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 2019-20 operating budget request includes $45.4 million for increases in mandatory cost obligations.
Permanent base budget costs associated with January 2019 employerpaid health care premium increases are over $7.3 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 California Government Code section 22871 that defines the employer-paid contribution rates.
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 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 $26.5 million included here represents the 2017-18, 2018-19 and projected 2019-20 unfunded retirement cost for annual CalPERS employer-paid rate adjustments that must be funded by the CSU.
The CSU is scheduled to open 404,052 square feet of new facilities in 2019-20. The cost to fund regular maintenance of these facilities is $11.75 per square foot, for a total of $4.7 million in 2019-20. Regular maintenance of new facilities includes the cost of utilities, building maintenance, custodial, landscape and administrative support.
In January 2019, the California minimum wage will increase from $11/hour to $12/hour. The estimated annualized cost of the increase on CSU campuses is over $6.8 million. Further, the California minimum wage will increase in each subsequent year until January 2022 when it reaches $15/hour.