May 20, 2008 Budget
TO: All Faculty and Staff
FROM: Sally Roush, Vice President, Business and Financial Affairs
May 20, 2008
Budget Message #4
On May 14, 2008, two significant actions occurred that have consequences for SDSU's 2008/09 budget.
First, Governor Schwarzenegger announced his revised 2008/09 budget. The May Revise estimates that the deficit for the State's General Fund has increased to about $17 billion, and proposes further cuts to many state programs, especially healthcare and social service programs. Fortunately, the revised 2008/09 budget now adds back $97.6 million to the CSU budget.
Second, the CSU Board of Trustees authorized an increase in undergraduate student fees of $276. This increase in the State University Fee will generate about $110 million in revenue which, after the one-third set aside for financial aid, will net about $73 million in operating revenue for the CSU in fiscal year 2008/09.
The fee increase is authorized and effective for the 2008/09 year. Therefore, based solely on the fee increase, we can modify SDSU's estimated budget reduction from $18.4 million to $12.1 million.
It is critical to understand that the Governor's revised budget is dependent on final action by the legislature, as well as on a plan to borrow from future lottery revenues that must be approved by the State's voters in November. If voters reject the lottery borrowing, the May Revise calls for a contingent one cent increase in sales tax.
Not surprisingly, both the lottery borrowing and the contingent one cent sales tax increase are controversial recommendations. If the Governor's revised budget is approved with either the lottery borrowing or the sales tax increase as now proposed, SDSU's estimated budget reduction in 2008/09 would be $4.2 million. If the Governor's revised budget is not approved, or is modified by the legislature, the consequence for SDSU would depend on the actual outcome of the deliberations. Given the requirement for a vote in November and the possibility that the legislature will oppose the further cuts to other state programs, SDSU will be well into its fiscal year operations before our budget is determined.
Neither the fee increase nor the Governor's May Revise fund enrollment growth or compensation increases in fiscal year 2008/09. Revenue from the fee increase will ease the impact of whatever the final reduction may be.
The President's Budget Advisory Committee will vote on June 12 on a budget it will recommend to the President for 2008/09. As in past budget reduction years, the Committee will deliberate on the Governor's revision, the Trustees's action, recommendations from the Senate Committee on Academic Resources and Planning and all other information available at the time including an assessment of the possible outcomes in the legislative process. In essence, we must recommend a budget prior to having many important decisions available. In the past, the PBAC has done a commendable job of developing a recommendation that was realistic as well as flexible should the final outcome differ from what was anticipated. It seems especially challenging this year, but I have confidence that the Committee will continue its good work.
The Budget Central website has links to much more detailed information on the May Revise, the CSU Trustees' fee increase action, and the SDSU budget process including PBAC and CARP. I encourage you to read this and other information to ensure you are well informed.
The broad advocacy for the CSU is believed to have influenced the Governor's May Revise. As you are contacted by the Alliance for the CSU during the legislative session this summer, I encourage you to participate in these advocacy efforts to communicate with legislators the importance of investment in higher education and the role of higher education in the State's economic recovery.