2009/10 Support Budget II

2009/2010 Budgetary Challenges

Core 2008/09 Compact Recovery, $116.7 Million

Ongoing restoration of a portion of the Compact funding foregone in 2008/09 is requested for the 2009/10 fiscal year. The CSU regards this portion as “core Compact funding” under the Higher Education Compact with the governor.

The 2007/08 Budget Act provided the CSU the full complement of funding promised by the Compact, including the basic budget support and core academic support needs components. On the basis of this funding commitment, the CSU entered into multiyear collective bargaining agreements with the California Faculty Association and other employee bargaining groups that provided multiyear incremental salary increases. These increases were agreed upon to keep employee salaries ahead of changes in the cost-of-living, and to close longstanding and documented salary “gaps” with similar employee groups at comparable institutions. Salary increases are necessary in order for the CSU to stay competitive in the recruitment and retention of highly-qualified faculty and staff.

Based on CPEC’s 20 higher-education comparison institutions, the 2008/09 projected faculty salary lag is 18.5 percent, and the CSU presidents salary lag is 46.7 percent. Also, CSU Human Resources 2008/09 staff market analyses indicate that many classifications have double-digit salary lags, including physicians, health care support, and various technical and administrative support groups.

The 2008/09 CSU support budget plan approved by the CSU Trustees included Compact level funding with a total of $154.3 million (5.08 percent) for employee compensation increases, consistent with collective bargaining agreements. The 2008/09 Budget Act, however, does not provide any increase in state funding for the CSU. The existing collective bargaining agreements include clauses that lead to reopening negotiations on salary and benefit increases in the event that the state does not provide the annual increase in funding called for by the Compact. The lack of a funding increase in the 2008/09 Budget Act denies the budgeted resources for the CSU to provide salary increases previously negotiated and scheduled to take effect in 2008/09.

The CSU support budget plan for the 2009/10 fiscal year assumes a resumption of the state’s funding commitments for 2009/10 under the Compact, and the budget plan includes $173.3 million (5.5 percent) within Compact funding for employee compensation increases in 2009/10. This necessary augmentation, however, cannot by itself keep employee compensation on pace to reach competitive levels. The CSU needs the additional $116.7 million augmentation requested here in order to avoid losing ground in its efforts to close salary lags and reach competitive levels. As shown in the following table, the $116.7 million additional funding requested is based on the compensation increase in the CSU 2008/09 budget plan ($154.3 million) less the amount allocated from the 2008/09 student fee increase toward the full-year (2008/09) cost of obligatory provisions with an effective date of June 30, 2008, in the bargaining agreement with the California Faculty Association ($37.6 million).

Core 2008/09 Compact Recovery

2008/09 Budget Plan Compensation Increases $154,310,000
2008/09 Funded* 37,590,000
2008/09 UNFUNDED COMPENSATION $116,720,000
* This provision is not subject to reopening under the contract and the full cost is being paid, notwithstanding the absence of Compact funding in 2008/09.