January 7, 2008 Budget

TO: All Faculty and Staff
FROM: Stephen L. Weber, SDSU President
Jan. 7, 2008

California State Budget

Dear colleagues:

The CSU will be required to permanently reduce its state appropriation for the current year by $59.6 million, in addition to the $43 million in previous cuts which earlier had been described as one-time. These cuts, combined with $22.8 million in unfunded costs for health benefit premium increases and salary increases, bring the total funding shortfall for the CSU to $125 million in 2002/03.

At SDSU, we have already permanently covered our share of the unfunded benefit/salary increases ($2.7 million). We addressed our share of the $43 million reduction ($3.078 million) from one-time funds. We now have decisions to make this year about our share of the additional cut of $59.6 million, which is approximately $5 million. We will also need to address the $3.078 million in next year's budget.

The Board of Trustees will hold a special meeting on December 16 to discuss and act upon this new budget information. After we have learned the results of the Board of Trustees discussion, our campus Cabinet Budget Committee will meet early in the new calendar year to make a recommendation to the President about how to address this mid-year budget reduction.

In his press release, Chancellor Reed said, "There are immense challenges ahead for the California State University. This year is a problem, but next year could be a catastrophe."

At SDSU, we have been planning carefully to be in a position to handle significant budget reductions with as little impact as possible on services and our campus population. We are in a good position to get through this year with few such impacts. Next year will be a great challenge.

Unfortunately, at this time, specific information about what we may face is sketchy. As soon as additional information is available, we will pass it along. I can only urge that we continue to stay informed and go about our campus business with the dedication that is the hallmark of SDSU.

It looks as if California's cyclic economy is once again turning downward. Citing a projected current year budget shortfall of $3.3 billion, Governor Schwarzenegger has announced that he will declare a fiscal emergency and call for a special session of the legislature on January 10, 2008. The proclamation is expected to be issued concurrently with the release of the governor's proposed 2008-09 state budget, which must address an estimated $14 billion shortfall for the next 18 months.

On January 10, California State University Chancellor Charles Reed will convene a special meeting of the CSU Executive Council (made up of the 23 university presidents and senior system officers) regarding the budget. At that time, I will receive more information about how the California budget may impact the CSU and San Diego State.

For some time, even after the governor's message, there will be a lot we do NOT know about the 2008-09 budget and its potential impact on SDSU. The California Legislature will not vote on the final 2008-09 budget until sometime after the "May Revise" following the release of updated information about state revenue.

What does all this mean for SDSU? San Diego State University has endured budgetary challenges for more than 110 years. Each was painful; faculty careers were disrupted, academic progress of thousands of students was slowed, research agendas were set back, community service was compromised. But through it all, our university has prevailed. Each time SDSU ultimately emerged a stronger university, capable of providing a higher level of excellence for more students, faculty and staff. Those gains were not, however, without considerable pain and sacrifice.

I was not here in the early 1990s, though some of us were. During that time, state support to SDSU declined significantly. To partially offset the decline, CSU tuition and fees were raised. It was not, however, enough money to provide the classes required by our students. Consequently, SDSU enrollment declined, further exacerbating a downward spiral that reduced the number of tenure-track faculty and staff. San Diego State rebounded as California's economy strengthened, but we never recovered the funding (in inflation-adjusted dollars) that was lost in the early 1990s.

We faced another of California's cyclic downturns between 2001-02 and 2004-05. During that time, SDSU absorbed a cumulative impact of $40 million in budget reductions and unfunded mandates (primarily health benefit costs). Once again, student fees were increased; once again, the increase was insufficient to offset the combination of diminished state support and increased mandatory costs.

Given that California's fiscal circumstances are once again deteriorating, how should we proceed? While there is much we do not know, it would be imprudent not to begin planning for a likely downturn in California's budget and consequently in its financial support for the CSU. My own preliminary view (which will surely change as events and advice emerge), is that we would be wise to do whatever we reasonably can to reduce our current expenses and thereby maximize whatever budgetary flexibility we might have in the coming year.

First steps:

  • I have asked Sally Roush, Vice President for Business and Financial Affairs, to convene the President's Budget Advisory Committee (PBAC) membership (see list of members below) at the earliest possible time to make recommendations with regard to our current fiscal year's budget, to consider possible budget scenarios for 2008-09 and to begin considering recommendations for what is likely to be reduced funding. I am eager to receive PBAC's advice as to what it believes university strategies should be during the current year and for the year ahead.
  • I have asked Vice President Roush to resume the budget memos that were so helpful during California's last fiscal downturn, so that we all can be informed as events unfold. Her first budget memo is expected the week of January 14, following a systemwide meeting of chief financial officers.
  • I have asked Jack Beresford, Associate Vice President for Marketing and Communications, to establish a Web site where updated budget information can be widely available.

SDSU has weathered tough times in our past; we will do so again. Let us strive together to do as little damage as possible to the excellence we have created, and to get through this economic downturn with our professionalism, collegiality, and our care for students and community still intact.

Respectfully,
Stephen L. Weber

List of PBAC members:

  • Lena Rodriguez, Executive Assistant to the President
  • Edith Benkov, Senate Chair
  • James Kitchen, Vice President, Student Affairs
  • Nancy Marlin, Provost
  • Mary Ruth Carleton, Vice President, University Relations and Development
  • James Poet, President, Associated Students
  • Sally Roush, Vice President for Business and Financial Affairs
  • Kathy Lamaster, CARP Chair
  • Cezar Ornatowski, Senate Representative