Chancellor's Recent Speeches

Remarks by Charles B. Reed
Chancellor, California State University
CHESS Conference
CSU Sacramento
University Restaurant, University Union
Friday, April 17, 2009

Thank you, Tim (Snyder, CSSA Chair).

This is my 12th time speaking before your organization Ė you were one of my first speaking engagements after I started at the California State University in 1998.

And that is fitting because in all my years at the CSU, I have thought of students first when developing policy, creating programs or implementing change. Some students might not believe that because they think only of fee increases and their belief that action like that isnít putting students first.

Iíll get into fees shortly, but let me tell you that I donít like them anymore than you do, but if you want a quality education, it comes at a cost.

As you can probably guess, today I am going to talk about our budget situation and what it means to students and to our 23 campuses. I also want to talk a little about the May 19 special election, and then about some good news that has come from Washington D.C. We will have a little time for questions at the end.

CSU Budget

What can I say other than that it is bad….maybe we are not as bad off as other parts of the state, but it is still bad

Overall, for the current 2008-09 year and the upcoming 2009-10 year, we are nearly $600 million below where we should be to serve all our students and employees. For the second year in a row, the Compact will not be funded, which means a loss of $217 million dollars in 2009-10, and more than $200 million dollars this year.

Because California did not receive enough federal stimulus money for the stateís General Fund, the CSU will receive an additional $50 million dollar reduction. While that $50 million dollar cut was not unanticipated, it means tightening our belts even more.

And depending on the May 19 election, we may have additional reductions, which Iíll talk about in a few minutes.

Cuts to the CSU budget will mean 10,000 fewer eligible students enrolled next year, which is not something any of us are pleased about. But if we are to maintain quality, we cannot keep admitting students without adequate funding from Sacramento.

As it is, there will be larger classes, fewer faculty hires, fewer summer classes and some reduced services.

But the presidents and I, who are now meeting monthly, will work hard to see that there are as few disruptions to your education as possible. We are exploring all personnel options but are trying to save as many positions as we can at the campuses and the Chancellorís Office.

We have put a freeze on hiring unless it is a critical position, and we also have reduced travel and limited our purchases. We have frozen the salaries of all vice presidents and above.

But that may not be enough.

Californiaís fiscal picture is continuing to be stuck in red ink. The Legislative Analystís Office has said there will be an $8 billion dollar revenue hole by summer. The unemployment rate is currently 11.3 percent, which hurts how much revenue this state raises.

The $8 billion dollar figure could go higher because of the May election and other factors. I would not be surprised to see a further deterioration in state revenue, from the current $8 billion dollars, plus another $6 billion dollars to $14 billion dollars.

I am guessing that it will be 18 months before this state begins to recover some of its lost ground. I donít expect to see the sun shining for a while.

Student Fees

Part of the gloom is that we have to raise student fees, and we will have an agenda item on next monthís Board of Trustees meeting to do that. The 10 percent fee increase will be the only new money going into our budget; without the increase, the CSU would be in a much bigger fiscal pit.

When the state cuts our funding, we are forced to raise student fees because they are our only other major source of revenue. The Governor and legislature already anticipated this in the 2009-10 budget that passed in February.

Neither I nor the trustees want to raise fees, but we are going to have to do it.

We will set aside one-third of the fee increase for financial aid, in accordance with trustee policy. That means that students coming from families with incomes below $75,000 dollars will not see any increase Ė we will cover that.

Approximately 166,000 needy students are likely to experience no fee increase. About half of all CSU students receive some kind of need-based aid. Of these students, nearly two out of every three will not pay any fee increase because of the dollar for dollar offset in the Cal Grant and State University Grant programs.

Undergraduate students pay about 23 percent of the cost of their education and graduate students pay 28 percent of their cost of education. The state funds the remainder.

Currently, the annual State University Fee is $3,048. Students also pay an average of $800 dollars in campus-based fees. In total, CSU fees are still among the lowest in the nation, and are the lowest in our comparison group of campuses.

The net revenue to our budget, after the financial aid set aside will be $87 million dollars. We will use those funds to keep our quality high.

Even though the CSU is affordable, I know any increase is still hard on students and your families. I wish we did not have to do it, but we must.

One good fee-related note is that I have asked the presidents not to increase campus-based fees unless absolutely necessary.

Because the stateís budget is still precarious, I urge every one of you to continue to advocate for the CSU with the governor, legislators, your families, friends and neighbors.

The CSU is the best investment the state can make.

We all need to keep talking about the CSUís value to the economy and to the workforce. The 92,000 students who graduate from our campuses annually Ė Iím sure some of you will be among them this year Ė power this state.

Further cuts to the CSU will mean some students wonít graduate when they thought they would.

We need to stop that from continuing to happen, which is why I say again - we must all be the strongest advocates that we can be and persuade the legislature and Governor to avoid cutting us any further.

We prepare the majority of Californiaís workforce in the stateís leading industries including agriculture, technology, entertainment, engineering and nursing. These skilled professionals can help the economy recover.

If we are cut too much, we wonít be sending as many graduates into the workforce, which means lower tax revenues for the state.

The demand for people with college degrees gets higher every year. By 2025, the demand will outpace the supply of graduates with a bachelorís degree by 3 million people if we donít fund education in this state.

President Obama has set a goal to regain Americaís position as the country with the highest number of college graduates by 2020. That will not happen if this state doesnít resume funding us to do our job to educate the workforce.

May 19 election

Just a few words about the special election: The trustees voted last month to support Propositions 1A- through 1E because of the potential impact on our budget.

If these do not pass, the stateís revenue deficit could increase from the $8 billion dollars I spoke about earlier to $14 billion dollars. And if that happens, then the CSU will get cut more. Think of your university when you vote a month from now.

Good news

Even though we are experiencing budget setbacks, we cannot give up on our student outreach efforts, especially to students of color.

We had very successful ďSuper SundayĒ events in February in Northern and Southern California. Two hundred (200) members of the CSU family visited 71 African American churches and touched the lives of thousands of families and students.

I have made a commitment that we will visit 100 churches next year so we can spread our message even further that college is possible. Since we began this program four years ago, we have seen a 20 percent increase in the number of African American students enrolled Ė that is a statistic to be proud of.

We also are continuing our outreach to our Latino, Asian and Native American families, as well as to our veterans through our Troops to College program.

It is important that we serve our returning veterans and get them into our universities and into the workforce with good jobs. Weíve done something unique: all 23 of our campuses have set aside five, free open admission slots per campus (115 system-wide).

The base commanders can select any military person exiting the service to attend any one of the CSUs. It is interesting to me that they are so careful Ė their standards are probably higher than our standards because they want no failures.

Stimulus Money

There is more good news to share with you.

The stimulus bill that was passed by Congress and signed by the President recognizes the neediest students in this country.

First, the CSU is the largest Pell recipient in the United States. We have calculated that our Pell students - some 125,000 students - will receive $81 million dollars more.

Next year the Pell grants will go to $5,500 dollars per student from $5,350 dollars, and that will mean another $21 million dollars. So we are going to receive more than $100 million dollars in the next 18-20 months for our students. So thatís good news for the CSU.

The second piece is work study. We have about 1,800 students on work study. We are going to be able to add 3,000-4,000 more work-study students. They will be able to earn about $2,500 dollars per year while they are going to college.

So there is some good news out there as we go about our business.

In summary:

Let me end my talk by giving you some of the key points I have learned from speaking to legislators over the years:

One: Be clear about what you are asking for.

Two: Do not overstay your time. Get in, make your points and get out. Legislators and their staffs are busy, and usually do not have lots of extra time.

Three: Remember that you are probably the most important voices that legislators hear from regarding the California State University. You are the face of the university; you are the ones who receive the benefits of higher education.

Go in as proud student-advocates for the California State University and tell them what the CSU means to the economy and the workforce.

Thank you and have a great conference. Iíd be happy to answer a few questions.