Spring 2010 Convocation Speech
“From Difficulty to Uncertainty”
January 28, 2010
Spring 2010 Speakers
Interim Provost and Vice President for Academic Affairs
Chair of the Faculty
Associated Students President
Staff Representative to the Academic Senate
First, let me add my words of welcome to the Spring Semester of 2010 and wish all of you a happy, and hopefully, more prosperous new year. Last year was a very trying and difficult one but we have survived and have managed through these difficulties which continue to challenge all areas of the University.
As we begin this new semester we are still facing very difficult economic times nationally, at the state level, and at the University. This semester continues to be impacted by major budget reductions of almost $16 million, or 17% of Sonoma State University’s General Fund support. These reductions have resulted in:
- two furlough days a month for almost all employees with the accompanying salary reduction of close to ten percent
- 32% increase in student fees
- mandated enrollment decrease of 421 FTES as our share of reducing enrollment by 40,000 students
- less availability of classes
- significant reductions in operating expenses
Clearly, these are not the best of times but we are managing through them.
While stressful, inconvenient and disruptive, the furloughs have saved jobs. This semester the furloughs are more university-wide rather than individually determined and this brings a greater sense of conformity and predictability. The message is clear, the budget reductions have a major impact on what we do, what we offer, and how services are provided—including when the University is open and when it is closed. An additional allocation of $600,000 was provided exclusively to Academic Affairs this semester to increase class offerings. Further funds have been internally re-allocated to increase a few more sections in a number of lower division bottleneck courses. While we are not meeting all the student demand, we are doing a bit better this semester than we thought we would. Still, pain and restrictions surround us.
A fact of life in a public institution is that it operates in a continuing budget cycle. Between last January and July 2009 the Governor and the Legislature closed an 18-month budget gap of about $60 billion, as the state faced the effects of the worst recession since the Great Depression. Many of the budget solutions were of a one-time nature, were strongly dependent on federal stimulus funds, were based on overly optimistic assumptions, and used several accounting gimmicks. Some actions were later reversed by the courts and are pending appeals. It was clear at the time of signing the 2009-10 budget that it would be immediately unbalanced.
Just a couple of weeks ago, the Governor announced his proposed 2010-11 budget. This budget identifies a $19.9 billion shortfall over the next 18 months—$6.6 billion in the current fiscal year and $12.3 billion in the next one with a proposal to have a minimal budget reserve of $1 billion. The Legislative Analyst estimates that the budget shortfall is closer to $21 billion.
The budget gap has grown for a number of reasons such as:
- revenues have declined by $3.4 billion
- the adverse court decisions have invalidated $5 billion in budget solutions
- the value of “other” solutions has eroded by $2 billion
- new population and caseload growth has added $1.4 billion of new costs
Let me tease-out the revenue situation. The General Fund revenues are estimated to total $89 billion, a year-to-year increase of only 1.4%. This means that baseline revenues are 30% below the projections of just two years ago and the Department of Finance expects that this depressed revenue picture will last for several more years. The good times are not yet within sight.
The Governor has declared a fiscal emergency and has called the Legislature into another special session with the intent of addressing $8.9 billion of the $19.9 billion budget gap by late February. The potential for real solutions from this special session are doubtful and cash flow problems are expected by the end of the fiscal year. Fortunately, the Governor does not call for changes in the current CSU support budget, thus eliminating the fears of a mid-year reduction.
The Governor proposes solving the $19.9 billion budget gap with a heavy emphasis on expenditure reductions amounting to $8.5 billion mostly from health, welfare and transportation programs as well as decreasing by an additional 5% the compensation of state employees (not including CSU), and reducing adult and youth correction programs. It also counts on receiving almost $7 billion in additional federal funds, creating $3.9 billion in alternative funding such as replacing the General Fund budget for state parks with proceeds of coastal oil leases, and shifting funds and revenues in the amount of $572 million. Needless to say that many of these proposals will face a difficult, if not hostile, reception in the Legislature, since some have been rejected before, and the amount of additional federal funding does not seem realistic even to our own Senators. If the federal funds fall short, the budget proposes a list of $4.6 billion of “triggered” cuts such as the elimination of the enrollment growth funding, the elimination of the state’s welfare program (CalWORKS), the elimination of the In-Home Supportive Services program which provides in-home care to 430,000 low-income elderly and disabled persons, and the elimination of the Healthy Families program which provides health insurance for 900,000 low-income children. The budget also proposes reductions under Proposition 98 to K-12 funding in the amount of $585 million under the maintenance-of-effort level of the federal stimulus act. This would require a waiver from the Department of Education. No new or increased taxes were proposed. What is clear is that there are no easy alternatives and the easier solutions were already exhausted two years ago.
Despite the dismal fiscal condition, the Governor has made higher education more of a priority in his proposed 2010-11 budget. For both the CSU and the UC systems, it restores $305 million for each of one-time cuts made this current year and provides an additional $60.6 million for 2.5% enrollment growth. The enrollment growth funds are contingent on the receipt of specified new federal funds for programs outside higher education amounting to almost $7 billion, and as I said before, it is highly doubtful that California will receive that much new money from the federal government.
All together, the proposed funding is just 63% of the Board of Trustees’ General Fund budget request of $579 million. Realistically, we probably will not get even half of the funds requested by the Board, so instead of another devastating reduction it is a modest increase over this year. In addition, the budget includes an expectation of revenues amounting to a 10% State University Fee increase of which a third would be dedicated to financial aid, and an expectation the present furloughs will end on June 30 of this year.
The Governor has gone further in his interest of restoring funding to higher education as an investment in our State’s economy by proposing a constitutional amendment that would redress the imbalance in priorities between higher education and prisons. The amendment proposes to reduce prison funding starting in 2011-12, with the objective of bringing the combined CSU/UC General Fund spending from the currently proposed 7.5% to a guaranteed minimum of 10% by the 2014-15 fiscal year. At one time it was about 13.5%, but it has declined to as low as 6% in the most recent years. This redress would be accomplished by capping prison funding at 7%. Prison funding has grown from 3.9% to now close to 11% of the General Fund budget. The reduction would be realized by improving efficiencies and allowing privatization of some of the jails—but not the early release of inmates. California spends more per capita inmate, $50,000 a year, than any other state in the nation which averages $32,000 a year. As in all propositions, this one would require either passage by 2/3 vote of the Legislature, or securing enough valid signatures to be placed on the ballot as an initiative and then getting a favorable vote by the majority vote of the electorate. Significant opposition can be expected from those opposed to the privatization of government services, especially in this case the guards’ union and those who are opposed to budgeting by proposition which has had such detrimental effects in this state.
While the future of constitutional amendment is to be determined, its proposal has focused needed attention to the importance of higher education to the future of California and its economy. Our future depends on an educated workforce able to fulfill the technological and intellectual jobs of the new economy which depend much more on brain power than brawn power. It has been predicted that in the next ten years California will need about a million more college educated workers than it produces today. We see it in the demand for education as it is reflected in the number of applications. All of the CSU and UC campuses are reporting significant increases in applications for next academic year both by first-time freshman and transfer students. This is most significant since instead of growing we are reducing enrollment in the CSU by 40,000 and the UC by 14,000 students who are fully qualified for admission.
Here at SSU we have seen an increase of 2297 or 22.6% in first-time freshmen applications—12,459 applicants for a target of 1,600. At the transfer level the increase in applications has been even much more dramatic: 2151 or 119% more applicants for next year than this year. The target for Fall 2010 is just 500 new transfer students—last year’s target was 600—and we have 3960 applications. I am sure that a number of these applications are duplicates with other campuses and many are incomplete at this time and they might not be fully qualified, but the enormity of these numbers shows that the demand is there but it cannot be filled with the present level of available resources. We are creating waiting lists to be able to increase enrollment if the funds become available. To do less than fulfill the enrollment demand of all qualified students mortally compromises the future of California and kills the dreams of its people. That course is not acceptable especially when the CSU is committed to a plan to increase six-year systemwide retention rates from the present 46% to 54% by 2016. There will be an emphasis in increasing the retention rate of under-represented students. Those few campuses, like SSU, which are already meeting or close to meeting those goals, still would have to increase their rates by 6% from wherever they are. SSU is committed to do that.
I admit that these have not been the most upbeat remarks but they reflect the facts as we know them today. The passage of the budget is several months away and there will be plenty of opportunities for the Legislature to do greater damage to our proposed funding. We must stay vigilant and keep pressure on our legislators to at least keep the minimal funding as it has been proposed by the Governor. There is also the imperative of working collaboratively and civilly with each other to meet the needs of our students. These times also call for patience with the expectation that California and higher education will recover in the not too distant future and then we will be able to meet the needs that realize the dreams of our students.
I wish all of us a good semester and a better and brighter future.