2021-22 RPP Task Force Budget Recommendations

 

CALIFORNIA STATE UNIVERSITY, LONG BEACH

TO: Jane Conoley, President

FROM: Karyn Scissum-Gunn Provost and Senior Vice President for Academic Affairs
Scott Apel, Vice President for Administration and Finance
Co-chairs, 2021-22 Resource Planning Process (RPP) Task Force

DATE: September 15, 2021

SUBJECT: 2021-22 RPP Task Force Budget Recommendations

This memo transmits the budget recommendations of the 2021-22 Resource Planning Process (RPP) Task Force and considerations made after the final budget memo was received. The RPP discussions for 2021-22 concluded on April 28, 2021, prior to the final budget allocation. A follow up meeting was held on September 15, 2021 to review campus final budget decisions. The recommendations in this communication take those conversations into account, and incorporate the information contained in the Final Budget Allocation Memo (B-2021-02) published on July 13, 2021.            

The CSU received $550 million in new incremental funding in the 2021-22 final budget deal codified in budget bills AB 128 and SB 129, both of which contain important detail about the CSU budget. The allocation included $299 million for budget restoration, $216 million for other CSU priorities, and $35 million earmarked for specific campus programs throughout the CSU system. CSU, Long Beach did not receive any specific budget earmarks for 2021-22.

State income and capital gains tax revenue projections for 2021-22 far exceeded the dismal economic conditions assumed in the 2020-21 final state budget. This allowed the state to restore funding from last year’s budget cuts and invest significant new dollars across most state agencies; at the same time, the state was also able to pay down debt and save for future economic uncertainty.  However, eighty-five percent of the discretionary funds available to allocate were given on a one-time basis and not as permanent augmentations to base budgets.

Governor Newsom and the state legislature continue to support the California State University and all segments of K-12 as well as higher education in the state. A special allocation of $25 million in new base budget funding for Humboldt State University is to be used to further their desire to join Pomona and San Luis Obispo to become the third polytechnic university in the state.

RPP Budget Planning

The RPP discussions on April 28, 2021 anticipated budget restoration to the CSU based on a publicized deal between the Governor and Legislature after the Governor’s January Budget was released. At that time, full restoration of division budgets to their 2019-20 fiscal year levels was the top priority. New allocations were expected for Graduation Initiative 2025, including base budget allocations for student basic needs. Additionally, funding for mandatory cost increases for employee health benefits rates as well as funding for new facilities scheduled to open this academic year were expected to be in the budget allocation memo; funding for both initiatives is to remain in the University Wide budget.

Final Budget Allocation

The final budget allocation memo (B-2021-02) included the following incremental budget adjustments for the CSU system and CSULB specifically: 

Budget Items	CSU System	CSULB
2020-21 Base Budget	$3,772,806,000	$277,052,000
2020-21 Budget/Expenditure Changes
2020-21 Retirement Rate Adjustment	(42,716,000)	(3,073,000)
Systemwide Priorities - Pullback	(43,110,000)	(9,220,000)
Employer Paid Health Premiums	23,782,000	1,664,000
Operations and Maintenance of New Facilities	15,206,000	87,000
Compensation Adjustment - Unit 8	45,106,000	68,000
AB 1460 Ethnic Studies	16,319,000	858,000
Budget Restoration	299,043,000	19,038,000
Graduation Initiative 2025	150,000,000	10,879,000
Other Program Adjustments	43,846,000	-
State University Grant		643,000
Total Incremental State Appropriation	$550,192,000	$20,944,000
Total State Appropriation	$4,228,282,000	$247,966,000
Projected Tuition & Fee Revenue	$3,036,991,000	$240,535,986
Total 2021-22 Base Budget	$7,265,273,000	$488,531,986

Of note, the 2021-22 budget allocation included a pullback of $130M from campuses to be held centrally at the Chancellor’s Office and re-allocated at another time for systemwide priorities. The CSULB share of this pullback was $9.2 million. Another budget reduction was made at the end of the 2020-21 fiscal year to reduce funding for retirement benefits, related to a reduction in the rate by CalPERS. These two budget reductions in addition to new funding generates a net balance of $20.9 million in new state appropriation for CSULB in 2021-22. Tuition, fees and other receipts have increased as resident enrollment has grown over the last two years, adding $5.85 million in additional revenue to support the CSULB base operating fund budget. The CSULB base budget for 2021-22 is estimated to be $488.5 million with $26.8 million in new funding.

Following the intent of the RPP task force and based on the new funding available from all sources, 95% of the budget cut sustained by divisions in 2020-21 will be restored at a total of $18,323,349. This restoration means that division budgets are back to 99.75% of their fiscal year 2019-20 level. Funding for increased mandatory costs of $2,853,407 will be added to the University Wide budget. The remaining $5,618,445 will be distributed as follows: to support basic needs initiatives; to fund additional faculty in support of the AB 1460 ethnic studies general education requirement; to fund the student health center based on increased enrollment; and to fund programs now eligible to charge the graduate business professional fee in the College of Business.

The new funding currently available does not allow for new investments in Graduation Initiative 2025 beyond legislative earmarks for basic needs. To continue momentum on this critical initiative, with special attention given to closing equity gaps, one-time funding of $4.675 million from a supplemental allocation will be given to Academic Affairs.

Additional Budget Priorities

The 2021-22 final budget act represented the largest single year investment in the CSU in the state’s history. However, it did not include funding for two critical components: (1) enrollment growth to fund access for more students to attend CSU campuses and (2) compensation increases for faculty and staff to keep pace with cost-of-living increases. The budget summary included an intent to fund enrollment growth in the 2022-23 budget of $81 million. As a high demand campus, CSULB will advocate for a significant share of this funding in the next fiscal year. While compensation increases were not specifically mentioned in the final budget bill, the Chancellor’s Office is currently in conversation with bargaining units to agree on the timing and amount of possible compensation increases.

With so many mandatory cost increases and legislative priorities included in the 2021-22 budget, little flexibility remained with which to make new strategic investments. However, one-time funding from university and division reserves can and will be used strategically to fund campus priorities.