2014/15 Executive Summary

CSU/Higher Education Funding — Recovering from Crisis

California’s near-term and long-run prospects for economic recovery and prosperity, and for social cohesion and harmony, depend on the ability of its higher education institutions to sharply boost the numbers of Californians attaining higher education degrees. The passage by the voters of Proposition 30 allows the state to invest once again in the California State University. The CSU’s 23 campuses are the source of almost half the bachelor’s degrees awarded each year in California and nearly one-third of the master’s degrees. Yet years of fiscal crisis have constrained the CSU’s capacity to admit students. In the fall 2012 term, the CSU had to deny admission to more than 20,000 eligible California undergraduate applicants. While the state still faces fiscal uncertainties, the CSU has legitimate funding needs in order to carry out its critically important mission for California of student access, success and completion. This 2014/15 support budget request is tempered by recognition of the state’s ongoing fiscal challenge, yet represents a credible statement of the university’s key funding needs.

During a half decade of state fiscal crisis, state support fell to a low of $2.0 billion. As evident in the graph below, “State Appropriation and California FTES Served from 1999/2000 to 2013/14,” this amount was nearly one-third below the peak level of state support of $2.97 billion in 2007/08. A funding recovery began with the enacted 2013/14 state budget. Nevertheless, the current level of state funding is less than what was provided in 2000/01 (13 years earlier) when the CSU General Fund appropriation was $2.47 billion. This comparison makes no adjustment for inflation. Moreover, in 2013/14, the CSU is teaching almost 58,000 more California resident, full-time equivalent students (FTES).

State Appropriation and California FTES Served from 1999/2000 to 2013/14

State Appropriation and California FTES Served from 1999/2000 to 2013/14

Fiscal Year Full-Time Equivalent Students (FTES) CSU State Allocation
(in billions)
99-00 281,782 $2.25
00-01 290,554 $2.47
01-02 316,396 $2.61
02-03 331,353 $2.68
03-04 331,704 $2.49
04-05 321,339 $2.45
05-06 334,343 $2.62
06-07 340,394 $2.79
07-08 353,915 $2.97
08-09 357,222 $2.87
09-10 340,303 $2.35
10-11 328,155 $2.79
11-12 341,280 $2.00
12-13 343,226 $2.06
13-14 348,000 (est.) $2.33

The prolonged funding crisis forced the CSU into an increased reliance on tuition fees. However, increased tuition fee revenues did not fully cover state funding losses. For example, increased tuition fee revenues offset less than half of the $750 million state funding cut for 2011/12. Tuition fee rates are currently the same as they were in 2011/12, and this budget plan does not envision any increase for 2014/15. This means that 2014/15 will be the fourth consecutive academic year with the same tuition fee rates in place at the CSU.

CSU campuses and the Chancellor’s Office responded to the fiscal crisis with a number of cost-saving measures, building on synergies achieved as a result of the success of recent initiatives such as implementation of the common financial system. This effort saves about $1 million per year by eliminating duplicative technology upgrades and maintenance at 23 campuses, and the consolidation of financial statement information was simplified. A similar merging is underway for the disparate campus personnel and payroll systems currently supporting the CSU. In addition, shared services are being implemented that combine police services, information security, and network and data center operations across multiple campuses. Plans to implement system-wide purchasing and accounts payable shared services are moving forward, as are strategic sourcing efforts that exploit the aggregate purchasing power of the CSU and redirect purchases to less costly, but equally beneficial commodities. Campuses also are consolidating and co-locating administrative offices and functions in an effort to reduce administrative overhead. Cost savings and efficiencies also are being sought through the coordination of campus academic calendars across the CSU. These are just a few examples of appropriate steps being taken to do more with less.

In many cases, however, the measures that have been taken to reduce spending cannot be sustained indefinitely without negative impacts to the quality of instruction and services to students. This budget plan is based on continuing those cost-reduction strategies that are sustainable, while restoring resources where they are most needed to provide access and quality programs and services to students.

Studies by the Public Policy Institute of California (PPIC) have projected that California will face a shortage of approximately one million college-educated workers by 2025 unless very strong initiatives are undertaken to boost the production of college graduates. A 2009 PPIC report finds that “...colleges and universities in California would need to increase the production of baccalaureates by almost 60,000 per year (about 40 percent above current levels) to meet projected economic demand by 2025.” Any hope of addressing this urgent problem depends on the CSU, which currently awards almost one-half of all baccalaureate degrees in the state and almost one-third of all master’s degrees. The PPIC reports identify the critical economic need for state investment in higher education. As the 2009 PPIC reports observed, “as the state’s economy has become increasingly reliant on highly skilled workers, a confluence of trends—the retirement of baby boomers, and demographic shifts toward groups with historically low rates of college attendance—makes these investments all the more crucial to the state’s continued economic success.”

Public Policy Institute of California

April 2009 Report on Closing the Gap: Meeting California's Need for College Graduates

Public Policy Institute of California: April 2009 Report on Closing the Gap: Meeting California's Need for College Graduates

Projected Supply
of College
Graduates to 2025
  Economic Demand
for College
Graduates to 2025
8,100,000 1.0 Million Gap 9,100,000