Ryan Storm Interim Assistant Vice Chancellor for Budget CSU Business Conference March 11, 2014

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1 Ryan Storm Interim Assistant Vice Chancellor for Budget CSU Business Conference March 11,

2 Roadmap Current Year Finances Budget Year Finances Multi-Year Trends CSU Support Budget Governor s Budget Proposals Legislative Analyst s Critique of Governor s Plan Next Steps in Budget Cycle Future Considerations 2

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CSU 2013-14 Operating Budget by GAAP Object Expenditure

Aid), $732, 14.9% Salaries, $2,398, 48.8% Benefits, $1,096, 22.

$3,493, 71.1% Operating Expenses (nondiscret.

5 CSU Operating Budget by GAAP Object Expenditure Category (in millions) Operating Expenses (discretionary), $26, 0.5% Financial Aid, $662, 13.5% Operating Expenses (nondiscretionary) (w/lrb and w/o Fin. Aid), $732, 14.9% Salaries, $2,398, 48.8% Benefits, $1,096, 22.3% CSU Operating Expenses (in millions) Salaries & Benefits, $3,493, 71.1% Operating Expenses (nondiscret.) (w/o LRBs), $1,287, 26.2% Lease Revenue Bonds & Annuitants' Dental, $108, 2.2% Operating Expenses (discretionary), $26, 0.5% 5

Management & Supervisory 13.0% CSU 2013-14 Operating Budget, Salaries Executives 0.4% Support Staff 33.

6 Management & Supervisory 13.0% CSU Operating Budget, Salaries Executives 0.4% Support Staff 33.4% Academic Salaries 47.4% Student Assistant, Temp Help, & OT 3.1% Department Chairs 2.7% Total Operating Fund Salaries: $2.4B 6

7 CSU 2013/14 Governor s Budget GF Appropriation 2013/14 Budget Act General Fund Appropriation $2,330,500,000 Supplemental GF Appropriation for Adjustment in 2013/14 Retirement Rates 15,631, /14 Revised General Fund $2,346,131,600 Lease Revenue Bond Debt Service Adjustments 8,543,000 State Interest Payment Adjustment 1,179,000 Fold In of CSU General Obligation Bond Debt Service into CSU Main GF Appropriation 197,577, /14 General Fund After Base Adjustments $2,553,430, /15 Governor's Budget General Fund Base Budget Increase 142,222, /15 Governor's Budget General Fund Total $2,695,652,600 7

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9 CSU Projected Revenues CSU (in Projected millions) Revenues (in millions) General Fund Allocation $2,346 $2,498 Tuition Fees 2,175 2,247 Tuition Fee Discounts Nonresident Tuition Application Fee Student Health (pass-through) Other Fees & Revenue Sources Total Projected Revenues $4,293 $4,505 9

10 CSU Sources of Revenue 10

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12 $3.50 State General Fund Trend $3.25 $3.00 $2.97 $2.75 $2.50 $2.43 $2.70 $2.60 $2.35 $2.58 $2.35 $2.50 $2.62 $ Projected GF $2.25 $2.00 $2.10 $2.00 $2.06 $1.75 $ CSU Actual GF Allocation (in billions) (w/o GO Bonds) 12

13 370, , , , ,000 General Fund Allocation and Resident Student Enrollment Trends 331, , , , , , ,711 target 346,050 target $4.00 $3.75 $3.50 $3.25 $ , ,000 $2.43 $2.70 $2.60 $ ,155 $2.58 $2.50 $2.62 $2.75 $2.75 $ ,000 $2.35 $ $ , ,000 $ ,554 $2.00 $2.06 $2.00 $ , , Actual Full Time Equivalent Students (Resident) CSU Actual GF Allocation (in billions) (w/o GO Bonds) $

14 Eligible Undergraduate Applicants - California Residents 250,000 26, ,000 28,803 28,803 21,697 22,123 6, ,000 Not Admitted* 100, , , , , , ,152 Admitted* 50,000 0 Fall 2008 Fall 2009 Fall 2010 Fall 2011 Fall 2012 Fall

15 (In Millions) $1,400 CSU Operating Fund (GF & Tuition Fee Revenue) Impacts since $1,200 $1,170 $1,193 $1,000 $800 $738 $936 $301M less funds in compared with $600 $670 $596 $635 $400 $372 $200 $164 $301 $318 $0 0 $ Combined GF Reductions / Adjustments and Unfunded Mandatory Cost Increases (in Millions) Net Tuition Fee Revenue Increases (in Millions) 15

16 CSU Declining State Support Forces More Reliance on Student Fees $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $ In constant dollars and based on resident FTES targets Tuition and Fees less Financial Aid State Funds 16

17 CSU Declining State Support Forces More Reliance on Student Fees 100% 90% 83% 81% 80% Gap Between State Appropriation and Tuition and Fees as a Percentage of Funding Source has Narrowed 80% 73% 72% 70% 62% 64% 60% 50% 40% 51% 50% 49% 50% 54% 55% 46% 45% 30% 38% 36% 20% 10% 19% 17% 20% 27% 28% 0% Net Tuition and Fees State Funds 17

18 Health Care Premium Costs* CSU pays 95% 20% 80% 5 95% Other CA agencies pay 80% of costs or less *CSU Operating Fund Costs $145 Million $365 Million $413 Million $268 million increase, approx. 184% since

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20 Requested Increase from the State (in millions) Student Success and Completion $ Percent Enrollment Growth (GF) 79.2 Compensation (3 percent pool ) 91.6 Financing critical maintenance/infrastructure 15.0 Mandatory costs (health benefits, new space) 13.7 Center for California Studies 0.2 Revenue from changed enrollment mix (12.1) Total request of the state $

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22 Requested of the state $237.6 m Proposed by the Governor $142.2 m Funding Gap $95.4 m 22

23 $142.2 m Support Budget Increase (Governor s Multi- Year Funding Plan) Increases funding for CalPERS retirement rate adjustments by $15.4M Freezes funding of CalPERS annual retirement rate adjustments to the CSU pensionable payroll Academic sustainability plans Awards for innovation in higher education Cal Grant change 23

24 Broadens use of support funds for capital outlay Shifts debt service payments into CSU support budget General Obligation bonds ($198M) State Public Works Board (SPWB) bonds ($99M) Base budget increase to pay debt service $297M shift increases to $315M in Allows restructuring of SPWB debt Cross pledge all programs/revenue sources (Systemwide Revenue Bond) Streamlined approval process 24

25 $ to CSU General Fund Appropriation (with Governor's Multi-Year Plan without General Obligation Bonds) $2.346 $2.498 $2.622 $2.751 In Billions $2.0 $2.000 $2.063 $1.0 $

26 General Fund Appropriation Adjustments $400 $300 In Millions $200 $100 $198 $10 $142 $ Fold In of GO Bond Debt Service from State General Services into the CSU GF Appropriation Lease Revenue Bond Debt Payments & State Fee Revenue Interest Adjustments Governor's Budget General Fund Base Budget Increase 26

27 to CSU General Fund Appropriation (with Governor's Multi-Year Plan and with General Obligation Bond fold in beginning ) In Billions $3.0 $2.0 $2.000 $2.063 Totals with GOB: $2.696 $2.820 $2.949 $0.198 $2.498 $2.346 $0.198 $2.622 $0.198 $2.751 $1.0 $

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29 Reject most Governor s Proposals 5% tuition fee increase 7,000 new full time equivalent students (FTES) for ; None for No proposals to meet current and future infrastructure needs; reject Governor s proposal 2.2% Inflation increase covers everything else 29

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31 Summary of Funding Proposals 31

32 Marginal Cost Continuum $0 0% Inconsistent with Ed. Code LAO Report 1 $5,999 54% DOF Method $7,101 64% $11, % 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1 From Legislative Analyst's Office Report, "A Review of State Budgetary Practices for UC and CSU," dated February 11,

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36 Significant Considerations Capital needs Tuition fees State-required performance measures, targets, etc. Support budget decision-making 36

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Campus Budget Submissions Due: August 19, 2008

Campus Budget Submissions Due: August 19, 2008 System Budget Office 401 Golden Shore, 5 th Floor Long Beach, CA 90802-4210 562-951-4560 Fax 562-951-4971 www.calstate.edu/budget FINAL-Budget Act of 2008 was chaptered on 9/23/08, AB 1781, Chapter 268