Chancellor

The California State University Employee Update
Wednesday, December 14, 2011

State Cuts Another $100 million from CSU’s Budget

State funding support for the California State University will be cut an additional $100 million this year as a result of lower-than-projected state revenues. The cut will be permanent.

The CSU has already sustained a $650 million permanent reduction in the current budget. The budget signed by the governor in June relied heavily on revenue projections to close an estimated $26.2 billion state budget gap and included the possibility of an additional $100 million cut to the CSU if those projections were not met.

The additional cut reduces the university’s funding to $2 billion and is a 27 percent year-to-year reduction in state support. It is the lowest level of state support the system has received since 1997-1998, but the university is serving an additional 90,000 students.

"It is disheartening when your budget is cut by an initial $650 million, but to face an additional $100 million reduction mid-year makes things extremely challenging," said CSU Chancellor Charles B. Reed. "We were aware this was a possibility, and our campuses have been planning accordingly. However, the uncertainty of the overall fiscal outlook for the state is not encouraging, and the CSU has run out of good options."

The CSU had previously announced that it will not raise tuition mid-year, even with the additional $100 million cut. Instead, campuses will take short-term measures such as drawing on one-time reserves and delaying equipment purchases and facility maintenance work.

In the next fiscal year, however, extremely difficult tradeoffs will be considered, including the possibility of additional cuts to academic programs or further increases in tuition.

The CSU has instituted a number of cost-savings measures the past several years including decreased enrollment, employee layoffs and furloughs, deferred maintenance, travel and purchasing restrictions, and increased use of information technology, among others.

In two of the last four fiscal years, state funding to the CSU has been dramatically reduced, forcing the CSU Board of Trustees to approve sizable tuition fee increases. However, increases in revenue from tuition hikes-- after setting aside one-third for financial aid--have not kept pace with state funding cuts. For the current fiscal year, tuition increases raised approximately $300 million, but CSU's budget has now been cut by $750 million.