May 13, 2004

 

Dr. Debra S. Farar (Chair, Board of Trustees)

VICE CHAIR (2001-02) and CHAIR (2002-04), BOARD OF TRUSTEES MEMBER, BOARD OF TRUSTEES (1999-2006)

 

Budget Crisis

Thank you for inviting me here today and especially thank you for all you do for the CSU and for the students and people of California.

I am very pleased to have an opportunity to learn about The Association of CA State University Professors and your rich history of 70 years of service to the CSU.

As you may know, my background is in education and one of first things I did as Chair was to initiate a Shared Governance committee which meets around 4 to 6 times a year.

I believe that Shared Gov is first and foremost about effective communication which ACSUP is certainly practicing. So again, I appreciate your willingness to have me here today and your effective work for the CSU.

I am going to speak now about the budget – it is very complex – especially for finance challenged people like myself -

In addition – it is ever changing –

We are very fortunate at the CSU to have a CFO like Richard West and his staff who work day and night along with the Chancellor to make sure that the CSU is protected and they make every effort to keep us informed.

· The governor’s proposed January budget leaves the CSU with a net reduction of $172 million.

· Over the past three years, the CSU has assumed a total net budget reduction of $562.6 million – a 21.6 percent reduction to the CSU’s budget.

· Today the governor is releasing the May Revise – the next significant step in budget process.

On Tuesday, the CSU and the UC have agreed to a new Compact with Governor Schwarzenegger that will provide the CSU with increased funding beginning in 2005/06 and continuing through 2010/11. In the first two years the increase will be 3 percent to our base budget, and in the subsequent years the increase will be 4 percent per year.

This agreement will mean that the CSU will be able to increase student enrollment by 2.5 percent per year beginning in 2005/06, and we can begin to stem the decreases we have experienced the past years.

We still have a difficult year ahead of us, 2005/05, but with the Compact, there is a brighter future for the entire California State University family.

· And we will not face additional budget cuts beyond the reduction proposed in the governor's January budget as we feared.

· We were also concerned about the ability of the CSU president’s to apply cuts where they believe it is most appropriate, and as far away from the classroom as possible.

· The CSU will take all its cuts in enrollment reduction (about 23,000 students) so that it can maintain quality for existing students.

· Student access is a special concern to me as an alumna of the CSU system.

I came from a family where no one had ever been to college before and with no ability to pay for college. I choose the CSU at Northridge (Valley State) because it was near my home and because I could afford the tuition if I worked part time. I believe that I am where I am today because of the opportunity given to me by the CSU and my hope is that every student will have that opportunity.

· The gap between the cost of educating a CSU student and the amount of General Funds invested per full-time equivalent student has grown from $900 to over $1,900 in four years.

· This says to me that the state’s commitment to affordable, accessible higher education and the Master Plan is at risk.

· Aside from its impact on individual students, the state’s declining investment in the CSU has reduced our ability to:

o Prepare well-trained employees;

o Create new jobs in our economy;

o Increase state revenues (through higher wages and increased consumer spending)

 

· The CSU has planned several scenarios to mitigate these cuts, including raising student fees, reducing enrollment, freezing vacant positions and reducing positions.

· Taking a longer view, we are currently looking at long-term student fee policy

· We have reached a general agreement that undergraduate student fees should be adjusted on an annual basis over a period of years until they reach a certain percentage of the average cost of education per full-time student.

· It will be difficult to set a percentage, but we believe that the percentage level range should be between 25 and 33 percent.

· After that, fees would be adjusted annually based on the California per-capita income or the Higher Education Price Index.

· This will let students and their families plan better for college costs over the years.

Although most of the compact does not apply to 2004/05, student fees are mentioned specifically. The compact proposes a three-year level of fee increases for CSU and UC undergraduate students that will average 10 percent in each of the coming three years. In 2004/05 student fees will increase 14 percent, and in 2005/06 and 2007/07, they will increase 8 percent each year.

· During this budget crisis, we must continue to emphasize that the California State University is the state's economic engine.

· We must remind policymakers that more educated workers means higher tax revenues, greater productivity and less reliance on government services.

· The CSU is an investment, not an expense.

· Also, the CSU has done everything in its power in the last several years to manage hundreds of millions of reductions and unfunded costs during a period of increasing enrollment.

· Our priority will continue to be to provide "authentic access" to students – meaning that they will be able to get the course sections and services they need to graduate on time.

· We will focus on maintaining the level of quality that Californians expect of and demand from the CSU.

As I stated, the budget of the CSU is very complex and ever changing – we do have as part of our web page "Budget Central" that is very current and informative.

Effective Trustees are ones that listen according to the Association of Governing boards to I would like to do that now.

Also, in these tough budget times my ear is about all I can offer.

At this time I would be happy to take any questions and also I would like to hear your thoughts.

 

 

HOME