2018-19 RPP Task Force Budget Recommendations


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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, 2018-19 Resource Planning Process (RPP) Task Force

DATE: July 16, 2018

SUBJECT: 2018-19 RPP Task Force Budget Recommendations

This memo transmits the budget recommendations of the 2018-19 Resource Planning Process (RPP) Task Force. While CSU final campus allocations will not be known until later this summer, the RPP Task Force believes it is important to communicate budgetary plans to the campus based on the enacted state budget and projections of how that might affect the CSULB budget for 2018-19.

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.

Executive Summary

The following summarizes our understanding of the current budget situation:

  • The governor’s 2018-19 budget invests new General Fund resources in higher education.
  • The governor’s budget includes $197 million in additional base operational funding for the CSU. This funding supports $75 million for the Graduation Initiative 2025. The remaining $122 million provides partial support of compensation increases and mandatory cost increases which total $153 million, resulting in a funding shortfall of $31 million.
  • It is anticipated that the Chancellor’s Office will allocate the $31 million funding shortfall to campuses. CSULB’s share of this funding shortfall is projected to be $2.3 million.
  • The governor’s 2018-19 budget also provides $120 million in one-time funds to support enrollment growth of one percent for four years. CSULB’s share of enrollment growth funding of one percent is projected to be $2.4 million per year for four years.
  • The Chancellor’s Office has not yet provided budget allocations to the campuses for the $197 million funding increase. Campus budget allocations are anticipated to occur in late July 2018.
  • CSULB relied on $3.2 million in one-time funds during 2017-18 to cover compensation increase and additional employee benefit costs. Because these are permanent ongoing costs, RPP recommends that base funding of this obligation be the highest priority for 2018-19.
  • Due to marked improvements in graduation rates and higher average unit loads, actual headcount figures continue to be below projections resulting in a 2018-19 revenue shortfall projection of $5 million.
  • If the assumptions and projections above are accurate, the overall campus budget shortfall for 2018-19 will be $8.1 million.
  • RPP recommends that the campus wait for final budget allocations by the Chancellor’s Office before making final budget decisions for 2018-19. Based on campus budget allocations and the magnitude of the final campus shortfall, onetime funds should be utilized to cover this shortfall. Because undesignated campus reserves have been fully expended, these one-time funds will need to come from divisional carryover balances.
  • If the overall campus base budget shortfall for 2018-19 exceeds $3 million, division base budget reductions may be required.

RPP Budget Planning

Campus budget planning by RPP began in April based primarily on the Governor’s January Budget for a $92 million permanent CSU funding increase, $171 million less than the $263 million increase requested by the CSU Board of Trustees. While the May Revise included some additional one-time funding to the CSU, the $92 million permanent increase remained the same. In late-May, multiple sources reported that legislative budget committees were going to recommend to the governor that the CSU be provided with additional funding. Furthermore, indications were that the governor would not veto a funding increase to the CSU if the full legislature agreed. Based on this encouraging news, RPP budget planning concluded at the end of the spring semester with hopes that the CSU would receive additional funding in the final state budget. While almost all additional funding would be dedicated for specific purposes such as compensation increases, enrollment growth, mandatory cost increases, and the Graduation Initiative, the increased funding is certainly welcome.

Current Budget Outlook for CSU

The May Revise budget projected that state revenues will be $8 billion higher than the January Governor’s Budget estimate. The governor proposed allocating some of this increase for higher program costs and ongoing commitments to Medi-Cal, Cal Grants, child care, and in-house supportive services. About $4 billion would be for one-time purposes related to infrastructure, homelessness, and mental health. The avoidance of making substantial new ongoing obligations allows the state to continue building reserves to prepare for the next recession. The May Revise did propose a funding increase of $100 million in one-time funds to support deferred maintenance projects throughout the CSU.

While the proposed permanent CSU operating budget increase remained at $92 million in the May Revise, we are grateful that the governor agreed with the legislature and increased budgetary support to the CSU in the final state budget. The enacted state budget includes a total of $197 million in additional base state support to the CSU. This funding supports $75 million for the Graduation Initiative 2025 and partially supports compensation increases and mandatory cost increases for retirement and health care. The enacted budget also includes one-time funds for deferred maintenance projects, but at $35 million rather than the $100 million proposed in the May Revise. Also included in the enacted budget is $3.8 million to support shark and beach research at CSULB.

It is anticipated that a final CSU budget will not be available until sometime in late July.

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 November 1, 2018. Staff bargaining units (CSUEU, APC, SETC, and the Physicians unit), Confidential, and MPP employees will receive a 3 percent GSI effective July 1, 2018. At this writing, salary increases for SUPA and UAW employees have not been determined.

As a reminder, CSULB had a 2017-18 compensation increase and employee benefits funding shortfall of approximately $3.2 million that required one-time campus funds. Since compensation increase costs are permanent ongoing costs, it is critical that base funding be identified in 2018-19 to replace the one-time funds utilized in 2017-18. Thus, permanent funding of this $3.2 million in ongoing costs is the highest priority for 2018-19.

Enrollment and Revenue

For 2017-18, the campus funded enrollment target was 28,963 resident FTES. Actual enrollment for 2017-18 was 29,150 resident FTES, or about 0.6 percent over target. However, due to marked improvements in graduation rates and higher average unit loads, actual headcount figures were well below projections. Unfortunately, the underachievement of headcount projections resulted in a shortfall in tuition fee and nonresident tuition revenues. For 2017-18, this revenue shortfall was mitigated with the utilization of one-time funds.

Several strategies have been put into place to minimize the tuition revenue shortfall for 2018-19. However, fully adjusting to these new dynamics will take a few enrollment cycles. While the plan is to be very close to the FTES target, headcount is still expected to be slightly under prior year actuals, resulting in continuing revenue shortfalls. For 2018-19, the resident enrollment target is 29,252 FTES, 1 percent higher than 2017-18. Current projections are to achieve 29,733 FTES, or about 1.6 percent above target. However, due to the lower headcount, the projected revenue shortfall for 2018-19 is $5 million.

Graduation Initiative 2025

The enacted state budget includes $75 million in base budget for the Graduation Initiative 2025 throughout the CSU. The exact CSU budget allocation methodology to campuses has yet to be determined. If it is similar to last year, each campus may use these funds in support of their individual graduation initiative plan, including systemwide 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 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 Taskforces, 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.

CSULB Budget Outlook

CSULB is projected to receive incremental funding in 2018-19. Unfortunately, the total costs associated with compensation increases, the Graduation Initiative 2025, and mandatory cost increases exceeds the incremental funding anticipated. The projected enrollment growth funding provides some discretionary funds, but it is one-time funding for four years rather than permanent base funding. Nevertheless, the enrollment growth funding is needed to help offset the funding shortfall, the ongoing compensation and employee benefits funding shortfall, and the revenue shortfall (all described earlier). Although we must await final campus budget allocations by the Chancellor’s Office, the best projection at this point is that the campus will have an $8.1 million budget shortfall for 2018-19.

Based on the January Governor’s Budget proposal, the operating divisions were told very early in the spring to expect possible budget cuts in 2018-19. However, divisions were not asked to develop specific reduction plans for 2018-19 nor were budget hearings conducted as in prior budget cycles.

Recommendations of the Resource Planning Task Force

  • RPP recommends that permanent funds be utilized in 2018-19 to cover the 2017-18 compensation increase and employee benefits cost obligation of $3.2 million.
  • RPP recommends that if the overall campus base budget shortfall for 2018-19 is less than the $3 million, one-time funds be utilized to cover this shortfall. Because undesignated campus reserves have been fully expended, these onetime funds will need to come from divisional carryover balances.
  • If the overall campus base budget shortfall for 2018-19 exceeds $3 million, division base budget reductions may be required.

Concluding Thoughts

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 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. These accommodations should be carefully discussed by financial and strategic planners, as well as within any new campus master plan.

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