We are pleased to submit the report of the 2005-06 Resource Planning Process (RPP) Task Force, including the planning parameters that shaped this year's process and recommendations.

Executive Summary

CSULB has now navigated through three very difficult budget years. Despite budget challenges in these years, the campus has improved graduation and retention rates and sustained the quality of the student experience, support for faculty, the technological infrastructure and our physical campus. U.S. News and World Report magazine recognizes these improvements by naming The Beach among "America's Best" colleges and universities. The campus deserves to take pride in these accomplishments.

The budget outlook for 2005-06 is the most positive it has been in several years, and much better than we had expected just months ago. California will continue to face a budget dilemma for some years to come, however, because the proposed state budget is balanced in part with controversial spending cuts, a continued reliance on temporary solutions and no general tax increases. Nonetheless, the CSU anticipates an increase in funding due to the Governor's support for a new Higher Education Compact Agreement that is intended to bring stability and predictability to our budget.

The RPP Task Force has developed a fiscally responsible budget strategy that continues to protect instructional capacity by maintaining a schedule of class offerings that enables orderly progress toward degree for our students. The plan also provides funding to gradually rebuild budgets in non-instructional areas that have suffered severely over the past few years. High priority has been given to restoring a steady workforce and to maintaining the quality of services to students, faculty and staff.

Although the outcome of the final budget cannot be predicted with certainty, given the May Revision we remain cautiously optimistic that the budget proposed by the Governor will survive the legislative process. In any event, a reasonable contingency reserve has been provided to allow for some deterioration in the CSU budget.

Governor's Proposed Budget and May Revise

While California's economy continues to improve at a moderate rate with revenues above earlier forecasts, the State still faces structural budget problems due to expenditure entitlements. To achieve a balanced budget in 2005-06, the Governor has proposed expenditure reductions to nearly every sector of state government and continues to rely on temporary solutions in order to avoid tax increases. Consequently, without serious budget reform, the structural imbalance will continue for the foreseeable future.

Despite this difficult situation, the Governor has proposed increased funding for the CSU. Last year, the Governor announced his intent to support a Higher Education Compact, which would provide the UC and the CSU with increased base funding and enrollment growth funding through 2010-11, and would allow the CSU system to retain the proceeds from scheduled student fee increases without a corresponding general fund offset. Similar agreements have existed with prior administrations and they served higher education very well. Given the State's current fiscal climate, such an agreement is particularly valuable in providing fiscal stability that otherwise would not exist.

An increase of $216 million is proposed for the CSU; this includes funding for systemwide enrollment growth of 2.5% or 8,103 FTES, and $88 million for a 3.5% compensation pool effective July 1, 2005. The budget also provides for mandatory cost increases for health benefits, new space, risk management, and energy.

On May 13, 2005, the Governor released the May Revision to the 2005-06 Budget. The revised budget plan incorporated a $4 billion improvement in state revenues. Since the revenue improvement is largely in the form of temporary dollars, however, the Governor has proposed that most of the expenditures also be one-time in nature. There were no reductions recommended for the CSU.

Enrollment in 2005-06

Consistent with the proposed 2.5% enrollment increase for the CSU that is included in the Compact, CSULB expects to receive an enrollment target of 27,551 FTES -- an increase of 655 FTES. The actual enrollment increase may be slightly greater than this, since indications are that enrollment demand will be particularly strong in 2005-06. CSULB again leads the system in applications (over 55,000 total applications, including about 39,000 from first-time freshmen), and the number of "statements of intent to enroll" by admitted students is exceptionally high this year.

A portion of the additional campus enrollment target (1,575 FTEs) has been assigned to summer, with the balance to the academic year. The number of enrolled transfer students should be about 4,000 and the freshman class may be somewhat higher. While admissions to teacher credential programs are expected to decline this coming year due to the drop in demand for teachers, graduate enrollments are expected to remain steady or increase slightly over last year.

Campus Budget Strategy and Recovery Plan

In recognition of the poor budget outlook over the past several years, the University has operated conservatively and accumulated reserves of one-time temporary funds as a hedge against further deterioration. Given the substantially improved outlook in recent months and on the assumption that funding will improve under the Higher Education Compact, the RPP Task Force has developed a strategy to use these temporary reserves to permit expenditures beyond the base budget in the current year in order to protect our instructional capacity and to buffer some of the recent budget cuts in the non-instructional areas. There are three key components of the strategy:

• The only source of new general fund discretionary dollars allocated to the campus are those directed to enrollment growth. The marginal cost funding for enrollment is intended to cover all costs of operations on the campus. After providing base funding for the additional faculty needed to handle the planned increase of 655 FTES related to our enrollment target next year, the RPP Task Force recommends committing the remaining discretionary funding to the campus budget recovery plan.

• Both base and non-base dollars are recommended for allocation to preserve instructional capacity, and to provide relief for non-instruction areas to partially recover budget cuts of the prior three years.

• As the campus receives new enrollment funding in future years, the plan will eventually substitute base funding for temporary funding until the base budgets are restored to 2003-04 levels and our dependency on temporary funds is eliminated.

The RPP Task Force recognizes that we cannot sustain indefinitely a budget strategy that relies on the use of temporary funds. We are confident, however, that we will be able to reduce our dependency on temporary dollars by applying new discretionary funds over the next few years to restoring base budget cuts.

Anticipated Improvements to Campus Operations

The RPP Task Force commends the divisions for the responsible budget plans they presented this year. The operating plans reflect stability, but also renewal and enhancement of services and programs. Some of the more significant priorities for restoration include increases in the number of tenure/tenure-track faculty recruitments, full-and part-time support staff hires, extended hours of evening and weekend services, and increased operating and equipment budgets.

Contingency Planning

Although the May Revision did not alter our basic planning assumptions, some risk remains until the Governor and the Legislature reach a final budget agreement. Even so, the plan we have developed contains sufficient contingency to sustain a modest deterioration without disrupting our planning strategy or fundamentally affecting our ability to serve students and operate effectively.

Campus Strategic Planning

The document, Campus Goals for 2005-2008, identifies all-university priorities for the upcoming three-year planning period and shapes annual budget decisions aimed at achieving the campus mission. Goals are the collaborative effort of the vice presidents, the Chair of the Academic Senate and the Chair of Staff Council. The Director of Strategic Planning facilitates. Campus goals were incorporated into the division plans submitted to RPP. Each campus division also pursues division-specific goals that contribute to fulfilling the campus mission. The Task Force commends the divisions for continuing to advance campus goals while coping with budget reductions.

CSULB has achieved many of the goals that were identified in past years. Being named among "America's Best Universities" by U.S. News and World Report was the result of a decade of sustained efforts on the part of many people across the campus working to improve retention and graduation rates, the quality of the student experience, support for faculty, the technological infrastructure and the physical campus. It is notable that this recognition was achieved during a period of budget retrenchment.

CSULB now aims to achieve still greater distinction in four areas: student success, academic quality, service excellence, and campus environment. The stabilizing state budget should facilitate our efforts to realize these goals. The current set of Campus Goals is included in the Appendix of this report and is available on the University's Strategic Planning website.

Conclusions

The RPP Task Force is optimistic that the proposed increase in the CSU budget will survive the final budget deliberations and that we will be able both to meet our enrollment commitments to our students and to advance our budget recovery strategy to restore programs and services throughout the campus for the foreseeable future. The main longer-term challenge for the Legislature and the Governor will be to manage budgets in the face of revenue fluctuations and rapidly-changing fiscal circumstances. The Governor has called a statewide special election this coming November. The ballot will include budget-reform initiatives designed to contain future spending growth and prevent state deficits.