Chancellor's Recent Speeches

Remarks by Dr. Charles B. Reed
Chancellor, California State University
CHESS VIII Conference
Sacramento, CA
February 22, 2003

Thank you, Artemio.

I see that the CHESS conference theme is "Investing in Our Future." Your education is an investment in your future - and it is one of the best investments you will ever make. So I'd like to spend the majority of my time talking about how we finance that investment.

I have been telling people that the CSU's top three concerns right now are the budget, the budget, and the budget.

We took some very painful budget cuts during the current year. The mid-year cuts in December were especially painful. Altogether for 2002/03, our cuts and unfunded cost increases totaled $125.4 million.

Those dollars are now gone.

And according to the governor's 2003/04 budget proposal, the CSU is going to be feeling even more pain.

On the negative side, we are looking at a total of $447.7 million in cuts and cost increases. On the positive side, the governor has proposed $45 million to partially fund our overenrolled students. Plus, he proposed a 25 percent fee increase for undergraduate students and a 20 percent increase for graduate students.

When you pull all of the positive and negative numbers together, the net result amounts to a $260.7 million reduction or a 10 percent cut in the CSU's budget.

Then there's the issue of student enrollment. The CSU has grown for eight years in a row and is currently at a record enrollment of about 407,000 students. We're in the middle of a phenomenon that we call the "double whammy," which is the combination of shrinking budgets and a rising enrollment demand. This means that we have to do more with less.

For next year, the governor is proposing to fund the CSU for a 5 percent enrollment growth. Altogether, we are expecting a record enrollment of 424,000 students in 2003/04.

But our admissions process is timed so that we are admitting those students now - not in July or August. That's how our planning cycle works.

The only way we can serve these students is if we have the following:

  • Effective management of instruction and services across the entire university
  • The funding for new enrollment
  • A fee increase PLUS financial aid

Now - before we talk more about a fee increase, let's take a step back and look at the big picture.

If we don't get the funding for the new enrollment growth and the new student fee revenue, it will be devastating for the CSU. It will mean painful and difficult decisions such as program cuts and layoffs.

And worst of all, we may repeat the situation of the early 1990s. During those years, we were not able to offer our students the classes they needed. We lost about 50,000 students, many of whom left in frustration.

We cannot repeat this situation at a time when our enrollment demand is growing. And we do not intend to compromise our commitment to quality and access. So we are going to face some tough choices ahead.

Fee Increase

Now let's talk about a fee increase. This discussion is especially difficult at a place like the CSU where we have a commitment to remain affordable for students. But I appreciate all of the time that you and your fellow student leaders gave to the fee increase discussion in December.

The CSU is here to serve students. We have students' best interest in mind. We are proud of how we are able to serve a diverse student body, especially those students who couldn't otherwise afford a college education. We would not raise fees to fund prison guards or other programs in state government.

But we believe we will need to raise fees because it is the only way we can preserve access and provide the classes that our students need to graduate.

Even if the fee increases are approved according to the governor's proposal, the neediest students will not suffer.

One-third of the revenues raised from the fee increases will go toward financial aid. The Cal Grants and the State University Grants will reflect a dollar-for-dollar increase. That will help approximately 140,000 CSU students.

Also, our fees will remain among the lowest in the country. Arizona, one of the other states that has a long tradition of affordable higher education, is looking at a $1,000 tuition increase. Here at the CSU we are talking about a $396 fee increase for undergraduates.

And last but not least - it's important to remember that low fees do not always equal more access. If fees are so low that we cannot hire professors and offer more sections, we cannot provide access.

Consultative Process

In difficult times like these, it is essential to have a plan. All good leaders know this. And you have to have that plan in hand when you enter into negotiations on the budget. You can't just go in there and say, "Cut everyone else but me." You need a plan for where the additional dollars are going to come from.

At the CSU, we want to make sure that we are making all of these decisions and crafting our plan in the best possible way for our universities. That is why we are going to make this a consultative process. We are taking steps to make sure that every group's voice is heard.

Our System Budget Advisory Committee is going to meet monthly this spring. In fact, they met again yesterday.

The Finance Committee of the Board of Trustees will meet monthly this spring.

And on March 14, we are going to have a systemwide Budget Summit that will include campus presidents, student leaders, and faculty leaders from the Academic Senate.

So we are going listen to all sides of this story. And we are going to work together to manage our budget. We all need to be on board with this plan so that we can do the job that we came here to do.

In the months ahead, we are going to have to work together in Sacramento - cooperatively - to support the CSU and to make sure our that funding is preserved and that the cuts go no deeper.

No matter what, our priority remains the same: To provide California's students with access to a high-quality education.

I want to thank all of you for the spirit of cooperation and thoughtfulness that you have brought to these discussions.

Thank you again for inviting me here today. I will be glad to take any questions you may have.

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