Chancellor's Recent Speeches

Remarks by Charles B. Reed
Chancellor, California State University
AOA (Auxiliary Organizations Association) Conference
Opening Night Keynote Address
Sunday, January 11, 2009
Westin Hotel
Long Beach, CA

Thank you, Alex (Gonzalez). Thank you Michele (Goetz, AOA president) and Leslie (Davis, AOA president-elect) for all your hard work putting this conference together.

Before I begin my formal remarks, I also want to say a few nice things about Richard (West). We have been partners for 11 years.

He said he is retiring but he’s still here…maybe this is the start of his “rock star” farewell tour where lots of people are going to say lots of nice things about him … Seriously, Richard has meant a lot to the auxiliaries but he has meant a lot more to the entire California State University system.

He has been a steady voice of reason when dealing with the people in Sacramento about our budgets and other financial matters. He is a very close adviser to me, and I plan to call on him during his “retirement” before he begins teaching at Sonoma State.

Let me tell you one thing that Richard has for the system: he said when I first came to the CSU eleven years ago that I could be the bad guy and he would be the good guy … Thank you, Richard, for what you have done for all the CSU family.

Now, let me move on to my more formal remarks.

I want to talk (1) about the budget; (2) what successes we have accomplished this year; and (3) our challenges ahead, which are many, and what you can do to help. This will not be a positive discussion.

Ben will speak more about the budget tomorrow, but let me give you a general picture of where we are today, knowing that it could be different tomorrow or the next day.

I spoke on Friday before the CSU Alumni Council to give the “State of the CSU” address. I want to use the same words I told them: California is going to hell in a hand-basket – fast.

This state is rapidly descending into a fiscal mess of epic proportions.

Given that the CSU receives two-thirds of its funds from the state’s General Fund (the other third is from student fees) this means that we are sharing in that rapid drop to the bottom.

These are extremely trying times for the CSU family of students, staff, faculty and auxiliaries.

The state’s $42 billion dollar fiscal hole means tough times ahead. It will get worse before it gets better, and it actually may take five to ten years for the state to turn around.

Better Advocates

In the meantime, all of us in this room need to become stronger advocates for the California State University.

We all need to tell our story better in Sacramento and throughout the state. We need to enlist the aid of our neighbors, friends, families, and community and business partners to tell our story.

We cannot do this alone.

We need this state to have a better understanding of:

  1. What the CSU means to it
  2. How our 2.4 million alumni power it
  3. And how our 92,000 annual graduates contribute to the workforce and spark the economy.

One of the ways you can do this is to become even stronger stewards of your enterprises.

We must be strictly accountable, credible and transparent. And most important, we must keep our eye on the ball. By that I mean keep our eye on what is best for students every day, all the time.

Gotten Better

This is my eleventh time talking at your conference. Each year, you have gotten better at being good stewards, so thank you for that. I will take Richard’s place and be the good guy …

Auxiliary organizations are even more important in these terrible fiscal times. You give the CSU the flexibility to do things that we cannot do with state General Funds. That is paramount when state funding is plummeting, like it is now.

For example, all of our organizations are members of the CSU Risk Management Authority (CSURMA), which means we will continue to work as one to streamline our operations, which means savings to all.

Since March 2005, slightly more than $6 million dollars in dividends have been returned to the auxiliaries. In addition, your organizations have saved several hundred thousand additional dollars in premiums for the coverage programs provided by CSURMA.

The campuses also have benefited from this arrangement – last year they received $15 million dollars in dividends, and more than $9 million dollars have been paid this year.

This is a benefit of all working together, which we must do more of these coming years.


Let me talk a few minutes about what I see happening in California. I read a lot of biographies, and biographies obviously have a lot of history in them.

More than fifty (50) years ago, this state decided to invest in human capital – that means its people.

  • The Master Plan for Higher Education came into being
  • The state’s highway system was expanded
  • The GI Bill and jobs were created for returning veterans.

There was a sense of optimism and faith in the future of this state. People worked hard to get things done. Now, California is living off its past rather than moving into the future. It is no longer investing in human capital.

Instead of investing in our higher education system that places the people into the workforce that powers this state, all we get in Sacramento is squabbling and finger-pointing.

This state is no longer competitive – it keeps losing ground to other states and countries. We have gone from the sixth largest economy in the world to the eighth. Our per capita income is decreasing significantly, and many of our communities are less hospitable places to live and work. California could become a third-world state.

It is going to take someone to stand up and shout: “California must be willing to spend more to invest in its human capital and raise taxes.”

But who will do that? And if someone does, will anybody listen?

I have said it before - this state is almost ungovernable.

  • Government is dysfunctional
  • Bickering is more common that collaboration
  • Far too partisan
  • Only one of three states that requires a two-thirds vote to pass a budget
  • Too many initiatives – starting with Proposition 13 and then Proposition 98 – have created fiscal failures and locked up too much of the state budget
  • Our population believes it is entitled to all for nothing. Labor believes it is entitled and the Legislature cannot say no to them
  • And term limits are erasing our institutional memories.

What has the California State University done in the face of all of this? Exactly what we are supposed to do.

We have been recognized nationally for our outreach efforts to the new population of California: the students of color, the first in the family to go to college, the underserved students.

We know that even with a budget crisis of this magnitude, we must continue to reach out to the next generation of our workforce. We must get them and their families through high school, into college, graduated from college and into the workforce as successful contributing members of society.

Sixty-five (65) percent of the public school population falls into those categories, and they are our future. We cannot and will not let the state’s budgetary mess stop us from doing our job.

That is our challenge, and we accept it.

I have talked before about what we have done in this area, but for those who have not heard, some of our outreach efforts are:

  • Super Sundays – will do again next month in LA and Bay areas
  • Road to College tour
  • “How to Get to College” posters with financial aid and other information
  • Early Assessment Program (EAP)
  • Working with K-12
  • PIQE
  • Troops to College.

The CSU produces the engineers, computer scientists, nurses, teachers, criminal justice practitioners, agricultural and entertainment experts and many others.

We provide not only economic mobility to these populations, but we provide the social mobility needed to put this state back on track.

It is not the highly selective institutions that educate this population – it is the CSU.

Almost forty (40%) percent of CSU needy undergraduates receive Pell Grants. Only 8 percent to 15 percent of the students receive them at highly selective universities such as Harvard, Yale, Stanford and others.

If the CSU fails to educate these needy students, these populations will remain in the underclass and California’s economy will falter, not grow. By educating the new workforce, the CSU’s 23 campuses are investing in this state’s human capital.
Now, for us to continue to do that, we need Sacramento to invest more in the CSU so we can continue to serve this state and its people.

This year our budget has taken a $97.6 million dollar cut, and we have a continuing $96 million dollar cut next year. Getting through this year and 2009-10 will be extremely difficult. We have shut down nearly $1 billion dollars in state-funded construction projects.

We will not take 10,000 additional students next year because we will not be funded for them. We did it this year, and it has meant larger classes and fewer services – that is not fair to students.

We will not compromise quality…period.

What can you all do?

I said earlier that we need everyone to be better advocates for the CSU. Here is some information you can use to tell our story:

  1. Our economic value ($4.41 for every dollar invested)
  2. Our high public approval rates (62 percent in the recent PPIC survey)
  3. And our success at annually granting 92,000 degrees to people who then go to work and contribute to the economy.

Those 92,000 graduates may not be enough, though. Another PPIC report showed that California will have an alarming lack of residents with bachelor’s degrees by 2025 if we continue going the way we are going.

That is why it is crucial that you let your neighbors, legislators and the Governor know that they must invest in the CSU if they want a healthy economy again.
I am asking you to work with your presidents and our Sacramento office to call, write, email and text legislators and the Governor about the value of the CSU to this state. This is an urgent assignment that cannot wait.

Protect CSU Family

Before I close, let me tell you what I have said publicly - we will do all we can to protect our students, faculty and staff in this unprecedented fiscal crisis.

We have been working on ways to save money by reducing non-essential travel, equipment and other purchases. We will fill only those positions critical to the operation of the organization.
We are freezing the salaries of the vice presidents, presidents, vice chancellors and chancellor. We are being accountable and creating efficiencies across the board.

I know these remarks have been gloomy, but there isn’t much sunshine in the Golden State at this point. But I do have faith that if we all continue on the right path, we can help turn this ship around, even if it is a slow process.

I appreciate your continued hard work and all that you do every day to make the California State University an outstanding university.

Let’s keep working together to keep it that way. I am pleased to take your questions, and also to hear any suggestions you have to keep the California State University front and center in the minds of those in Sacramento.

Thank you.