May 23, 2011 Budget
Budget Update #32
On May 16, Governor Brown issued a revised budget proposal that incorporates actual State tax receipts received. Tax revenues were $6.6 billion higher than the estimates in the Governor’s January budget proposal. While this is a positive occurrence, the Governor was quick to point out that the Prop 98 guarantee would immediately obligate about $3.6 billion of the increased revenue to K-12. The state also has other significant obligations such that the net available to offset the state’s revenue shortfall is significantly less than the amount collected.
The Governor estimates the state still has about a $10 billion shortfall to address. Therefore, he has stated that the CSU budget reduction in his revised budget will be $1 billion unless the tax extension package he has proposed gets on the ballot and is approved. You can read the CSU summary of the Governor’s Revised Budget. Chancellor Reed has indicated he is prepared to ask the Board of Trustees for authority to implement up to a 32% annualized tuition fee increase effective in Spring 2012 to help offset the impact of a proposed $1 billion reduction.
At this time we do not know what the final outcome of the budget will be, nor do we know when the budget will be finalized. However, PBAC has recommended and President Weber has approved a budget for 2011/12 that is based on a CSU reduction, including mandatory costs, of $550 million and proportionately distributes a $35.3 million reduction across the university’s major divisions. The university and its divisions have been conservative in the current year, and can manage a significant portion of the $35.3 million reduction by relying on increased revenue received in the current year, but largely not permanently obligated.
The University and its divisions also have one time funds that will enable us to phase in the impact in the event of a final state budget that is based on a $1 billion cut to the CSU system. We will rely on the deliberative process through PBAC that has served us so well over many years. As in the past, our highest budget priorities will be protecting our valued employees and providing the classes needed by our students to graduate. If you have specific questions or comments, please send them to [email protected].