2004/05 Support Budget

Chancellor's Message

Chancellor Charles ReedHigher education is vital to California’s economic prosperity and the development of a well-trained workforce. The CSU is proud to be a leader in providing high-quality, accessible, student-focused higher education. With more than 400,000 students, the CSU is the largest, most diverse, and one of the most affordable university systems in the country. It graduates 77,000 students each year into California’s workforce, and it prepares more students than all other state universities in the fields that make California work, including engineering, computer science, business, agriculture, nursing, and education.

Yet the current budget crisis has put the CSU and the state at a crossroads. The CSU experienced the largest reductions and unfunded costs in its history during the current year, with a net reduction of approximately 11 percent of its General Fund budget. For 2004/05, the CSU faces potential reductions of even greater magnitude and for the first time, the CSU has been asked to curb student access so that its limited resources can be focused on preserving instructional quality and services.

At other universities, limiting enrollment might be the simplest solution to such extreme budgetary challenges. But for the CSU, such limits run counter to its very mission. California’s Master Plan for Higher Education charges the CSU with providing access to a college education for all qualified students, a mission that the university system has embraced with pride throughout its 42-year history. Given the state’s current economic situation coupled with record student enrollment demand, the CSU is now at a point where it needs to be offering more—not fewer—opportunities for California’s students to achieve success in the workplace.

Complicating the CSU’s difficult situation is the fact that the university has been managing chronic funding shortfalls for more than ten years. While costs are increasing in areas such as health care, energy, and workers’ compensation, the CSU is not sufficiently funded to cover the total fiscal impact of these costs. In addition, the CSU’s funding shortfalls in areas such as new space, libraries, maintenance, and compensation amount to $418 million per year when amortized over ten years. In total, the CSU has been left with a deficit per full-time equivalent student that is estimated at $1,700 and rising.

Chancellor's MessageSince the mid-1990’s, the CSU has managed its operations according to terms established in a partnership agreement with the Governor and Department of Finance. That agreement set forth a stable and predictable level of financial support linked to outcomes and performance reporting. The CSU has fulfilled its end of the agreement by making extensive progress in accountability, productivity, and costsaving measures. The university has made better use of its facilities through evening, weekend, and summer classes; taken advantage of new technologies to bring course offerings to more students; built stronger collaborations with external partners to maximize its effectiveness in its local communities; and found new ways to develop and finance new capacity for our growing enrollments through the reuse of existing state and federal infrastructure at CSU Channel Islands and CSU Monterey Bay, as well as several off-campus sites in partnership with the public and private sectors.

The partnership was created to not only recognize the minimum funding levels needed to meet our Master Plan mission but also to provide campuses with the stability and predictability critical to plan for students seeking admission long before the annual state budget is finalized. The CSU has done all in its power over the past three years to continue to take more students even in the face of severe funding shortfalls: student-faculty ratios increased; staff is working harder, and for longer hours; students are paying more without any increase in services; and maintenance of the academic and physical infrastructure is an unfunded priority. The university has moved from a period of progressive growth to one of defensive constraint, focusing attention on the need to preserve quality while maintaining its commitment to access. The CSU limited, and then stopped, increases in compensation that kept its salaries competitive. It redirected resources to keeping as many courses as possible available to students. It eliminated funding that mitigated the growing cost of structural deficiencies. It reduced programs designed to increase the number of credentialed teachers in California and send its best graduates to teach in low-performing schools. And while the university continues to make these and other painful compromises, these actions alone are not enough to solve the current crisis.

Chancellor's MessageThe challenge before the CSU as it prepares for the 2004/05 fiscal year is unprecedented. The system simply cannot continue to fulfill its mission without appropriate resources. Without adequate funding, our instructional quality will suffer, course availability will be limited, student/faculty ratios will increase further, and student services will decline. In the end, the state will be shortchanged because the CSU will not be able to provide the number of well-prepared workers that will keep California economically competitive.

Given our belief in and our commitment to the California promise for higher education, we are presenting a request for increased funding at a time when the state has called for deep budget reductions. The CSU’s 2004/05 budget request has been developed with an awareness of the state’s fiscal realities but also the priority needs of the system and its students. In this budget document, we request funding for our increasing mandatory costs, for addressing the demand for student access, and for providing the resources essential to preserving the quality of instruction.

Over the next several months, we will continue to work with our Board of Trustees, the Governor, Legislature and our various constituencies to manage the changing needs of the system and prepare our graduates for their roles in our state, workforce and society as a whole. We will work to preserve the dream of higher educational opportunities for all Californians. But we hope our message is clear: We cannot do it alone. We hope that in partnership with the state, we can emerge from the current crisis and remain committed to the CSU’s mission of serving California’s students with high quality, accessible higher education.

Charles B. Reed - Chancellor

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Last Updated: December 8, 2003