$(48,525,600) $(5,574,700) $(54,100,300)

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3 Budget reductions, cost increases Permanent One-Time Total Campus share of $571.1M $(44,076,600) $(44,076,600) Campus share of $77.5M $ (5,574,700) (5,574,700) Mandatory costs increases (2,101,700) (2,101,700) Campus priorities (2,347,300) (2,347,300) Total budget reductions, cost increases $(48,525,600) $(5,574,700) $(54,100,300) 3

4 Budget reductions, cost increases For , the state reduced the CSU budget by $571.1 million. This consisted of the $50M reduction tied to the federal stimulus funds trigger, the $255M Governor s line-item veto, and the $266.1M Governor s unallocated reduction. The CSU Chancellor s Office apportioned $44M of that to the Long Beach campus. In addition, the state levied a one-time $77.5M CSU reduction and Long Beach s share of that was $5.6M. CSULB has $4.5M in mandatory cost increases associated with health benefits, utilities, the faculty PPI salary program, and new space adjustments. CSULB has identified campus priorities of $1.8M for the comprehensive fundraising campaign and $500 thousand for classroom maintenance. CSULB s total budget problem was over $54M. 4

5 Budget Solutions Permanent One-Time Total Estimated revenues from 30% fee increase $17,325,400 $17,325,400 Estimated revenues from 10% nonresident tuition increase 1,053,300 1,053,300 Initial reductions to operating divisions (a) 6,200,000 6,200,000 Projected payroll savings from staff furloughs (b) $8,445,416 8,445,416 Projected payroll savings from faculty furloughs (b) 11,661,127 11,661,127 Use of campus budget reserves per President 5,574,700 5,574,700 Supplemental reductions to operating divisions (a) 3,840,357 3,840,357 Total budget solutions $28,419,057 $25,681,243 $54,100,300 (a) - Total reductions to operating divisions = $10,040,357 (b) - Total payroll savings from furloughs = $20,106,543 5

6 Budget solutions CSULB projects to receive over $17M from the two fee increases (10% and 20%) levied by the CSU Trustees on resident students and another $1M from an increase in nonresident tuition. In May 2009, the Resource Planning Process Committee recommended and the President approved $6.2M in reductions to operating divisions. Administrative and staff furloughs are projected to save about $8.4M and faculty furloughs another $11.7M. The President authorized use of $5.6M in campus reserves (one-time funds) to offset the one-time reduction of that same amount. In July, the legislature revised the final state budget and it was necessary to levy another $3.8M in reductions on the operating divisions. 6

7 Impacts on Operating Divisions Operating Divisions % of Total Budgets and Reductions Permanent Academic Affairs 70.5% $(7,076,767) Administration and Finance 18.7% (1,876,778) Student Services 6.2% (625,602) University Relations and Development 1.9% (189,103) Athletics 1.8% (183,880) President's Office 0.9% (88,227) Total 100.0% $(10,040,357) 7

8 Percentages on previous slide represent proportion of total budget for each division, and proportion of permanent budget cuts assigned in Academic Affairs is largest division and includes Instruction ($108M) Academic Support ($37M) e.g. Library, academic technology, student advising President s Office is smallest division Less than 1% of total budget ($1.8M) Assigned pro rata share of cuts ($88,227) President also cut further by reducing additional $122,000 of expenditures 8

9 Other Factors that Affected Operating Divisions In addition to the reduction of $7.1M, Academic Affairs was affected by a loss of $3.1M due to enrollment downsizing as classes were eliminated and part-time faculty reduced All non-instructional operating areas also lost $1M in temporary funding in

10 Effect of Budget Cuts and Enrollment Reductions Budget Cuts: Permanent Funds $10,040,357 One-Time Funds 1,000,000 Reductions in courses due to enrollment decrease 3,128,280 TOTAL EFFECT $14,168,637 Reduction from state appropriation (June 30, $204,893,866) 6.9% 10

11 Effect of Budget Cuts and Enrollment Reductions Budget Cuts: Permanent Funds $6,263,648 $10,040,357 One-Time Funds 2,000,000 1,000,000 Reductions in courses due to enrollment decrease 0 3,128,280 TOTAL EFFECT $8,263,648 $14,168,637 Reduction from state appropriation (June 30, $204,893,866) 4.0% 6.9% Cumulative Dollar Reduction $22,432,285 Cumulative Percent Reduction 10.9% 11

12 Cumulative Effect It is important to remember that the cuts are on top of cuts the campus made in The cumulative effect is $22.4 million dollars, or a 10.9% decrease since June 30,

13 At CSULB, despite two years of budget cuts, the percentage of the total operating expenditures for instruction has not decreased. In fact, the percentage increased slightly from 54.1% to 54.3%. Nationally, the percentage of spending for instruction at public masters institutions has been declining recently and was below 51% in 2006 (as reported in the Delta Cost Project, 2009*). * Delta Project on Postsecondary Education Costs, Productivity and Accountability The Lumina Foundation for Education 13

14 SUMMARY CSULB now receives $5,252 in state appropriation per FTE student compared to $6,418 in (18% less) Had we received $6,418 per student in , our total state appropriation would have been $34.3M higher Unfortunately, further mid-year state cuts are still possible While CSULB handled the budget reductions, almost half the solutions are temporary in nature We therefore start next year s planning with a budget problem of $20M 14

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16 Enrollment: Large campuses must reduce enrollment by 10.8% CSULB will reduce 3,044 full-time equivalent students Enrollment reductions result in loss of fee revenue Enrollment reductions result in fewer sections, fewer lecturer positions 16

17 Budget: State budget cuts levied in will continue The budget cuts were recalculated further reducing CSULB s budget by $3.9M Some mandatory cost increases are almost certain (health benefits, utility costs) 17

18 Amount of mandatory costs (health benefits, utility costs) Budget reductions from the state Fee increases Trustees might approve Furloughs continuing 18

19 Our potential problem is large We cannot wait to plan We need to frame plausible possibilities Scenarios can be based on What we know already Plausible assumptions about what we don t know Following are three scenarios 19

20 The three budget scenarios are based on the following: The assumption that faculty and staff furloughs will not continue. This is based on current collective bargaining agreements that only authorize furloughs until June 30, There is an unresolved budget problem from of $20M because the permanent budget reductions and cost increases were offset by temporary measures (furlough-related payroll savings). We cannot assume furloughs will continue because each employee union must vote on whether furloughs would be implemented in Budget cut allocations for were recalculated for all campuses. Large and middle-size campuses were allocated a greater proportion of the total cuts to protect smaller campuses with less financial flexibility. As a result, CSULB s budget will be reduced by an additional $3.9M in CSULB will again be reducing enrollment by 10.8% in This will result in the loss of fee revenue of $9.6M in The enrollment reduction will result in fewer class sections and fewer lecturer positions. CSULB projects enrollment downsizing instructional cost savings of $6M. 20

21 Scenario 1 is based on: The assumption that faculty and staff furloughs will not continue An average amount of mandatory cost increases that we have experienced over the last several years. Primarily reflects costs increases related to employee benefits and utility costs. No additional state budget reductions for No additional student fee increases for

22 Scenario 1 = no furloughs, some mandatory costs, no state reductions, no fee increases Scenario 1 Unresolved permanent budget problem from $(20,106,543) Recalculation of budget reduction (3,887,400) Enrollment downsizing fee revenue loss (3,044 FTES) (9,554,045) Mandatory costs (1,500,000) State reductions 0 Total budget problem $(35,047,988) Enrollment downsizing instructional savings (3,044 FTES) $6,057,560 Revenues from student fee increase 0 Revenues from nonresident tuition increase 0 Total solutions $6,057,560 Unresolved Budget Shortfall $(28,990,428) 22

23 Scenario 2 is based on: The assumption that faculty and staff furloughs will not continue An average amount of mandatory cost increases that we have experienced over the last several years. Primarily reflects costs increases related to employee benefits and utility costs. Additional state budget reductions for of $5M which represents a 3.25% reduction Additional student fee increases for of 10% for both State University Fee and nonresident tuition 23

24 Scenario 2 = no furloughs, some mandatory costs, state reductions, 10% fee increases Scenario 2 Unresolved permanent budget problem from $(20,106,543) Recalculation of budget reduction (3,887,400) Enrollment downsizing fee revenue loss (3,044 FTES) (9,554,045) Mandatory costs (1,500,000) State reductions (approx. 3.25%) (5,000,000) Total budget problem $(40,047,988) Enrollment downsizing instructional savings (3,044 FTES) $6,057,560 Revenues from 10% student fee increase 8,238,239 Revenues from 10% nonresident tuition increase 1,042,767 Total solutions $15,338,566 Unresolved Budget Shortfall $(24,709,422) 24

25 Scenario 3 is based on: The assumption that faculty and staff furloughs will not continue An average amount of mandatory cost increases that we have experienced over the last several years. Primarily reflects costs increases related to employee benefits and utility costs. Additional state budget reductions for of $10M which represents a 6.5% reduction Additional student fee increases for of 10% for both State University Fee and nonresident tuition 25

26 Scenario 3 = no furloughs, some mandatory costs, higher state reductions,10% fee increases Scenario 3 Unresolved permanent budget problem from $(20,106,543) Recalculation of budget reduction (3,887,400) Enrollment downsizing fee revenue loss (3,044 FTES) (9,554,045) Mandatory costs (1,500,000) State reductions (approx. 6.5%) (10,000,000) Total budget problem $(45,047,988) Enrollment downsizing instructional savings (3,044 FTES) $6,057,560 Revenues from 10% student fee increase 8,238,239 Revenues from 10% nonresident tuition increase 1,042,767 Total solutions $15,338,566 Unresolved Budget Shortfall $(29,709,422) 26

27 About the three budget scenarios: The previous three budget scenarios are for illustration only. Please note that in scenario #2, the best scenario, the unresolved budget shortfall is still $24.7 million. There are significant factors that are still unknown and that cannot yet be predicted with any level of certainty: additional mandatory cost increases, state budget cuts, and student fee increases. One effect made clear in the scenarios is that if both additional state budget cuts and student fee increases are implemented, they largely serve to offset each other rather than lessening the campus budget problem. 27

28 Effect of Budget Cuts and Enrollment Reductions (Scenario 1) Budget Cuts: Permanent Funds $6,263,648 $10,040,357 $28,990,428 One-Time Funds 2,000,000 1,000,000 0 Reductions in courses due to enrollment decrease 0 3,128,280 6,057,560 TOTAL EFFECT $8,263,648 $14,168,637 $35,047,988 Reduction from state appropriation (June $204,893,866) 4.0% 6.9% 17.1% Cumulative Dollar Reduction $22,432,285 $57,480,273 Cumulative Percent Reduction 10.9% 28.0% 28

29 Scenario #1: Scenario #1 was chosen for the previous slide because it makes the fewest predictions about how the CSU budget may eventually materialize. 29

30 If this is the range of possible futures we face, how do we plan? 1. All scenarios are extremely challenging. 2. Any scenario will require several kinds of solutions: Focusing resources on core mission Postponing less critical actions and initiatives Analyzing organizational structures; where efficiencies can be created, reorganizing Analyzing processes; where processes can be made more efficient, changing Suspending activities that generate workload but can be delayed Limiting hiring 30

31 In Academic Affairs, three categories for planning: 1. Academic programs 2. Academic infrastructure 3. Other centers, programs, and units 31

32 Produce enrollment, serve students After downsizing, we must still: Serve students well Achieve FTES Key questions - efficiently meeting student needs: 1. How can we efficiently provide class offerings to meet student needs? 2. How can we achieve additional reductions while still meeting student needs? 3. Will program consolidations improve efficiency? 32

33 Services essential to instruction, academic operations Key questions: 1. Which services are truly essential? 2. How can we deliver those most efficiently? 3. What services can we defer? 33

34 Highly valued (or would not exist) Contemplating reductions is painful Do not produce enrollment or essential services Key questions: 1. What non-state resources can be used? 2. What activities can be deferred? 3. How significant are these activities compared to our most mission-central activities? 34

35 In , we handled a $54M budget problem with some short-term solutions, which was still painful For , we are facing a set of possible scenarios that will be very challenging We must accept that it is not business as usual; we are facing additional cuts of 17% in , bringing the cumulative total of cuts over three years to 28%. We will have to think creatively and be opportunistic We have a difficult task: providing full information about what we know while not alarming our faculty, staff and students so much that we are paralyzed 35

36 Share information with the campus community Budget presentations Informal Q&A sessions Budget central website Launch Resource Planning Process (RPP) early, this fall Focus October 23 rd Academic Senate Retreat on budget Divisions, colleges will conduct internal planning processes 36

37 Honesty Transparency Participation Focus Mission Teamwork Morale Future Face realistic possibilities Share full information Solicit broad input Work on major budget solutions (avoid distractions) Focus on core mission (not micro issues) Unite people (don t encourage divisiveness) Remember that institutional effectiveness depends upon people and collaborative solutions Remember that the campus will continue to pursue institutional excellence 37