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May 12, 2004
What's the Buzz on the Compact with Governor Schwarzenegger?
The CSU, UC and Governor Schwarzenegger have reached agreement on a long-term
funding plan for 2005/06 to 2010/11. The following news release regarding
this "Compact" was distributed from the CSU Chancellor's Office
yesterday.
This Friday, May 14, the Governor's May Revise of the 2004/05 budget will
be released and presented to the State Legislature.
For the most current information on the CSU budget, check Budget Central
regularly. It can be found at http://www.calstate.edu/BudgetCentral/index.shtml
As information becomes available on the SSU budget, it will be sent via
e-mail to all faculty and staff.
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News Release
The California State University
California State University, University of California and Gov.
Schwarzenegger Reach Agreement on Long-term Funding Plan for 2005/06 to
2010/11
(May 11, 2004) – Governor Arnold Schwarzenegger, California State
University Chancellor Charles B. Reed and University of California President
Robert C. Dynes today reached agreement on a six-year “Compact”
that will ensure quality, access and affordability at the nation’s
top public university systems.
The Higher Education Compact also recognizes the overwhelming demand for
student access and proposes to fund 2.5 percent annual enrollment growth
through 2010/11, ensuring educational opportunities for an additional
8,000 CSU students and 5,000 UC students per year. These funds will allow
both systems to stem the student enrollment decreases that each has been
experiencing because of the state’s fiscal crisis.
The Compact, which will take effect in 2005/06 and continue through 2010/11,
will provide the CSU and the UC systems a 3 percent state General Fund
increase in 2005/06 and 2006/07.
Beginning in 2007/08 and through 2010/11, the state will provide an increase
of 4% to the prior year's base budget for basic needs including salary
increases, health benefits, maintenance and inflation.
“Gov. Schwarzenegger is to be congratulated for his exceptionally
strong commitment to higher education, particularly given that the state
still is experiencing fiscal difficulties. He clearly knows CSU’s
and UC’s impact on the state’s economy, and recognizes that
to keep the state strong, higher education must continue to produce graduates
for the workforce and to provide research capabilities and community service
that benefit the state and its residents,” said CSU Chancellor Reed.
“We also want to thank members of the state Legislature for their
continued support of the CSU, and for keeping the public informed of the
budgetary issues facing higher education. We look forward to working with
them on this year’s budget and into the coming years when the Compact
is in effect. Together, we can keep the quality high in our educational
institutions,” Reed said.
“I applaud President Dynes and Chancellor Reed, and everyone involved
for helping to get us through the worst of our budget crisis. Together,
we have found a compromise that will protect the quality of our world-renowned
higher education system. We have made a long-term commitment for greater
investments in our schools and equipping California’s workforce
with the best and the brightest for years to come,” said Gov. Schwarzenegger.
By providing fiscal stability in the initial two years of this Compact,
the state will prevent further erosion of support for higher education.
Funding commitments in the third year and beyond reflect the Governor’s
belief that the state will experience moderate economic growth. This will
allow some recovery for CSU and UC, such as improving salaries and addressing
several years of under-funding of core programs.
“Economic growth, the health of our people, and our collective quality
of life as Californians all depend in large part on the teaching and research
being done in our universities. They are where ideas start, where new
jobs start, where cures to disease start, and where better futures start,”
said UC President Dynes. “This compact provides the support that
will allow our faculty, staff, and students to preserve and enhance that
positive impact on the lives of all Californians.”
In exchange for the commitment of funds, both CSU and UC have agreed to
a series of accountability measures, and will make annual reports to the
Governor, Secretary of Education, fiscal committees of the Legislature,
the Legislative Analyst’s Office and the Department of Finance by
October of each year.
Student Fees:
While most of the Compact does not apply to 2004/05, student fees are
mentioned specifically. The Compact proposes a three-year level of fee
increases for CSU and UC undergraduate students that will average 10 percent
in each of the coming three years. In 2004/05, student fees will increase
14 percent, and in 2005/06 and 2006/07, they will increase 8 percent each
year.
For graduate students, the fee levels are different at CSU and UC. At
CSU, in 2004/05, graduate fees will increase 25 percent, except that teacher
credential candidate fees will increase 20 percent. At UC, graduate student
fees will increase 20 percent in 2004/05. For the following two years,
it is expected that both CSU and UC graduate fees will increase by no
less than 10 percent.
The CSU Trustees must vote on the 2004/05 fee increases. Action is expected
at the May 19 board meeting. If approved, undergraduate fees would increase
by $288 (14 percent), qualified credential program participants by $450
(20 percent) and all other post-baccalaureate and graduate students by
$564 (25 percent). One fifth of the revenue from these fee increases will
be set aside for State University Grant financial aid.
The Schwarzenegger administration expects both CSU and UC graduate student
fees to eventually reach levels that make them 50 percent higher than
undergraduate fees in recognition of the cost of these programs and the
expected higher earnings these students will make once in the workforce.
In the years 2007/08 to 2010/11, the Governor has recommended that any
fee increases be tied to an annual California per capita personal income.
However, he has given the two systems’ governing boards, the CSU
Trustees and the UC Regents, the power to exceed that number if fiscal
circumstances warrant, but not above 10 percent in any given year. Given
that the CSU had a net reduction in the General Fund Budget of 20 percent
over the last three years, the CSU may have to adjust fees at the higher
level to make up for the lost revenue and to enhance quality for students.
“This Compact, when fully funded, has the potential for providing
long-term student fee stability that is an overwhelming benefit to students
and their families,” said Richard P. West, CSU executive vice chancellor
and chief financial officer. “However, the Compact also includes
a critical recognition by the Governor that our board may need to increase
fees higher in some years to maintain quality and preserve programs, so
we are grateful to the governor for having the foresight to think about
the future.”
The Governor also has asked both CSU and the UC to develop higher fees
for students who take considerably more units than required for their
degrees.
“The CSU is working on a multi-pronged policy that will benefit
students in the areas of articulation, advising and counseling, so that
all students will have a clear path to the courses they need to take to
graduate,” Reed said.
Enrollment:
The Compact calls for a General Fund increase to the CSU budget beginning
in 2005/06 to support a 2.5 percent growth in student access, or about
8,000 students annually.
This growth will allow the CSU to return to the higher enrollment growth
trend line projected by the Department of Finance. In addition, the Compact
calls for state supported summer sessions that eventually will serve about
40 percent of the students who take classes in the fall and spring terms.
CSU currently enrolls about 410,000 students but will decrease enrollment
by up to 5 percent in 2004/05 (a non-Compact year) because of cuts proposed
in the Governor’s January budget.
Core Academic Needs:
Gov. Schwarzenegger has also committed to an additional 1 percent growth
in CSU and UC budgets in 2008/09, 2009/10 and 2010/11. These funds will
address the annual budgetary shortfalls in state funding for other instruction
and research support critical to maintaining the quality of the academic
program such as instructional equipment, instructional technology, libraries
and building maintenance.
Capital Outlay:
The state will provide funding for debt service to support general obligation
bonds of $345 million per year per segment to be used for high priority
projects that address seismic and life-safety needs, enrollment growth
and modernization of out-of-date facilities. The state will commit to
support similar amounts over the life of the Compact.
One-Time Funds:
As the fiscal situation permits, and one-time funds become available,
the state may provide one-time funds to address high priority infrastructure
needs, such as capital renewal of facilities and deferred maintenance
needed to maintain the segments’ capital assets. For CSU, at least
$141 million per year is needed for systematic capital renewal of existing
facilities and utilities, and the deferred maintenance backlog for high-priority
projects exceeds $365 million.
Long-Term Goals for Accountability:
Given the past three years of budget cutbacks, the governor is giving
the CSU and UC some latitude in meeting all accountability expectations.
However, he is requiring the CSU and UC to collect specific data and begin
to develop an annual report on specific accountability measures in exchange
for the funds provided by the Compact.
Some of those areas include: efficiency in graduating students, including
number of degrees and time-to-degree; utilization of system-wide resources
such as student/faculty ratio and change in employee salaries; student-level
information, including student proficiency levels and progress on achieving
community colleges course articulation agreements; and capital outlay,
including five-year plans with priorities by campus.
The CSU and UC had agreements similar to Gov. Schwarzenegger’s Compact
with previous Governors Davis and Wilson. Like Gov. Schwarzenegger, they
also recognized the value of higher education to the state’s economy.
Under those agreements and this one, the CSU and UC are expected to continue
to raise private funds to enhance the quality of their education, and
to seek contracts and grants for research activities for faculty, staff
and students to enhance the state’s vitality.
For additional information on the Compact, please see: www.calstate.edu/BudgetCentral/index.shtml
The California State University is the largest system of senior higher
education in the country, with 23 campuses, about 410,000 students and
44,000 faculty and staff. Since the system was created in 1961, it has
awarded about 2 million degrees, about 77,000 annually. The CSU is renowned
for the quality of its teaching and for the job-ready graduates it produces.
Its mission is to provide high-quality, affordable education to meet the
ever-changing needs of the people of California. With its commitment to
excellence, diversity and innovation, the CSU is the university system
that is working for California. See www.calstate.edu.
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slk, 5/12/04