July 11, 2012
TO: SDSU Faculty and Staff
FROM: President Elliot Hirshman
Provost Nancy Marlin
Vice Presidents Sally Roush, Mary Ruth Carleton and James Kitchen
We write to provide you with an update on recent developments affecting the university’s 2012-2013 budget. We also wish to describe the overall fiscal pressures we face, as well as steps we are taking to address these pressures so the university can seize the significant opportunities that lie ahead.
On June 28, the governor approved a budget that includes a $250 million “trigger” cut for the CSU should the voters not approve his proposed tax measure in November, 2012. Taking a prudent planning approach, the Chancellor’s office will not distribute the $250 million to the universities’ budgets.
Taking into account our share of the $250 million reduction, increased revenue from the previously-approved 2012-2013 tuition increase, increases of $4.9 million in waivers for State University Grant (SUG) financial aid, and increases in mandatory costs (e.g., $1.2 million increase in employee health costs), our reduction for 2012-2013 will be $18.5 million. Combined with the reductions of the prior 3 years, our state appropriation has decreased from $221 million to $103 million, a reduction of 54 percent since 2008.
Faced with these unprecedented circumstances, we must accomplish three objectives in the next 2-3 years. These objectives build upon, and are consistent with our past practices and the entrepreneurial spirit that has defined us as a university.
First, we must strengthen our financial position substantially so we can enhance support for the important academic and co-curricular efforts of our students, faculty and staff.
Second, we must allocate our resources strategically to build on our many areas of strength, distinction and excellence. Third, we must communicate about our accomplishments to numerous constituencies in ways that enhance our financial position and our areas of strategic focus. Together, these three steps will strengthen and enhance the university.
Moreover, we must pursue these critical objectives in ways that are consistent with our core values. For example, support for students from all socio-economic backgrounds has been a core value of our campus and we must maintain this support. Consistent with this value, our State University Grant (SUG) program will allocate $45 million in need-based tuition waivers in 2012-2013.
To strengthen our financial position, we are altering our fiscal strategy in three important ways. First, we are increasing our focus on enhancing revenues. We have dramatically reduced costs since 2007/08. Budget reductions of over $56.5 million in instruction and support funding have been implemented or are in the process of being implemented. We will continue to pursue efficiencies and reduce costs whenever possible, but we cannot accommodate the full $118 million reduction in state appropriation solely by reducing costs. To do so would significantly jeopardize our ability to carry out our core missions of education, research and service.
In enhancing revenues, we must pursue multiple revenue initiatives. This will ensure a diversified, more robust base of support for the university. Our first comprehensive fundraising campaign is one such revenue initiative. Our campaign goal is $500 million and we have already raised $320 million.
These funds are already supporting numerous aspects of our academic and co-curricular programs. Enhancing revenues in Extended Studies programs and our auxiliary organizations, as well as increasing enrollment of non-resident (international and out-of-state) students, all hold promise for supplementing our philanthropic efforts.
Second, we must consider the budget of the university and its auxiliary organizations from an integrated perspective. This integrated approach produces significant advantages, as the auxiliary organizations can absorb certain costs previously borne by the university operating fund.
Consistent with this approach, the $749.5 million budget President Hirshman approved for 2012-2013 covers all revenues from all sources, including the revenues administered through our auxiliary corporations.
Third, we must take additional steps to protect the academic core of the university.
In prior years, we allocated budget reductions to the divisions using a pro rata approach. Given the scope of prior reductions to, and the potential impact of prospective reductions on, our academic programs, we can no longer pursue this approach. Pro rata reductions to our academic core would seriously jeopardize our ability to continue to provide instruction and would hamper our students’ progress to graduation.
For the 2012-2013 budget year, the President’s Budget Advisory Committee (PBAC) has recommended and President Hirshman has approved an Academic Affairs’ budget reduction that is approximately one-half of the division’s pro rata share. The Table below lists the recommended and approved 2012-2013 reduction amounts for all of the university’s divisions. Each divisional vice president has developed a plan for handling the divisions’ reduction that includes cost reductions and cost recovery from auxiliary organizations as described above.
| DIVISION | PRO-RATA | APPROVED FACULTY-ADJUSTED PRO-RATA |
| President/KPBS | (189,064) | (173,764) |
| Academic Affairs | (13,749,744) | (6,375,884) |
| University Non-Divisional | N/A | (6,261,160) |
| Athletics | (426,320) | (391,820) |
| Business & Financial Affairs | (2,622,795) | (3,910,545) |
| Student Affairs | (1,117,700) | (1,027,250) |
| University Relations & Development | (430,027) | (395,227) |
| Total | (18,535,650) | (18,535,650) |
The $6.2 million difference between Academic Affairs’ pro rata budget reduction and
its actual budget reduction has NOT been distributed to the university’s other divisions.
This amount is listed as “University Non-Divisional.” For 2012-2013, this amount will
be addressed through centrally-held reserves and increased non-resident tuition revenue.
In succeeding years, we must continue to increase revenues as described above to accommodate
this obligation.
In a time of challenge, outreach and consultation become more, not less, important. In recognition of the importance of consultative processes, the university will undertake a broad-based strategic planning process beginning in the fall. This process will consider the state of the university relative to its mission.
It will consider how we can allocate our resources strategically to build on areas of strength and it will consider how we can pursue an integrated financial strategy that will provide our students, faculty and staff the support their efforts merit.
This summer, President Hirshman will meet with representatives of our governance groups to begin discussions of this consultative process. Following this meeting, we will provide more information about the planning process and opportunities for communal participation in the process. We are confident that, working together, we can address our current challenges and emerge as an even stronger university.