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Funding the CSU A Tale of Two Budgets

Funding the CSU A Tale of Two Budgets. Rodney Rideau , Director of the Budget, Chancellor’s Office Debbie Brothwell , Deputy Vice President – Finance, CSU East Bay. Overview. How is the CSU Funded? Where Funding Is Used How the System Blew Up Where CSU Fits in the Universe

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Funding the CSU A Tale of Two Budgets

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  1. Funding the CSUA Tale of Two Budgets Rodney Rideau, Director of the Budget, Chancellor’s Office Debbie Brothwell, Deputy Vice President – Finance, CSU East Bay

  2. Overview How is the CSU Funded? Where Funding Is Used How the System Blew Up Where CSU Fits in the Universe Budget Cuts – Do You Know Your Share? Student Fees and Financial Aid CSU Budget Cycle CSU FUNDS

  3. How CSU Is Funded CSU Receives Two Budget Allocations from the State • General Fund • Lottery Revenues CSU Uses One Source of Student Revenue(except when it doesn’t)to Address BOT Budget Priorities • Incremental Increase in Student Tuition Fees Campuses Use All Other Student Fees and Income • Application Fees, Nonresident Tuition, Miscellaneous Course fees, Student Excellence Fees, Health Services Fees, Academic Program Fees • CERF, Parking, Housing • Interest Earnings, Grants, Administrative Overhead

  4. How Campuses Are Funded • Campuses receive three General Fund allocations • Operating budget (e.g., enrollment, mandatory costs, compensation) • State University Grants • Lottery • Campuses must raise projected budget plan fee revenue increase(s) or cut operating expenses, redirect operating budgets or do both • CO can use any operating revenue in the allocation process • CO can use CERF in the allocation process • Campuses must reimburse State for lost Tuition Fee Interest Earnings

  5. System Perspective In 1992,Budget Redesign was born. • State ends the “needs-based,” formula-driven methodology used for annual changes in State General Fund appropriations to CSU • CSU adopts a “revenue-focused” budget framework to develop annual budget request for a reasonable expectation of General Fund growth • CSU establishes “gross budget” methodology to equitably distribute annual State General Fund change. • Budget Plan Recognizes Increase in Tuition Revenue but all Tuition Revenue remains at the campus

  6. Campus Perspective In 1992, Budget Redesign begins new era of budgeting. • Campuses receive increased flexibility for budgeting expenditures. Campus responsibility for managing enrollments and fee revenue increases. • General Fund allocations vary by campus • All mandatory Tuition Revenue remains at the campus but increased revenue used in BOT systemwide budget plan. • Campus expenditure allocations based on past year budget performance, two years behind budget year costs

  7. Where is Funding Used? The Budget Process The Budget Process

  8. 2012-13 Support Budget CSU Request

  9. 2012-13 Budget Plan

  10. CSU Budget Priorities

  11. Campus Budget Allocations Campus allocations are designed to determine General Fund need.

  12. 2012-13 Campus Gov.’s Budget Allocations In recent years, the same process has been used to allocate General Fund cuts.

  13. Where Is Funding Used 2011-12 CSU Operating Expenditures Source: CSU Final Budget Summaries

  14. Where Is Funding Used 2011-12 CSU Operating Expenditures Source: CSU Final budget Summaries Does not include Financial Aid or Lease Bond expenditures

  15. How the System Blew Up

  16. CSU State Support versus Higher Education Compact Funding Agreement $ in Billions $1.7 Billion Gap

  17. How the System Blew Up Resident Students 2012-13 State Appropriations equal 1996-97 levels, but Resident Enrollment has increased by 90,000 Students $ in Billions

  18. Declining State Support Forces More Reliance on Student Fees (in 2012 projected Constant Dollars)

  19. How the System Blew Up Tuition Fee Increases Have NOT Made Up for General Fund Losses Tuition Fee Increases Have NOT Offset Total General Fund Losses

  20. Sharing the cost of education in the CSU per $1

  21. Where CSU Fits in the Universe

  22. 2012-13 California’sRevenues

  23. 2012-13 California’sExpenses

  24. 2012-13 Proposed Higher Education Spending

  25. Where CSU Fits in California’s Universe • Higher Education 10% • Student Aid Commission 5% • University of California 22% • Community Colleges 54% • CSU 19%CSU is 19% of Higher Education spending and 2.4% of the State of California’s General Fund Expenditures

  26. Do You Know Your Share?

  27. Do You Know Your Share

  28. Do You Know Your Share

  29. CSU Share of California’s Fiscal Problem • If you hear the State of California has a $9 Billion problem: • Higher Ed • 10% X $9B = $900 Million ($1 Billion, rounded) • CSU • Approximately 20% X $1B = $200 Million • The allocation of the current problem is never prorated like this, but it does give you an idea of the potential impact to the CSU • 2012-13 Potential Budget Reduction Trigger to the CSU is $200 Million

  30. What is your campus share? If you hear the CSU has a $200 Million problem: • What is your campus share?

  31. What is your campus share?

  32. What is your campus share? • Sample CSU Campus Estimated Reductions: • 3.2% = $9M • 3.2% of $200M = $9M • 4.7% of $200M = $13.2M • 7.1% of $200M = $20M • CSU Maritime total budget is $22.6M

  33. Student Fees and Financial Aid

  34. CSU Trustees Fee Policy • Enunciated by the Board in 1993 document “Quality and Affordability.” Reaffirmed and elaborated upon by the Board in May 2010. • Primary responsibility for funding the educational mission and operations of the university, including supporting enrollments, rests with the State.

  35. California’s Master Plan for Higher Education • 3. Reaffirmation of California's long-time commitment to the principle of tuition-free education to residents of the state. However, the 1960 Master Plan did establish the principle that students should pay fees for auxiliary costs like dormitories and recreational facilities. Because of budgetary reductions, fees have been increased and used for instruction at UC and CSU in recent years, but fee increases have been accompanied by substantial increases in student financial aid.

  36. CSU Fees Remain Below Comparison Institutions Note: CPEC Comparison Institutions

  37. CSU Operating Costs Among Lowest in Nation Greater Efficiency? CSU Already Among the Most Efficient

  38. CSU Faculty is working harder…..

  39. CSU Foregoes One-Third of all projected new Tuition Fee Revenue to Provide Grants to Students with Need. CSU revenue loss now exceeds $600 million. CSU State University Grant Awards Exceed $600,000,000

  40. Budget Cycle

  41. CSU Support Budget Cycle Budget Calendar Jun Aug Sep Nov Jan Feb Apr May Jun • • • • • Exec Council Review • Budget Advisory Com. Review • Statement of Priorities • Trustees Approve Budget • Governor's Budget Issued • Legislative Analyst Analysis • Preliminary Campus Allocations • • Legislative Hearings & May Revise • Budget Signed

  42. CSU FUNDS

  43. Main Operating Fund • General Fund/Student Fee Revenue • CSU Operating Fund • The primary purpose of the CSU Operating Fund is to record revenues and expenditures for state-supported instruction. • Used to record state tax revenue and student fees.  The state tax revenue portion, which is annually allocated by the California Legislature to the CSU, is the main source of funds for the University operating budget.  A secondary source of funds is student fees such as the CSU State University Fee, Non-Resident Tuition, Application Fee, Health Services fee, and other fees. 

  44. Funding Source There are two sources of funds for CSU capital outlay programs state tax revenues appropriated by the state legislature the proceeds from the sale of bonds. funding is allocated to the University as either Minor Capital Outlay (projects of $400,000 or less) Major Capital Outlay (projects greater than $400,000). The funding must be used for the construction projects specified. Capital Outlay

  45. Enterprise Budgets • Other CSU Funds – Campus specific budget process • Housing • Parking • Continuing Education • Instructionally Related Activities • Lottery • Miscellaneous Trust

  46. Funding source Cash generated from the sale of California State Lottery tickets, a portion of which is allocated to CSU campuses Departments are allocated Lottery Funds by an annual budget allocation Lottery Education Fund

  47. Lottery Guidelines

  48. Funding Source These sources are generated by student fees for enrollment in Continuing Education courses.  Funds must be used for self-supporting instruction in the Continuing Education program. Continuing Education Revenue Fund (CERF)

  49. IRA (Instructionally Related Activities) • Use of Funds • Funding source are fees collected for the mandatory IRA Fee and or revenue generated by the IRA program itself • IRA funds are to be used solely for the support of instructionally related activities as defined in Section 89230 of the Education Codeand by CSU System-wide policy. As a general rule, expenditure of IRA funds follows the same principles and guidelines as required of CSU Operating Fund monies. Exception: Different Guidelines under Hospitality Policy • If capital equipment is purchased whose use will not be restricted to IRA programs/activities, IRA funds may be employed only in proportion to the anticipated IRA use. • Expenditure for awards that are the culmination of a group(s) or individual(s) efforts through competition or as a normal part of program activities will be allowed. Awards will normally be in the form of trophies, plaques, ribbons, and other similar items, the value of which is primarily intangible and limited to the recipient(s). • Departments are allocated IRA Funds by an annual cash transfer

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