanent ongoing costs, base funds should be identified in 2017-18 to replace the one-time funds utilized in 2016-17. However, should base funds not be available in 2017-18, one-time funds could be utilized again to cover these costs.
Each year salary savings associated with anticipated retirements are projected as part of the Division of Academic Affairs budget planning for the subsequent year. As in 2016-17, some faculty contemplating retirement may defer retirement for at least a year in order to add the 3.5 percent increase to their retirement benefits. The Division of Academic Affairs had been projecting salary savings but in this situation, some portion may not be available. This may create a cash flow problem for the division in 2017-18. This situation may balance out in a subsequent year if there is an increase in retirements but it will likely mean belt tightening for the academic division in 2017-18.
Divisional Budget Planning
While CSULB is projected to receive incremental funding in 2017-18, all of the funding is earmarked for specific purposes such as compensation increases, the Graduation Initiative 2025, and mandatory cost increases. There are no truly new discretionary funds available to divisions. As such, the operating divisions were told very early in the spring to expect a status quo budget for 2017-18. No budget reductions or funding augmentations should be anticipated. Therefore, divisions were not asked to develop specific expenditure plans for 2017-18 nor were budget hearings conducted as in prior budget cycles.
Recommendations of the Resource Planning Task Force
- RPP recommends that one-time funds be utilized in 2017-18 to cover the 2016-17 compensation increase permanent cost obligation. Should any discretionary base funds become available during the remainder of the budget cycle, RPP recommends that base funding be directed to satisfy this obligation.
- RPP recommends that if one-time funds are again utilized to cover this permanent cost obligation in 2017-18, then identifying base funding for this purpose be the highest priority in 2018-19.
For 2017-18, the campus funded enrollment target remains unchanged from the 2016-17 target of 28,814 resident FTES. At this time, the campus enrollment plans for 2017-18 are based on our resident FTES to come in right at target or just slightly above target. Any increased enrollment contributes positively to our net budget as it generates additional fee revenue.
The CSU continues to face a set of key issues. Graduation rates and time to degree continue to be discussed systemwide and in Sacramento. Deferred maintenance and capital funding are continuing important issues. Of note, however, is that some analysts are concerned with the possible effect of major changes in federal policy, especially changes to federal health care programs. Also of concern is a risk of economic downturn in 2017-18 and beyond, which may affect the system’s ability to garner new funding for these very important priorities.
The campus may face key choices with regard to enrollment growth. Enrollment growth is the primary funding mechanism through which the campus can capture additional revenues that are important to the University. However, the campus is near its master plan enrollment limit. The campus may have to adapt to accommodate more students, while continuing to improve quality, using both traditional and creative strategies.
The Task Force would like to acknowledge the continued hard work and resolve shown by the entire university community. CSULB remains a vital, premiere institution of higher education. This would not be possible without the energy, creativity, dedication and positive attitude of our faculty, staff and students.
Associated Students Officers
All CSULB Employees