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How Big a Budget Bite for Chico?
As you know, California is facing a huge deficit of $34.6 billion according
to Governor Davis, or of $21.6 billion according to legislative analyst
Elizabeth Hill. Regardless of whose figures are accurate, two things are
certain: (1) the deficit is unprecedentedly large, either 21 percent or
34 percent of the state’s budget, and (2) it will grow the longer
legislators procrastinate, as this big debt is compounding interest.
Although it is not likely that the state’s budget for 2003–2004
will be voted on until well past the July 1 deadline, the governor has
given the California State University a budget that contains $326.1 million
in reductions. This budget left unfunded an additional $78.6 million in
compensation and health insurance cost increases. Given that these unfunded
items are mandatory costs, the CSU will need to find the necessary funds
elsewhere in its budget, which is tantamount to an additional cut, bringing
the 2003–2004 budget reduction to $404.7 million. To make the situation
worse, the governor has made permanent a one-time reduction of $43 million
for 2002–2003, bringing the total fiscal impact to the CSU in 2003–2004
to $447.7 million. I should quickly add that these cuts come on the heels
of the $82 million cut the CSU took for the current academic year.
The governor’s budget contains a number of items that could help
mitigate the impact of the reductions to the CSU. The governor has proposed
that $45 million be added to next year’s budget to compensate for
this year’s overenrollment (2 percent more than the budgeted enrollment).
I believe the chancellor intends to pass on to CSU, Chico a percentage
of this money. In addition, the governor is proposing to fund 5 percent
enrollment growth for 2003–2004. This would result in another $105
million. Obviously, the combined $150 million does not provide much help,
as the money is meant to cover the costs of educating 7 percent more students
than the CSU was budgeted for in 2002–2003. Nonetheless, for campuses
that are still growing, these additional resources could represent some
The other mitigating factor included in the governor’s budget is
a proposed 25 percent fee increase for students. This would generate $212.2
million, $70.7 million of which would be set aside for student financial
aid, leaving a net revenue of $141.5 million to offset the $447.7 million
deficit. If approved, this student fee increase would amount to an additional
$396 per year for undergraduates, bringing the total state university
fee to $1,968 per year.
What does all of this mean for CSU, Chico? The Office of the Chancellor
will send each campus a proposed budget for 2003–2004 by February.
Given that CSU, Chico represents 5 percent of the total CSU budget, should
we have to take our proportional part of the CSU budget cut, our share
could be $20 million. Based on discussions I have held with the executive
vice chancellor and chief financial officer, it is likely that our share
of the cuts will range from $9 to $14 million, or 9–14 percent of
our budget, if the governor’s budget ends up being the final budget.
The fact that the governor seeks to increase the enrollment funding for
the CSU at a time when all other budgets are being severely reduced is
a sign of the governor’s trust in the ability of the CSU to educate
California’s students. It is important to realize that the proposed
budget for the CSU represents a “best scenario.” It could
become a lot worse. Funding for the additional enrollment, the $150 million
(of which CSU, Chico would probably receive around $1 million) could disappear
in the legislative negotiations that will precede a final budget. Equally,
since there will be opposition to increasing student fees, the $141.5
million in student fee increases could also evaporate. CSU, Chico would
generate slightly more than $6 million from such an increase. Together,
between the revenue we would receive from enrollment growth and the fee
increases, we would generate more than $7 million that would mitigate
our share of the cuts. Should either or both of these sources of revenue
disappear from the final budget, we would be in a very precarious financial
situation. Therefore, I urge your support in contacting our local legislators
and asking them to support the budget proposed by the governor.
Clearly, whether the final cut is $9 or $14 million or more, it will be
impossible to reduce our campus budget by these significant amounts without
causing pain. I can assure you that the process we will use to determine
from where the cuts will come will be open and transparent. We will do
all we can to minimize the impact on people. Here are some of the principles
I will ask that each major unit use in determining where to cut:
1) Our number-one priority is our students. Consequently, we must offer
sufficient numbers of essential courses to allow them to make good progress
2) We must cut judiciously so as to not cause irreparable damage to the
key components of our mission and strategic priorities.
3) We must do everything in our power to protect our faculty and staff.
The economic situation of the state is perilous. Even if the governor’s
proposed budget is finally passed, we will face very difficult choices.
This is a time for us to work cooperatively to find short- and long-term
solutions that will help us emerge from this financial crisis united and
— Manuel A. Esteban