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California State University, Long BeachCalifornia State University, Long Beach
CALIFORNIA STATE UNIVERSITY, LONG BEACH
TO:F. King Alexander, President
FROM: Donald Para, Provost and Senior Vice President for Academic Affairs
Mary Stephens, Vice President for Administration and Finance
Co-chairs, 2013-14 Resource Planning Process (RPP) Task Force
DATE: June 24, 2013
SUBJECT:

2013-14 RPP Task Force Budget Recommendations

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The purpose of this memo is to transmit the budget recommendations of the 2013-14 Resource Planning Process (RPP) Task Force. The final state budget and CSU funding will not be known until later this summer, but the RPP Task Force believes it is important to communicate budgetary plans to the campus based on what we currently know.

In the past decade, CSULB has faced challenging budget circumstances that resulted in substantial reductions to the resources of our operating divisions. During this time, the campus prioritized our academic purpose, graduating students with highly-valued degrees, minimizing the damage to academic quality and continuing to support the schedule of classes and student progress to degree. Instead of losing ground on retention and graduation rates, the campus posted the highest graduation rate in campus history with the graduating class in 2012. Early indicators are that rising retention will lead to further increases in graduation rates. This is a remarkable achievement during this challenging period of which the campus can be proud.

As we move forward, we face impending challenges:

  • More than ten percent of 2013-14 new resources from the Chancellor's Office are being awarded on the basis of competitive proposals.
  • We expect technology to continue to drive changes in pedagogy and service delivery.
  • Future performance-based funding expectations being proposed by the governor will require continued increases in retention and graduation rates and a new focus on time to degree and four-year graduation rates.

Executive Summary

The Governor’s May Revise Budget contained no changes for the CSU budget from his January proposal. The following summarizes our understanding of the budget situation:

  • The governor’s 2013-14 budget proposal invests new, discretionary General Fund resources in higher education, reversing a trend of decreased state support over the past several years.
  • The governor’s budget proposal includes $125 million to replace lost revenue from the student fee rollback in fall 2012. Although this amount is $7 million less than the estimated lost revenue for the CSU, the impact to CSULB’s budget is manageable because of our conservative planning.
  • The governor’s budget proposal also includes $125.1 million in additional funding. Some of this new funding is for mandatory cost increases such as healthcare, a modest compensation pool, and enrollment increases.
  • The governor’s budget proposal has also set aside $17.2 million of the $125.1 million in additional funding for technology enhanced learning, student advising and course redesign to improve access to classes and students’ progress to degree. This $17.2 million will be competitively allocated to campuses based on a request for proposal (RFP) process.
  • CSULB’s estimated share of the discretionary funds beyond mandatory cost increases, compensation, and the $17.2 million set-aside is $4.4 million. Of this $4.4 million, $1 million has been reserved to address campus high priority needs to be determined by the president and the vice presidents. The remaining $3.4 million has been tentatively allocated to the operating divisions on a pro rata basis to fund operational requirements.

Campus budget planning by RPP has been completed based on this estimate of $3.4 million, the best estimate that was available during the spring.

Background

After several consecutive years of extremely challenging fiscal circumstances, California appears to be experiencing some degree of economic and budget recovery. With tough spending cuts enacted over the past several years and temporary revenues provided by the passage of Proposition 30, the state budget situation for 2013-14 is favorable. The governor’s budget proposal reinvests in both K-12 and higher education. The goal is to provide all students in California with a high quality affordable education so that they all have the opportunity to succeed professionally.

Current Budget Outlook

Governor Brown recently released his May Revise budget for the coming year. The May Revise now projects slightly lower state revenues from those projected in the January budget proposal. Despite this deterioration in state revenues, the May Revise does not include any changes to the CSU budget for 2013-14.

The May Revise also maintains the governor’s commitment to a multi-year stable funding plan for higher education. Under this plan, which is not a commitment, the CSU would receive up to a 20-percent increase in General Fund appropriations over the next four years (2013-14 through 2016-17). In exchange, the CSU is expected to freeze resident tuition for that same period to ensure affordability for students and their families. Additionally, the CSU is expected to achieve the following priorities: improve graduation rates; increase the number of transfer students from community colleges; increase the number of degrees completed, particularly by low-income students; and reduce the cost per degree. The multi-year funding plan increases funding and strengthens accountability to encourage the CSU to become more affordable and to maintain quality and access over the long term.

As of this writing, the exact performance expectations tied to the annual funding increases are still under discussion. The CSU is actively engaged with the governor and legislative leaders to ensure that an adopted plan has measures and targeted expectations that are realistic and appropriate to the CSU.

Preliminary Campus Budget Outlook and Planning (Spring Term Planning)

While we do not know the final budget for CSULB, we are assuming receipt of some discretionary funding this coming year. We know the CSU has set aside funding for specific purposes. This includes traditional mandatory cost increases related to health benefit costs, energy rate changes, and new space. Funding for a compensation increase pool is subject to the collective bargaining process. Funding to alleviate “bottleneck” courses and for student access and success initiatives will be allocated to campuses based on a competitive process. Beyond these set-asides, CSULB is expecting to receive about $4.4 million in discretionary funds partly due to an increase in our enrollment target. Of this $4.4 million, $1 million has been reserved for campus high priority needs to be determined by the president and vice presidents. The net amount of $3.4 million in campus discretionary funds was the basis for RPP budget planning this spring.

While we are grateful to be receiving a funding augmentation, this report would be remiss not to include a reminder of recent budget reductions imposed on operating divisions. CSULB operating divisions were collectively assessed budget cuts of $6.8 million in 2012-13 and $9.9 million in 2011-12. Fortunately, we have been utilizing onetime restoration funds received in fall 2010 from Governor Schwarzenegger to help mitigate the budget problem. While this one-time restoration funding has allowed for a “soft landing” from these recent budget cuts, we must be mindful that the use of onetime resources to mitigate permanent reductions may have masked some of the impact of the reductions.

Results of Divisional Budget Planning

The projected $3.4 million in campus discretionary funds were allocated to the operating divisions on a pro rata basis. The divisions were asked to develop expenditure plans for their share of discretionary funds. Divisions were asked to tie expenditure plans to the Campus Strategic Priorities and Goals. Below is a summary at an aggregate level:

  • The divisions have embraced the campus priority “graduate students with highly valued degrees,” making students our highest priority.
  • The majority of discretionary funding will go towards: increasing tenure track hiring and RSCA funding to strengthen academic programs; expanding student engagement and innovative instructional methods; improving progress to degree and graduation rates; providing adequate schedule of classes and support services; and improving student health and wellness.
  • Other divisional priority areas include: refining our new approach to admissions; supporting innovative technology; conducting a major comprehensive campaign; and hiring essential staff positions.

Divisional plans are very preliminary and are based on our best estimate of available campus discretionary resources. Both the amount of campus discretionary funds and details for the use of these funds by divisions may change by the time we have a final budget later this summer. Plans may also change depending on how much funding and for what purpose CSULB receives some of the $17.2 million designated for “bottleneck” courses and student access and success.

Recommendations of the Resource Planning Task Force

  • RPP recommends that the $3.4 million in discretionary funds be allocated to all campus operating divisions pro rata as prescribed in planning.
  • The $1 million of campus discretionary funds reserved for high priority needs should be allocated as determined by the vice presidents and the president.
  • Since this $1 million is considered permanent base funding, any one-time uses of these funds would be available for allocation the following year.

A summary of divisional budget plans and the proposed allocation of funds for campus high priority needs are contained in the Campus Budget Plans section of this report.

Enrollment

For 2013-14, the campus funded enrollment target has been established at 27,198 resident FTES, an increase of 323 FTES or 1.2 percent over our 2012-13 target. At this time, the campus enrollment plans for 2013-14 are based on our resident FTES to come in approximately 2.0 percent over target for 2013-14. This increased enrollment contributes positively to our net budget.

Due to our new approach to admissions based on major-specific criteria for all academic programs, there is slightly more uncertainty about our enrollment performance. However, because of effective enrollment management, indicators are that we will be close to projections.

Concluding Thoughts

The Task Force recognizes the utilization of one-time restoration funds from 2010 has mitigated the impact of budget reductions implemented over the past two years. As the one-time restoration funds are now depleted, effects of budget reduction actions may be felt in 2013-14.

Anticipated budget increases by no means fully offset severe reductions we have experienced. The phrase, “The New Normal,” is being widely used to describe a situation of reduced but stable funding. This phrase characterizes our expectations for the coming years. At the same time, the world around us and the needs of our students continue to shift; we cannot stand still. New initiatives such as technology must be pursued despite limited resources. The RPP Task Force perceives that the current moment is a time of significant opportunity to accomplish some campus priorities and goals with the projected discretionary funding that we have not seen in several years.

The Task Force commends all divisions for their thoughtful, creative and proactive efforts. Essential services have been examined and efficiencies have been maximized. While necessary, the Task Force recognizes that reduction strategies will force the elimination of many less critical services and will slow the delivery of crucial services to students and campus constituents. Our university, however, has made virtually all of the reductions that can be made without beginning to affect core mission activities.

The Task Force would like to acknowledge the continued hard work and resolve shown by the entire university community. CSULB remains a vital, premiere institution of higher education. This would not be possible without the energy, creativity, dedication and positive attitude of our faculty, staff and students.

Copy to:
  • Associated Students Officers
    All CSULB Employees

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