You might be interested in California's disfunctionality. From: CSU, Chico President Paul Zingg Sent: Thursday, July 12, 2012 1:29 PM To: All Announce (restricted) Subject: Budget news update
To: University Community From: Paul J. Zingg, President Subject: Budget news update Since the end of the spring semester, there have been several developments regarding the CSU budget situation for 2012-2013. Even though this is mid-summer, I'd like to bring you up-to-date on what we know and what the implications are moving forward for both the system and the campus. The bottom line, as I will explain, is an ever volatile, uncertain and complicated budget situation for public higher education in California. Its elements include: * The $750 million reduction in state General Fund support that the CSU has already experienced over the last eighteen months (slightly more than $30 million for our campus alone); * Competing ballot measures in November that would raise taxes for K-12 education (and in one measure community colleges), public safety, child care and other purposes, but not for the CSU and UC; * Threats from the governor that, if his ballot measure does not pass, another $250 million (up from $200 million in his initial January budget message) in further General Fund cuts will hit the CSU (that's another $10 million for our campus); * Intense public scrutiny of executive compensation arrangements in the UC and CSU, tuition increases, faculty workloads and any actions that might reduce access; * Threatened cuts in State University Grants for both undergraduate and graduate students; * Heightened accountability demands throughout the state for higher education to demonstrate greater efficiency, effectiveness , transparency, flexibility and worth; * An intense political environment in Sacramento that has all but shut down prospects for bipartisan support for higher education. It is not a pretty, or encouraging, picture. All the more so because, time and time again, for over 150 years, higher education has enabled California to invent and re-invent itself along the simple proposition that the road to prosperity, social justice, opportunity and hope is built upon what happens in our state's colleges and universities. That was the promise and, indeed, the performance of the 1960 Master Plan, a brilliant and bold commitment to the future. Yes, to the future. Now, this is what our immediate future faces. Governor Brown has stated that if his ballot measure fails to pass in November it will "trigger" another $250 million reduction in state General Fund support for the CSU. This will occur even if the other ballot measure passes and the governor's does not. Currently, only the governor's budget measure is polling above 50% approval, but just barely. Failure of the state to accomplish enough savings and generate enough revenues to meet the governor's assumptions in his budget for 2012-2013 could bring budget cuts whether or not his ballot measure passes in November. Currently, revenue projections are lagging behind projections as the state (and national) economic recovery appears to be slowing again. The final budget for 2012-2013 contained a surprise element in the form of a trailer bill that the governor and the Democratic majority in the Legislature supported to "buy out" a fee increase for students in both the CSU and UC. If the governor's ballot measure passes in November, he will direct $125 million to both the CSU and the UC so that these systems will not impose a tuition fee increase. But these funds will not be forthcoming until 2013-2014. And, further, in order to get these funds, if they become available, both the CSU and the UC must roll back fees in 2012-2013 to 2011-2012 levels. There are many problems with this proposal. First, the buy-out funds would only come if the governor's ballot measure passes. And, of course, we won't know if that is the case until November, when we are well into our fall semester and new fiscal year. Second, the buy-out amount takes effect in 2013-2014, although the governor insists that neither system increase fees in 2012-2013. This means that, in order to sign on to the possibility of a $125 million fee buy-out in 2013-2014, the CSU must forfeit $132 million in new tuition fee revenues in 2012-2013. These are fees that our campuses are already collecting as a result of the Trustee-approved 9% fee increase for 2012-2013. Third, if the governor can identify $125 million for a fee increase buy-out, why can he not direct that $125 million to both the CSU and the UC in order to begin some kind of recovery for, and re-investment in, the state's systems of higher education? Fourth, if the CSU Board of Trustees endorses the governor's buy-out proposal, but the ballot measure on which it is predicated fails in November, what are the implications for a fee increase in spring, 2013, and beyond? In fact, the last time that a fee increase buy-out occurred, the next rounds of fee increases were significantly higher than originally scheduled because of the lost revenues to our systems and campuses through the inadequacy of the fee buy-out. Further, this ushered in another period of roller-coaster fee increases, exacerbating the unpredictability of fees and making it harder for students and parents to plan to meet college costs. So, here's the worst case scenario in this complicated situation: the CSU suffers a further reduction of another $514 million. That is, the governor's ballot measure does not pass in November and the $250 million "trigger" is pulled. Moreover, the governor's insistence on freezing fees for both 2012-2013 and 2013-2014 at 2011-2012 levels - without buy-out funding - means a loss of another $264 million (that is, $125 million each year plus the difference between the proposed buy-out amount and the actual revenue generated through a 9% fee increase). As many of you are aware, the Chancellor's Office has been facilitating discussions and presentations focused on both cost reduction and revenue enhancement strategies. Another round of these will occur at the July 17 Board of Trustees meeting. Summaries of these discussions, presentations and frequently asked questions can be found at the CSU Budget Central web site (http://www.calstate.edu/budget/) and Board of Trustees web site (http://www.calstate.edu/bot/agendas). Now, what does all of this mean for us? It means, first of all, that we are not immune from the consequences of politics and the huge, unresolved budget deficits in the state. It means that, as part of the CSU, we have obligations to support system-wide directives regarding enrollments, strategic priorities and initiatives, budget management, collective bargaining, etc. And it means, especially, that we do not have to be passive victims of developments that we cannot control. We can, in fact, influence both attitudes and actions beyond our campus through the approaches and decisions we undertake on our campus. Specifically, I am pleased to let you know that the chancellor will be presenting to the trustees a template for budget management and fiscal planning that follows what we are doing at Chico State. It is based on an argument for shared responsibility and it uses the analogy of a four-legged stool with the legs representing (a) state support, (b) student/parental support, (c) revenues derived beyond A and B (e.g., fundraising, grants and contracts, intellectual property, licensing fees, etc.), and (d) wise and effective institutional stewardship of all resources. Each of these elements requires the CSU to take strong positions: A. We must vigorously press the case for strong state support for higher education. Moving, as we are now, from being state-supported to state-assisted is a dangerous course on the way to merely being state-located. B. We must achieve both greater predictability and a clearer rationale for the fees we charge our students. For fees, whether system-wide or campus-based, are neither evil nor an end in themselves. It is the consequence of those fees for student success and progress to degree that will make the best case for them. We must also defend a strong financial aid commitment for all students in need who qualify. C. We must strengthen our capacity and commitment to raise revenues beyond fees. But we must see, and expect, results from investments to this effect. D. And, above all, we must welcome the opportunity to demonstrate the quality of our work and its consequences for delivering a higher education experience that benefits individuals and serves the public good. We must demonstrate that we are willing and able to face hard times and to make wise choices that protect our mission and core values, even if that means limiting the scope of our operations and activities. Regarding the latter point, in particular, I emphasized in my address at the beginning of the spring 2012 semester our need to refocus and re-center the discussions about academic reorganization that had started last year. Because before we embark on any organizational changes, we need, first, to achieve a sharper understanding of the strengths of our present academic culture and its alignment with our goals and priorities. We would then translate that understanding into a stronger sense of the academic culture and areas of distinction we choose to pursue. Each of these steps will inform how we build a more exemplary academic culture and learning community that serves our students, supports our faculty and staff, addresses the needs of our state and enjoys broad consensus on the campus. As mentioned earlier in this message, higher education in California has no shortage of critics and doubters. Ironically, their ranks include many who graduated from our institutions and who have enjoyed successful careers because of what they gained from their time and study with us. Yet, as disappointed as we may be in the failure of folks who should know better to rally to our banner, we cannot just sit around and wait for them to see the light. We cannot just muddle through hard times without facing hard decisions, without making wise choices. And we cannot move forward without a strong sense of a shared vision. No, we do not need perfect agreement in these matters. But we do need strong alignment between the values we profess and the values we enact and clear resolve to sustain them. Our challenge is to build our budget around purposeful decisions and emphases, drawing broadly upon the collective wisdom and experience of the University's faculty, staff and students. So far, as reflected in the direction of Cabinet, the Council of Academic Deans and the University Budget Committee, we have been guided by a commitment to protect instruction, student learning, student success and progress to degree, workforce and public safety. We are focused on supporting diversity, community engagements and regional service, developing external sources of support and effectively stewarding all of our resources. But planning is not just list-making. We must be sure that our plans are feasible, that they address real problems, and that we pursue attainable goals. We must constantly ask: What might we do to accomplish our work better? What academic investments could yield exciting results over the long run? How can we fortify those assets that are at the heart of the University's strengths and reputation - our faculty, staff, students and service engagements? What potential contractions could make us a more effective educational institution? How do we strengthen our appeal as an institution of choice for faculty, staff, students, donors and partners? These are some of the questions and challenges facing us. They will be the focus of critical conversations that we will have in the new academic year. I am confident that they will yield both affirmation of what we do well and determination on what we can do even better. As always, thank you for all that you do for our University and students. And my best wishes that you are having a good summer.
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