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SCVNews.com | CSU Board Makes Budget Contingency Plans | 09-19-2012
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[CSU] – The California State University Board of Trustees adopted budget contingency measures Wednesday based on the outcome of Proposition 30 on the Nov. 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  In addition, if the tuition fee is rescinded, CSU will receive a $125 million state appropriation as part of next year’s budget.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.

 

About the California State University

The California State University is the largest system of senior higher education in the country, with 23 campuses, approximately 412,000 students and 43,000 faculty and staff. The CSU awards about 90,000 degrees annually and since its creation in 1961 has conferred nearly 2.6 million.

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