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Uses of Revenue
Uses of Funds

Graduation Initiative 2025: $75,000,000

The CSU currently enrolls more than 480,000 students. One-in-three undergraduates are the first in their family to attend college, and more than half of CSU undergraduates are Pell recipients. In 2015-16, more than half of CSU bachelor’s degrees earned were by first generation college students. Improving degree completion rates at the CSU will not only have significant consequences for individual students and their families but will also contribute to the state and national economy by moving thousands of additional graduates into the workforce annually. Today, CSU students earn nearly 100,000 bachelor degrees annually. Over the next 14 years with no gains in outcome rates, CSU students are estimated to earn 1.4 million bachelor degrees. Achieving the Graduation Initiative goals, coupled with enrollment growth, will enable the CSU to introduce an additional 500,000 college graduates into the workforce between now and 2030.

The CSU carefully established a set of five areas of investment that will be the most important for dramatically improving student success. It is in these five areas that campuses have invested over $85.0 million in ongoing funding and $47.5 million in one-time allocations. This funding started the ball rolling on strategic initiatives that can be brought to scale as momentum builds across the system. For 2018-19, an additional $75.0 million will be invested as the second year of a six-year plan totaling $450.0 million.

  • Improve Course Taking Opportunities – For students to graduate sooner, they need to know which classes are required for their selected major, and campuses need to know when to offer them so that students can stay on-track to graduation. Investments will focus on offering more sections of high-demand courses, when students need them.
  • Tenure-Track Faculty Hiring – In order to offer more courses, and redesign the CSU’s approach to developmental education, more tenure-track faculty will be critical to the success of the initiative. Improved ratios of tenure-track faculty to lecturers will lay the groundwork for long-term success of all our students.
  • Enhanced Advising – Advising students more effectively and efficiently is an imperative for Graduation Initiative 2025. Hiring more professional advisors and giving them the tools to provide clear and accurate education plans will help students align their academic goals and career goals, improving both student services and institutional efficiency.
  • Academic and Student Support – Students can succeed academically when the university supports engagement and well-being. Expanded programs for student wellness and basic needs alongside improved academic support programs like supplemental instruction, tutoring and co-requisite models for developmental education will keep all students on track toward their chosen degree.
  • Data-Driven Decision Making – Keeping advising, course scheduling and resources in line with student needs requires innovative use of data across campuses and the system. Campuses will continue to invest in student information systems and data tools to facilitate strategic and intentional campus decision making.

The CSU has already taken major steps to improve academic preparation. Beginning in fall 2018, two strategies will be implemented to change the way students work on academic skills in math and English. The CSU will offer credit-bearing academic courses rather than developmental courses, and strengthen the Early Start Program to offer students college credits in the summer before their first term. The CSU is also in the process of revising its assessment and placement protocols used to determine college readiness. Through these deliberate policy changes, the CSU is fundamentally changing the academic interventions provided to students, removing deficit models, and relying on innovative approaches to better serve students.

Compensation Increase: $122,100,000

The CSU Board of Trustees recognizes compensation for faculty, staff, and management as a key element of the university’s success. Continued investment to make progress toward competitive salaries is critical for the CSU to fulfill its primary mission of access to an affordable and high-quality education. A competitive compensation package is essential to the CSU’s ability to recruit and retain faculty, staff, and management employees who contribute to the CSU’s mission of excellence.

This budget plan calls for $122.1 million to fund a compensation pool for current, tentative, and pending contracts, new contracts open in 2018-19 and commitments to non-represented employees.

Funded Student Enrollment: $39,905,000

The CSU was established to provide a high-quality, affordable education to the top one-third of high school graduates and eligible community college transfer students in California. Each year, nearly 480,000 undergraduate students attend the CSU and more than 119,000 students graduate ready to contribute to their communities. The CSU is the largest and most diverse system of higher education in the country, and more and more qualified students apply for admission to the CSU each year.

As the population of California remains steady, the number of high school graduates completing admissions requirements for the CSU continues to grow. To meet growing demand from students, and the longer term workforce needs of California for more baccalaureate degrees, the CSU continues to ask for funding for enrollment growth in its annual operating budget request. The Public Policy Institute of California projects a shortage of baccalaureate degrees by 2030—in excess of one million degrees. For the CSU to do its part, the CSU has to graduate an additional 500,000 students by 2030, or about 5,300 additional degrees each year from 2018 through 2030. This growth is a part of the projections included with the goals of Graduation Initiative 2025.

As part of the 2018-19 operating budget plan the CSU requests $39.9 million to fund one percent enrollment growth (3,641 FTES). Even with this funding, there are eligible students that the CSU cannot admit due to the lack of capacity or resources. A recent study commissioned by the Governor's Office of Planning and Research found that 41 percent of high school students in 2015 were eligible for CSU admission, which is far higher than the 33 percent target recommended by the Master Plan. The Board of Trustees will be adopting an enrollment management plan in March 2018 to better serve the students who qualify for the CSU, and that they have the opportunity to enroll at one of the 23 campuses.


Enrollment Growth

​2017-18 Residential FTES Base​364,131​
​Proposed Growth (1%)​3,641
​2018-19 TOTAL RESIDENT FEES​367,772​
​Marginal Cost Rate per FTES​$10,960
​Total Cost of Enrollment Growth​$39,905,000​

Academic Facilities and Infrastructure: $15,000,000

The CSU prioritizes critical infrastructure and utility renewal projects and facility renovation to support the campuses' academic program needs. The $15.0 million request will also enable the CSU to fund limited capacity growth to serve new enrollment. Under current bond market conditions, $15.0 million would finance approximately $225 million for capital projects across the system.

The budget plan will allow the CSU to keep pace with the aging infrastructure (annually growing by approximately $150 million) and will help reduce the academic facility deferred maintenance backlog, which currently stands at approximately $2 billion. For more information on specific projects and priorities, see the CSU 2018-19 Capital Outlay Program and the Five-Year Facilities Renewal and Improvement Plan.

Mandatory Costs: $30,888,000

Mandatory costs are expenditures the university must pay regardless of the level of funding allocated by the state, and they often increase independent of the state budget condition. These costs include increases for employee health and retirement benefits, state minimum wage cost increases, and the operations and maintenance of newly constructed facilities. The 2018-19 operating budget includes $30.9 million to address increases in mandatory cost obligations.

​Health Benefits​$12,029,000
​Retirement Benefits
​11,100,000​​
​Maintenance of New Facilities
​3,601,000​​
State Mandate (minimum wage)
4,158,000
​Total
​$30,888,000

Health Benefits

Permanent base budget costs associated with January 2018 employer-paid health care premium increases are over $12.0 million. Health care premiums are shared between the CSU and its employees, with the CSU funding a significant portion of the costs. The CSU is governed by Government Code Section 22871 that defines the employer-paid contribution rates.

Retirement Benefits (above state-funded)

Beginning with the 2014-15 fiscal year, a limit was placed on the state’s obligation to adjust CSU retirement funding due to annual changes in CalPERS rates. While the state’s obligation to adjust retirement funding based on rate changes continues (Government Code Section 20814), the salary base applied to the incremental rate change is set to the CSU 2013-14 pensionable payroll level as reported by the State Controller’s Office. The current projected CSU cumulative cost of retirement (above state-funded) from 2014-15 to 2018-19 is $26.5 million. The $11.1 million included here represents the 2018-19 share.

Maintenance of New Facilities

The CSU is scheduled to open 315,545 square feet of new facilities in 2018-19. The cost to fund regular maintenance of these facilities is $11.41 per square foot, for a total of $3.6 million in 2018-19. Regular maintenance of new facilities includes the cost of utilities, building maintenance, custodial, landscape, and administrative support.

Minimum Wage Increases

In January 2018, the California minimum wage will increase from $10.50/hour to $11.00/hour. The estimated annualized cost of the increase is over $4.1 million. Further, the California minimum wage will increase in each subsequent year until January 2022 when it reaches $15/hour. The current projected CSU cumulative cost of minimum wage increases from 2017 to 2022 is $66.0 million.

Other Inflationary Cost Increases: $17,400,000

As is the case with any large and complex organization, there are cost increases each year based on both explicit and implicit factors. The CSU has acknowledged and included mandatory cost increases (e.g. employee benefit costs) for many years in its operating budget request to the state. In addition to these explicit cost increases, the university faces implicit cost increases associated with the regular ongoing obligations of the university. These cost increases are affected by larger economic factors, such as inflation.

Inflation affects campus and system contracts, supplies, services, and equipment each year, but the CSU has not made it a practice to include inflationary cost increases in the annual operating budget request. It is necessary to start this practice to better understand the budgetary pressures that these costs represent and to acknowledge the success of campuses in absorbing these new costs to balance their budgets while also bolstering student success.

To estimate the effect of inflation on campus budgets, the Higher Education Price Index (HEPI) was applied to non-personnel costs such as communications, information technology (software, hardware, and infrastructure), library subscriptions, contractual services, instructional equipment, and travel. Over the past five years it is estimated that these inflationary cost increases accumulated to over $46.4 million.

In addition to inflationary costs, this line in the budget acknowledges many new costs from recent state and federal mandates not accompanied by additional state or federal funding. Examples include American Disabilities Act compliance and accommodations, new positions for diversity and inclusion and federal Title IX compliance, Clery Act and California Fair Pay Act compliance, and State Fire Marshal and environmental regulations. The CSU is committed to providing an environment that recognizes the needs of all our students to study in a safe and adaptable educational setting. It must be acknowledged that new state and federal mandates and changes to various regulations increase costs that must ultimately be absorbed by individual campuses that must make year-to-year decisions to create greater efficiencies and reallocate funds to the highest priorities.

For the 2018-19 operating budget, it is estimated that inflationary cost increases and other unfunded obligations total $17.4 million and the resulting, offsetting cost avoidance, efficiencies, and program reallocations represent a like amount.