2005/06 Support Budget

Higher Education Compact

Agreement Between Governor Schwarzenegger and the California State University 2005/06 through 2010/11

Compact photo 1Adequate financial support for the California State University is essential if the CSU is to fulfill its mission under the California Master Plan for Higher Education, contributing to a higher standard of living and better quality of life for the citizens of the state.

The compact is based on the value of the CSU to the state of California and its citizens. To ensure the university is well positioned to serve the state’s students and industry, Governor Arnold Schwarzenegger commits to a long-term resource plan for the CSU that addresses base budget allocations, enrollment, student fees, and other key program elements for 2005/06 through 2010/11. In exchange for this long-term stability, the CSU commits to focusing its resources to address long-term accountability goals for enrollment, student fees, financial aid, and program quality. To allow appropriate monitoring of progress toward these goals, the CSU commits to providing student and institutional outcome data in numerous program areas including program efficiency, utilization of systemwide resources, and student-level information.

State’s Commitments to Provide Adequate Financial Support for the CSU

The state administration and the CSU share a deep concern for both preserving the quality of the higher education system in California and for maintaining the ability of the university to meet its basic mission under the Master Plan. By providing fiscal stability in the initial two years of the compact, the state is able to prevent further erosion of higher education support for the CSU. Funding commitments in the third year and beyond reflect the belief that the state will return to a position of fiscal health based on moderate economic growth that will allow some recovery of vital needs for the CSU, such as the ability to provide competitive salaries and to address several years of underfunding of core programs.

Basic Budget Support: The state will provide a General Fund increase of 3 percent to the prior year’s base in both 2005/06 and 2006/07. This will help prevent further erosion in the segment’s ability to fund competitive faculty and staff salaries, health benefits, maintenance, inflation, and other cost increases. Beginning in 2007/08 and through 2010/11, the state will provide a General Fund increase of 4 percent to the prior year’s base for basic budget needs including salary increases, health benefits, maintenance, inflation, and other cost increases.

In order to help maintain quality and enhance academic and research programs, the CSU will continue to seek additional private resources and maximize other fund sources available to the university to enhance the quality of its academic programs.

Core Academic Support Needs: In 2008/09, 2009/10, and 2010/11, the last three years of the compact, the state will also provide an additional 1 percent increase to the prior year’s base to address the annual budgetary shortfalls in state funding for other instruction and research support for core areas of the budget critical to maintaining the quality of the academic program—including instructional equipment, instructional technology, libraries, and ongoing building maintenance.

Compact photo 2Enrollment: CSU enrollment plans project enrollment increases of approximately 2.5 percent per year through the end of the decade. This growth rate represents an increase of 8,000 students annually at the CSU. The state will provide funding for this enrollment growth at the agreed-upon marginal cost of instruction as adjusted annually. This rate of growth will allow the university to achieve enrollment levels consistent with earlier projections for this decade. A portion of the funding in the initial years will be used to implement state support for existing summer enrollment on campuses not currently receiving state support for summer instruction.

State funding will not be provided to support an undergraduate student whose credit units within the system exceed a specified threshold above the minimum necessary to complete the degree program, consistent with the policies established by the segments in 2004/05. The CSU will phase in fee policies to charge these students full cost for excess credit units.

Student Fees: The student fee policy contained in the compact assumes that the CSU will retain student fee revenue without a corresponding reduction in state funds which, together with state funds provided each year, will be used to help meet its budgetary needs as well as help the segments recover from the current fiscal crisis.

  • Undergraduate Students. The CSU will develop its annual budget plan based on the assumption that student fees will increase by 14 percent for 2004/05, and by 8 percent for 2005/06 and for 2006/07. Thus, undergraduate fees will have increased by 10 percent per year on average over the three-year period. This fee policy is contingent on the provision of resources for the basic budget at the level called for in this compact. It also is contingent on no further erosion of the segments’ base budget, and it assumes that revenue from student fees will remain with the CSU and will not be used to offset reductions in state support.

    It continues to be the priority of the state and of the CSU to provide financial aid to ensure students are not denied the opportunity for a higher education because of financial barriers. An amount equivalent to no less than 20 percent and no more than 33 percent of the revenue generated from student fee increases is to be used to provide aid to needy students who qualify for financial aid, based on the federal methodology for determining need.

  • Graduate Academic Students. It is critical that the CSU maintains its ability to offer competitive support packages to recruit and retain the best graduate students. The CSU will increase graduate student fees for nonteacher credential candidates by 25 percent and will increase graduate student fees for credential candidates by 20 percent for 2004/05. In view of these proposed increases, fee increases for graduate students will be no less than 10 percent in both 2005/06 and 2006/07. For future years, the university will develop plans to achieve student fee levels in graduate academic programs that consider the following factors: average cost of instruction, average fees at other public comparison institutions, total cost of attendance, market factors, the need to preserve and enhance the quality of graduate academic programs, the state’s need for more graduates in a particular discipline, and financial aid requirements of graduate academic students. Revenue from student fees will remain with the segments and will not be used to offset reductions in state support. 

Compact photo 3Other Budget Adjustments: The state will provide funding for other basic budget costs, such as annuitant health benefits, employer retirement contributions, and changes in debt service, in addition to the base budget support provided each year.

Capital Outlay: In addition to annual increases in state support cited above, the state will provide funding for debt service to support general obligation bonds of $345 million per year from Proposition 55 to be used to finance high-priority capital outlay projects that address seismic and other life-safety needs, enrollment growth, modernization of out-of-date facilities that no longer serve the academic programs they support, and renewal or expansion of infrastructure and other facility systems that cannot accommodate ongoing needs. The state administration will support additional General Obligation bond measures to provide funding of similar magnitude in future years of this agreement. If appropriate, the state may consider the use of lease-revenue bonds for approved projects to maintain a viable building program within prudent state debt levels. It is recognized that the annual level of funding proposed in this compact does not meet all of the university’s capital needs. Therefore, the CSU will continue to use institutional resources to help meet other critical needs unmet by state funds.

One-Time Funds: As the state’s fiscal situation permits, and one-time funds become available, the state may provide one-time funds to address high-priority infrastructure needs, such as capital renewal of facilities and deferred maintenance needed to maintain the segments’ capital assets. For the CSU, at least $141 million per year is needed for systematic capital renewal of existing facilities and utilities, and the deferred maintenance backlog for high-priority projects exceeds $365 million.

Initiatives: Depending on the state’s fiscal situation, there may be initiatives mutually agreed upon by the university, the governor, and the legislature, either through legislation or through the budget process, that may be funded in addition to the basic budget funds provided, as outlined above, in order to meet high-priority needs of the university and the state. In addition, if agreed upon by the governor and the legislature through the annual budget process, the state will fund the fixed cost needs of developing campuses and off-campus centers that are not addressed in the basic funding provisions to the segments outlined above.

The CSU's Commitments to Achieve Outcomes that are High Priorities for the State

Compact photo 4The outcome goals delineated in the compact are focused on academic productivity measures needed to meet the state’s highest priorities within higher education.

Because the compact is developed in the context of several consecutive years of significant budget cuts, the university will need some latitude in the initial years of the compact in terms of accountability expectations. The following states the long-term goals for accountability that the CSU agrees to achieve to the best of its ability.

Enrollment: The Master Plan specifies the mission of each public higher education segment, and defines the pool of high school graduates from which each segment is to admit its students. The Master Plan also calls for the state to provide adequate resources to accommodate enrollment.
Consistent with the Master Plan, enrollment levels at the CSU should match the resources provided. To the extent resources are provided consistent with the compact, the CSU will maintain its commitment to the Master Plan to provide a space for the top one-third of graduating high school seniors wishing to attend and will maintain its commitment to provide access to transfer students.

The university’s highest priority for enrolled students will be to ensure they receive appropriate courses and services necessary for them to succeed in meeting their degree objective in a timely manner.

As funds are provided for normal enrollment growth, the CSU will continue its efforts to achieve on all general campuses a goal of state-supported summer instruction and off-campus enrollment at least equal to 40 percent of the average of fall/winter/spring enrollment by 2010/11.

Each CSU campus has achieved course articulation for general education requirements for community college transfers at all 108 community colleges. The CSU campuses will articulate a lower division major preparation pattern of a minimum of 6 units (two courses) for each high-demand major with all 108 community colleges, and achieve complete agreement by June 2006.

The CSU will continue efforts to maintain progress and improve, where possible, both persistence and graduation rates and time-to-degree.
The state is challenged to improve the overall quality of K-12 instruction and to produce sufficient teachers in the public school system that meet the definition of highly qualified teachers capable of improving student outcomes consistent with the state’s content standards. The CSU is uniquely positioned to ensure that the majority of new teachers will have the skills necessary, particularly in the areas of special education and English and language arts, to meet the demands of rigorous state standards and will continue to improve the quality and efficiency of teacher training sufficient to meet demand.

The CSU has been engaged in outreach programs to improve the academic preparation of K-12 and community college transfer students for three decades and remains committed to working with K-12 schools and all higher education segments to continue its efforts. The CSU agrees to provide no less than $45 million to support the continuation of the most effective programs. Any additional funding provided by the state would be subject to the annual budget act. The resources will be supplemented by matching private sector funds to the extent possible.

Compact photo 5The state continues to place considerable value on high school course work that is intended to prepare California youth for careers that will bolster the state’s economy. To the extent that such courses contain appropriate academic content, such courses should be recognized by the CSU as meeting “a-g” subject requirements. The CSU has in the past and will continue to review and approve college preparatory courses that adequately integrate academic and career-technical course content.

Increasing public service to help meet community needs and fostering a citizenry that is oriented toward performing community service are high priorities for the state. The CSU will strengthen programs to encourage students to participate in community service programs while they are enrolled at their campuses.

Student Fees/Financial Aid: Student fee increases will be approved by the CSU Board of Trustees as it carries out its responsibility to serve the state’s students and maintain educational quality.

Any student fee policy adopted by the CSU Board of Trustees should include the following considerations:

  • Both the state and students must share in funding the cost of providing an education and related support services.

  • To the extent the state provides the resources called for under the compact for basic budget needs, increases in student fees should be gradual, moderate, and predictable, and should be considered in the context of total cost of attendance.

  • Financial aid should be provided to ensure that needy students, as defined by federal program requirements, can afford to attend the CSU.

Maintaining Quality: The ability of the CSU to return to a fiscally healthy position while maintaining quality will greatly enhance the state’s ability to produce jobs and help the economy recover. A high priority will be given to restoring funding for competitive salaries for faculty, staff, and graduate students, and for other core areas of the budget that are critical to the instructional program and that have been significantly underfunded, such as libraries, instructional technology, instructional equipment, and building maintenance.

The CSU will continue to maintain faculty workload policies that are comparable to those at other institutions. The highest priority for the CSU should be to ensure that students have access to the classes they need to graduate in a timely manner.

In the interest of ensuring priority for instruction, the CSU will not increase the proportion of the budget designated for administration above its current level, assuming no significant additional administrative mandates are imposed on the university.

In order to help maintain quality and enhance academic and research programs, the CSU will continue to seek additional funds from other sources to support basic programs.

Compact photo 6Student and Institutional Outcomes: The CSU will continue its efforts to achieve improved student and institutional outcomes and will place a high priority on providing needed classes to reduce the time to degree.

The state administration places a high priority on student success as well as other mission-related measures and seeks to foster greater student and institutional accountability through the inclusion of performance-based outcomes. In order to accomplish this, the state administration, in consultation with the CSU, will seek to remove barriers to these goals.

As with the K-12 system, accountability for these outcomes should be highly visible and public. This will require that timely and reliable data be collected to provide a strong foundation for sound decision making in these matters. Therefore, the CSU agrees to provide a comprehensive single report to the governor, the secretary of education, the fiscal committees of the legislature, the California Legislative Analyst’s Office, and the California Department of Finance by October of each year on the following measures that compare performance for each item for three prior years and the most recently completed academic year:

Efficiency in Graduating Students

  • Number of undergraduate degrees awarded

  • Number of graduate and professional degrees awarded, including detail on degrees awarded in fields that are high priorities for meeting state workforce needs (mathematics, engineering, computer science, and other science fields)

  • Average time-to-degree for undergraduates

  • Total number and percent of graduating undergraduates who have accumulated excess units required for their degree, as determined by the segments, and the average number of excess units accumulated by these students

  • Persistence and graduation rates for freshmen and California Community Colleges (CCC) transfer students

  • Number of undergraduates admitted as freshmen who leave in academic difficulty

  • Number of undergraduates admitted as CCC transfer students who leave in academic difficulty

Utilization of Systemwide Resources

  • Student-to-faculty ratio

  • Instructional activities per faculty member

  • Percent of total state-funded salary and benefit expenditures dedicated to direct teaching staff

  • Rate of change in total state-funded staff salary and benefit expenditures for instructional staff, administrative staff, and other student and public service staff

  • Faculty honors and awards

  • Total state-funded expenditures and staff levels for the CSU Chancellor’s Office, together with rates of change from the previous year

Student-level Information

  • Total enrollment (headcount and FTE), by class level

  • Number of new CCC transfer students enrolled (headcount and FTE)

  • Number of new freshmen enrolled (headcount and FTE)

  • Number and percent of new freshmen and CCC transfer students who were admitted by exception

  • Progress on achieving course articulation agreements with CCCs

  • Number and percent of undergraduates who did not meet the math and English placement exam requirements before entering the CSU

Compact photo 7Capital Outlay

The CSU will continue to provide five-year capital outlay plans outlining the capital priorities for each campus. The plans should include projects that provide safe and accessible learning environments for students and the faculty and staff that serve them.

Content Contact
Budget Development
(562) 951-4560
Chris Canfield
Technical Contact

Last Updated: November 10, 2004