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University Update

University Update

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TO: Members of the San Diego State community
 
FROM: Elliot Hirshman, President
           Sally Roush, Vice President of Business and Financial Affairs

July 6, 2011

Budget Update #33

We are writing to inform you of recent developments in the California state budget process and the impact of these developments on our FY 2011-2012 budget.

The budget passed by the Legislature and signed into law by the Governor on June 30 includes further reductions and presumes additional increased revenue of approximately $4 billion. While the Governor requested tax extensions, these were not included in the final budget.

The immediate implication of the budget is that the California State University system faces an additional $150 million reduction this year. This reduction is on top of the $500 million reduction the CSU has already received for FY 2011-2012. This will translate into a total reduction in appropriation of approximately $54 million for San Diego State University in FY 2011-2012. Should the increased revenue of approximately $4 billion cited above not materialize, it is expected that there will be an additional $100 million mid-year reduction to the CSU system with consequent effects on our budget.

While these reductions are significant and will have substantial impacts on our programs, our university leadership and shared governance processes have taken critical steps to mitigate the effects of these cuts as much as possible.

First, we have exercised prudence in multiple ways in preparation for this year’s budget. The university has held approximately $6.1 million in base budget reserve, and the divisions have approximately $19 million in base budget funds that were allocated in fiscal 2010-2011 and remain largely unobligated. Similarly, the divisions have substantial one-time funds that can be used to delay and mitigate the effects of budget reductions and cover costs through the end of the year if there is a mid-year budget reduction. In this context, it is important to note that on June 16, prior to the conclusion of the state budget process, the university took the prudent step of adopting a preliminary budget that distributed a $35.3 million reduction across SDSU’s major divisions.

Second, given the magnitude of the referenced reductions and the recognition that there would have to be increases in tuition fees to protect the access and excellence of our university (see statement from CSU Chancellor Charles Reed at http://blogs.calstate.edu/budgetcentral/), we have worked closely with our CSU colleagues to plan for substantial increases in financial aid to ensure continuing access for our students. Chancellor Reed has indicated he will ask the Board of Trustees to approve an additional 12% tuition fee increase for the fall 2011 semester at its July meeting. Given this action, we are planning to allocate an additional $7.9 million to the State University Grant program FY 2011-2012. This self-funded, need-based financial aid program reflects a commitment of approximately 1/3 of the projected additional tuition revenue to maintain and ensure access.

Third, we have maintained, and will continue to maintain, our commitment to shared governance processes. Given the circumstances described here, we are currently estimating that, in addition to the $35.3 million reduction in our approved FY 2011-2012 budget, an additional budget reduction of approximately $2 million will be required to balance our FY 2011-2012 budget. Consistent with our traditions of shared governance, the President’s Budget Advisory Committee will convene to discuss these final additional reductions as well as a strategy to address a possible mid-year reduction. The committee will endeavor to convey its recommendation by July 28, and we will share this information as soon thereafter as possible.

We recognize the significant challenges the current reductions present, as well as the shared sacrifices SDSU’s students, faculty and staff have made throughout the current period. On behalf of the entire leadership team, we thank you for your efforts and commend you for your commitment to excellence and access.