January 23, 2009 Budget
TO: All SDSU Employees
FROM: Sally Roush
Jan. 23, 2009
Budget Message #14
In recent weeks, there has been a good deal of information in the media about the budget and fiscal condition of the state of California. This update will attempt to briefly summarize the current situation and describe, to the extent possible, the potential consequences for SDSU.
The 2008/09 budget, although adopted in September, is not yet resolved. Immediately after adopting the 2008/09 budget, the governor required a return of $31 million from the CSU to address a statewide revenue shortfall. The governor has since proposed mid-year adjustments that have yet to be finalized through the legislative process. The mid-year proposal from the governor includes an additional $66 million permanent reduction to the CSU which, in combination with the previously required reduction of $31 million in one-time funds, results in a $97 million reduction for CSU in 2008/09.
Through its shared governance process, SDSU had adopted a 2008/09 budget assuming an approximate $97 million reduction to the CSU. While not all that amount has been officially enacted through the formal state budget process, SDSU has held funds centrally to cover the financial impact on SDSU if the total $97 million reduction proposal were to be finalized by the legislature.
There has been no final action taken on the 2008/09 mid-year budget proposal. The Governor and other state officials consistently warn that the state will suffer severe consequences from the continuing failure to resolve the 2008/09 budget imbalance. They also warn of further dire consequences in budget year 2009/10.
On Dec. 31, 2008, the governor released an 18-month budget proposal that would, if adopted by the Legislature, resolve both the remaining budget issues in 2008/09 and the continuing issues in 2009/10. That proposal is described in Chancellor Reed’s Jan. 9 budget update:
http://advancement.sdsu.edu/budgetcentral/emails/bc_010909.html
In terms of the CSU, the governor proposes continuation of the $66 million permanent reduction; restoration of the $31 million one-time reduction to the CSU; and assumes that the CSU trustees will implement a 10% increase in state university fees. The CSU has stated that after covering mandatory cost increases that must be paid in 2009/10 (such as health insurance and energy cost increases), the CSU will experience a total shortfall of $15.8 million system wide:
http://www.calstate.edu/budget/documents/Quillian_Trustees_Pres_2009-10.pdf (Note: documents in Portable Document Format (PDF) require Adobe Acrobat Reader 5.0 or higher to view; download Adobe Acrobat Reader.)
SDSU’s share of the 2009/10 CSU estimated shortfall would be $1.3 million. BUT, this is only the beginning proposal from the governor. It will be months before we know the final 2009/10 budget.
Beyond SDSU’s own general fund allocation, there are many other complex issues and reductions in state-supported programs that directly affect the university.
The state has stopped reimbursing SDSU and other universities for previously approved construction expenditures. Pursuant to direction from the Chancellor’s Office, SDSU will pay its contractors through Dec. 31, 2008, but has issued stop-work orders effective Jan. 1, 2009, for capital projects. SDSU has requested an exception for the Love Library roof and mechanical equipment project. Stopping work on that project would incur damage to the library as it would leave part of the library roof open.
The governor has proposed suspending lottery funding for the CSU, and replacing those funds with an equivalent general fund appropriation. It is unclear how the lottery funding change will ultimately affect the university.
The governor has proposed a two-day-per-month unpaid furlough for state civil service workers. CSU Chancellor Reed has indicated CSU employees are not subject to this proposal.
There is also discussion within the state about the possibility of state workers and others receiving “IOUs” rather than checks for payments issued beginning in February. Under the California State Constitution, however, the state has an obligation to meet its payment to public higher education systems:
http://www.sco.ca.gov/eo/fiscalissues/payments01-2009b.shtml#paymentmenu
Further, SDSU has tuition and fee revenues to cover our payroll for several months. SDSU normally retains these funds for the purpose of covering these payments every spring semester. The state’s condition, however, is unprecedented. It may be months before there is any resolution.
Given these circumstances and our desire to do everything within our power to support our students and employees, President Stephen L. Weber has indicated (consistent with his November letter) that SDSU should continue its careful monitoring of the situation and exercise caution with regard to expenditures. Chancellor Reed recently issued instructions to implement a hiring freeze for all but essential positions and to reduce expenditures on travel and equipment.
As always, I urge you to remain informed. While this is clearly uncharted territory, I continue to believe in our ability to work together to for the benefit of our students and employees.