One final item from this weeks BOT: The report to ASCSU, shared with permission
Report to the ASCSU
Board of Trustees Meeting
May 23 & 24, 2017
Submitted by Kevin Baaske
The BOT convened its public meeting ahead of the 12:45 scheduled start time.
Committee on Institutional Advancement – All motions approved
Naming of Bookstein Hall – California State University, Northridge
Naming of Dignity Health Baseball Clubhouse – California Polytechnic State University, San Luis Obispo
Naming of The Bartleson Ranch and Conservatory – California Polytechnic State University, San Luis Obispo
‘Naming of The Swanson Cal Poly Golf Program – California Polytechnic State University, San Luis Obispo
Committee on Campus Planning, Buildings and Grounds Consent—All motions approved
- Categories and Criteria for the Five-Year Facilities Renewal and Capital Improvement Plan 2018-2019 through 2022-2023, California Environmental Quality Act Annual Report, Information Mark Nelson,
- California State University Seismic Safety Program Annual Report, Information
- Intramural Field Upgrade for California Polytechnic State University, San Luis Obispo
- Replacement Space for Residential Life Programs and Conference Center for San Diego State University, amends physical Master Plan. Proposal is to two new facilities replacing the existing Tula/Tenochca conference facility. The new Tenochca Community Space to support student housing will be built on the site of the demolished building, while the new Tula Conference Center will be built in closer proximity to the parking structures and at the terminus of a main campus walkway serving the east campus facilities. Cost is estimates at $24 million to be paid for through CSU Systemwide Revenue Bond with the balance funded from housing reserves. Approved
- Replacement and Expansion of the Equine Center for California Polytechnic State University, San Luis Obispo. Land use refinements of Physical Master Plan. The Equine Center improvements are the first of four improvements in this revised Master Plan. Phase 1 primarily includes the renovation of the existing equestrian arena, replacement of the breeding and stallion barns, and expansion of the hay barn at the north end of the Equine Center. Approved
- Holloway Avenue Revitalization: Replacement of Student Housing (High Density, Mixed-Use) and Creative Arts for San Francisco State University. Provides housing opportunity for 500 students and commercial properties. Financed by a private developer. Creative Arts Replacement Building. For broadcast and electronic arts departments. It will serve Broadcast Electronic Communication Arts (BECA) the largest SFSU College, and interdisciplinary inquiry. Paid for through CSU-system bonds and CSU reserves. Approved
- North Campus Enhancements and Soccer Training Facility for California State University, Los Angeles. Partnership with the Los Angeles Football Club (a new soccer franchise). Paid for by this club, including maintenance. The LAFC added money for student athletic support. Proposal provides new student housing facilities (1,500 beds), additional sport and recreation fields, and a parking structure. Approved
- Representatives from the CSU Employees Union spoke about the significant adverse consequences of moving of work from CSUEU employees to the private sector (outsourcing) and the need for compensation increases in the next contract.
Committee on Finance Consent Actions
Appointment of Three Members to the Fullerton Arboretum Commission. Approved
- Approval to Issue Trustees of the California State University Systemwide Revenue Bonds and Related Debt Instruments for Project at California State University, Los Angeles (Bioscience Incubator, Overseen by University Auxiliary Board). Approved
- Approval to Issue Trustees of the California State University Systemwide Revenue Bonds and Related Debt Instruments for Project at San Diego State University. Approved
- Final Approval of a Public-Private Partnership with the Los Angeles Football Club to Develop a Practice Facility at California State University, Los Angeles—described above. Approved
- Final Approval of a Public-Private Partnership Mixed-Use Development Project at San Francisco State University—described above Approved
Report on the 2017-2018 Support Budget
As a result of past board of trustees’ discussions, the Chancellor’s Office has implemented an active strategy to obtain an additional $167.7 million from the state than is proposed in the governor’s budget proposal. That amount will bridge the gap between the trustees’ support budget request ($324.9 million) and the governor’s January proposal ($157.2 million).
Governor’s May Revise
- Proposes $4 million redirected from CSU budget to supplement Cal Grant funding to cover the cost of tuition increases. Increased Cal Grants will cost the State of California $28 million.
- Governor signaled in the future CSU growth will lead to a 3% budget increase, instead of the 4% CSU has been receiving. This would result in a loss of about $30 million in recurring funds.
Senate Budget Committee
- Supported $153 million budget, which is consistent with the governor’s may revise
- Senate added $25 million in one-time funding for graduation initiative 2025
Assembly Budget Committee
- Taking action today (5/23/17)
- Restored Middle-Class Scholarship
A CFA representative spoke about the threats posed by Border Patrol and ICE to our students and the need for the BOT and campus presidents to reassure DACA and DACA eligible students.
I have attached the bill by bill assessment provided to the BOT. I have highlighted the bills where the CO’s position has changed.
Education Policy Committee
- Graduation Initiative 2025
EVC Blanchard read, verbatim, what had been written for the Ed Policy Committee. Since this is perhaps more relevant to Senators than some of the other things, I have copied it as a separate document (attached).
EVC Blanchard added a couple of points of elaboration. These are provided below:
Increasing Financial Literacy
Blanchard cited programs at Fresno and Northridge as examples of CSU efforts to explain the financial benefits of graduating sooner rather than later
Micro-grants to help students graduate who only need a little more financial help
Fresno State has micro-grants of $150 and more, which can make a difference between a student dropping out and earning a degree. Trustee John Nilon argued for the importance of grants and the need to acquire private funds or to change state law so that public funds can be used. Trustee Kimbell played “devil’s advocate” arguing that students need to be responsible. James Minor pointed out that many campuses also have emergency loans.
ELM & EPT and the Graduation Writing Assessment Requirement (GWAR)
Trustees asked about these exams/requirements. The ELM and EPT will be examined by the Academic Preparation Workgroup. GWAR is not currently under review as the CO is focusing on preparation, but consultation with various entities has raised this as a possible barrier to graduation.
Campus allocation in support of GI 2025 plans
$10 million in May for:
Instructional innovations to improve academic preparation
Technology platforms to improve data-drive decision making
Increased hiring of tenure-track faculty, and
Increased course offerings
In accordance with the California Education Code, a campus determines each student’s California residency status for tuition purposes at the time of admission. Students who are deemed nonresidents for tuition purposes by the campus may appeal the initial residency status decision or the subsequent reclassification decision.
The proposed policy (which amends Title 5) would establish criteria for appealing this determination.
The campus decision may be appealed only if at least one of the following applies:
The decision was based on:
a significant error of fact;
a significant procedural error; or,
an incorrect application of law which, if corrected, would require that the student be reclassified as a resident; and/or,
Significant new information, not previously known or available to the student, became available after the date of the campus decision classifying the student as a nonresident and based on the new information, the classification as a nonresident is incorrect.
Amendments to Title 5 require a public hearing, so the BOT paused and asked if anyone was present to discuss the proposed change to Title 5. No one did. The BOT then approved the proposal.
Title 5 Amendments
Doctor of Audiology Degrees
As previously outlined
Bachelor of Arts Degrees
Proposal removes the minimum 40 upper division units required in BA degrees.
What the amendment would allow:
All existing degree programs may maintain existing unit requirements, including 40 overall upper-division units to complete BA degrees.
Through the usual curriculum procedures, campuses would have the authority to decide the number of upper-division units required for BA programs.
What the amendment would not do:
Change any campus’ existing BA policy requirements.
Change any existing BA degree program on any campus.
Prohibit campuses from requiring a minimum number of overall upper-division units in the BA.
These degrees do not specify minimum overall upper-division requirements:
Bachelor of Architecture
Bachelor of Fine Arts
Bachelor of Landscape Architecture
Bachelor of Music
Bachelor of Science
Lower-Division Transfer Patterns
Three Lower-Division Transfer Patterns (LDTP) Title 5 sections are proposed for repeal because LDTP pathways were rendered obsolete when Senate Bill 1440 (Padilla) The Student Transfer Achievement Reform Act (or STAR Act) was signed into law in 2010, creating Associate Degrees for Transfer.
Admission and Transfer
Amendments are proposed to ensure similar admission standards for freshman and transfer students such that grades in specific courses required for transfer applicants will be evaluated in the same manner as the course grades of high school applicants.
Amendments clarified that transfer students must earn a C- or better in the Golden Four.
Proposed amendments to sections 40804 and 40804.1 specify the conditions under which exceptions may be permitted for transfer applicants who have earned fewer than 60 transferable units. These changes will codify what is already admission practice at some CSU campuses, serving as part of an overall enrollment management strategy.
Provided an overview of campus audits and technology audits, too.
Committee on University and Faculty Personnel
Sally Rausch Interim President San Diego State University
Salary = $420,64 + $60,000 housing allowance—currently waived + auto allowance. Compensation for the San Diego State University Interim President is at 94% of the median of the peers, in other words, it is less than the 50th percentile of peers identified by CSU. That makes the compensation within Board policy
Trustees Silas H. Abrego and Douglas Faigin both spoke against the salary for Dr. Rausch. Her salary is higher than many (all?) long serving CSU presidents. They also argued that it was the wrong message to send when also raising tuition. Trustees Lillian Kimbell, Maggie White, and John Nilon spoke in support of Chancellor White’s request, including Chancellor White’s comparisons to presidential salaries at CSU identified peer institutions. Trustee Maggie White also noted that the CSU needs to fairly compensate other CSU employees. Motion passed. Three “no” votes and one abstention.
Melissa Baird hired as Vice Chancellor of Human Resources
Salary = $287,000; 2% higher than previous Vice Chancellor. That makes the compensation within Board policy
Board of Trustees: Reports
Adam Day, Chair of the Board of Trustees (Chair Eisen was absent)
Thanked and congratulated folks. Spoke glowingly about the diversity of the CSU presidents
Timothy White, Chancellor of the CSU
Cal State East Bay is receiving more applications than they can support and has declared impaction. Los Angeles and Chico have implemented targeted impaction (by major). All campuses complied with the public comment process as required by state law.
Pomona and San Francisco have discontinued specific class level and academic programs for the 2018-2019 year.
Year-round Pell coming!
*In response to student speakers during the public comment period, Chancellor White announced that his office was in constant connection with Cal State LA President Covino, and that he had personally written to the presiding judge of the case overseeing the Claudia Rueda matter. Ms. Rueda, a Cal State LA student, was recently arrested by the U.S. Border Patrol.
Reports were also given by David Lopez, CSSA President, and Dia S. Poole, President of the CSU Alumni Council. Lopez presented two awards: Chancellor’s Office Staff Member of the Year: Kathleen Chavira, Assistant Vice Chancellor Advocacy and State Relations and President of the Year: Judy K. Sakaki (Sonoma State).
The Legislative Analysts Office has released its analysis of the Governor’s May Revise proposal.
California State University (CSU) Funding Up From January Levels by $121 Million, Primarily Due to Recognizing Tuition Increase. Under the May Revision, combined CSU funding from the two sources is $121 million (2 percent) higher than in the Governor’s January budget. is consists of $135 million in higher tuition revenue offset by a $15 million decline in state General Fund support. As compared with the revised 2016-17 level, CSU funding in 2017-18 is $247 million (4 percent) higher. Under the May Revision, CSU’s combined General Fund and tuition revenue reaches $6.8 billion in 2017-18. Below, we describe and assess the May Revision proposals for CSU.
Revises Base General Fund Increase Downward by $15 Million. …this reduction results from two adjustments. Under the May Revision, CSU receives an unrestricted base increase of $153 million rather than $157 million. ( This $4 million drop could be framed in many ways, including being conveyed as an adjustment to reflect higher Cal Grant costs due to CSU’s tuition increase. The administration, however, links the drop to its proposal to keep private Cal Grant awards at their current level rather than cutting them as previously scheduled.) The May Revision also adjusts CSU’s General Fund support downward by $11 million to reflect recently revised state contribution rates for CSU pensions.
Provides $2 Million From Transportation Special Fund. Pursuant to Chapter 5 of 2017 (SB 1, Beall), the May Revision appropriates $2 million from the State Transportation Fund to CSU for transportation research and transportation-related workforce training and education.
Assessment and Recommendations
Under May Revision, CSU Has Sizeable Unrestricted Base Increase. In March 2017, the CSU Board of Trustees approved a tuition increase for resident and nonresident students. is increase, which is scheduled to take effect in fall 2017, will generate net revenue of about $95 million in 2017-18 ($135 million in gross revenue less about $40 million that CSU intends to use for tuition discounts and waivers for certain students). When combined with the $153 million unallocated ongoing General Fund augmentation included in the May Revision, CSU would have $248 million (4 percent) in additional unrestricted base resources in 2017-18 compared with the current year.
Administration Does Not Earmark Any of Increase for Enrollment Growth. CSU has indicated that it intends to use the additional unrestricted monies to address a number of its priorities, including using (1) $139 million to fund collective bargaining agreements that were approved by the Board of Trustees last spring, (2) $26 million to cover basic cost increases (such as higher health care premiums for employees), and (3) $75 million for the system’s Graduation Initiative (primarily to make available more courses to current students). CSU has indicated that without additional funding from the state (beyond the amount proposed in the May Revision), it does not intend to fund enrollment growth in 2017-18.
Recommend Approving May Revision Funding Level but Setting Expectation for Enrollment Growth. In The 2017-18 Budget: Higher Education Analysis, we note that CSU has reported denying admission in recent years to some eligible transfer students. Given this development, together with statute that requires CSU to prioritize transfer applicants, we continue to recommend the Legislature signal to CSU that increasing transfer enrollment is a priority. Thee Legislature could send this signal by adopting provisional language that sets an enrollment target for new transfer students. An expectation of 2 percent enrollment growth in the budget year would result in about 7,200 more FTE transfer students being served, which we estimate would allow CSU to accommodate all or virtually all transfer applicants in 2017-18. Under our recommendation, costs for CSU to serve these students, which we estimateat about $60 million (after factoring in about $20 million in net tuition revenue generated by the additional students), likely would come at the expense of CSU’s Graduation Initiative. Given the opportunities we have identified for CSU to reform its assessment practices and make available more course slots by reducing excess units, we believe CSU can make significant progress on improving student outcomes without funding set aside for the Graduation Initiative in the budget year.
Here’s a May 11th email from the Chancellor to presidents and trustees about the Governor’s May revision:
Governor Brown and his administration released the “May Revision” of their budget plan. Unfortunately, the budget proposal was reduced slightly from January’s proposal by $4 million (http://www.ebudget.ca.gov).
Nevertheless, this revision maintains a steady, incremental recovery of state funding for the CSU, and from that perspective we are grateful.
We have – and will continue – to discuss at length why greater investment to achieve the Board of Trustees’ budget request is necessary and critical for our ambitious initiative and California’s future. The CSU must – and is – maintaining our advocacy presence in Sacramento to urge the legislature and the governor to prioritize the state’s economic and societal future. In this regard, you will be engaged during the next trustees’ meeting in a discussion of the revision and our advocacy efforts.
I appreciate the continuing support of the CSU community writ large who are working for a strong future for the CSU and California. Particularly, my thanks to CSSA, the Academic Senate and bargaining unit leaders. I know that – together – we are making the strongest possible funding case in Sacramento.
Our very own Jerry Schutte (Sociology; Statewide Academic Senator) has been doing yeoman’s work on the statewide senate’s tenure density task force.
I recently saw a letter from him to a senior legislative staffer which I thought set out the problems with admirable clarity and suggests a more CSU friendly way of thinking about the costs.
I asked his permission to share it; he did one better and rewrote it to make the issues even more accessible. I am therefore pleased to share this with you:
You’ve probably heard about a recent audit which found that hiring of administrators outpaces faculty hiring. From the LA Times’ report
The audit, titled “California State University: Stronger Oversight is Needed for Hiring and Compensating Management Personnel and for Monitoring Campus Budgets,” specifically found that between fiscal years 2007-08 and 2015-16, the number of full-time equivalent “management personnel” — which includes administrators, supervisors and other professional staff — grew by 15%. Over the same period, the number of faculty rose by 7%, while non-faculty support staff rose 6%.
The audit found that the six campuses it reviewed could not justify the growth in new management personnel. One campus, California Polytechnic State University, San Luis Obispo, increased pay for at least 70 management personnel in 2016 who either had outdated performance evaluations or no evaluations on file.
President Harrison had Human Resources compile the growth rates for CSUN. From her email to me:
CSU audit system-wide finding related to MPP growth from FY 2007/08 to FY 2015/16:
- MPP = 15%
- Faculty = 7%
- Staff = 6%
CSUN data for the same time period:
- MPP = 5.2%
- Faculty = 18%
- Tenure/Tenure-Track = 53.3%
- Lecturers = -7.6%
- Staff = 4.7%
- Represented Staff = 5.1%
- Non-Represented Staff = -7.8%
[Updated 21 May 2017]
Here’s the original letter from the auditor: https://www.auditor.ca.gov/reports/2016-122/index.html
Here’s Chancellor White’s response: https://www.auditor.ca.gov/reports/2016-122/response.html
The Chancellor’s Office has prepared (and intends to keep updating) a frequently asked questions document on the academic preparation of CSU students.
You should be able to access it here: https://www2.calstate.edu/csu-system/why-the-csu-matters/graduation-initiative-2025/documents/academic-preparation-faq.pdf
Read it here: http://www.ppic.org/main/publication_quick.asp?i=1228
The Legislative Analyst’s Office has just issued the following report:
The 2017-18 Budget: Higher Education Analysis
In this report, we analyze the Governor’s higher education budget proposals. Though we think some of these proposals are reasonable and recommend the Legislature approve them, we recommend rejecting others and requesting additional information in a few cases. Below, we highlight a few of these recommendations.
We recommend the Legislature consider providing base increases for the University of California (UC), California State University (CSU), and California Community Colleges (CCC), as such increases would help the segments address certain cost increases, including salary, health care, and pension cost increases. Were it to support university cost increases beyond those that could be covered using the Governor’s proposed augmentations, the Legislature may want to consider tuition increases linked to anticipated inflation in 2017-18.
We caution against augmenting funding for some other proposals coming from either the administration or the segments—including UC’s Academic Excellence initiative, CSU’s Graduation Initiative, and CCC’s Innovation Awards—as they lack sufficient justification at this time. Instead, we recommend improving implementation of existing student support programs before expanding these initiatives.
We think a few proposals, such as the CCC guided pathways and CCC Chancellor’s Office staffing proposals, lack sufficient detail. We recommend the Legislature ask the administration to provide certain additional information about these proposals during spring budget hearings.
We discuss these recommendations as well as many others, including ones involving Hastings College of the Law, Cal Grants, and Middle Class Scholarships, in our report, which may be accessed using the following link: http://lao.ca.gov/Publications/Report/3559
If you’re looking for the CSU part. Here it is:
California State University
In this section, we provide an overview of the Governor’s proposed budget for CSU, describe CSU’s proposed spending plan, and assess key components of that plan.
CSU’s Budget Proposed to Reach $10 Billion From All Sources in 2017‑18. As Figure 15 shows, CSU’s budget would increase by $182 million (1.8 percent) over revised 2016‑17 levels. Of total CSU funding, about two‑thirds ($6.7 billion in 2017‑18) comes from core funds—a combination of state General Fund, state lottery, and student tuition and fee revenue. These three fund sources, which would increase by a combined $126 million (1.9 percent) in the budget year, supporting CSU’s core mission of providing undergraduate and graduate education. CSU also receives federal funds and operates various campus enterprises, such as student dormitories and parking facilities. The remainder of CSU’s revenues ($3.3 billion in 2017‑18) mostly supports these other operations.
California State University Funding by Source
(Dollars in Millions)
2015‑16 Actual 2016‑17 Revised 2017‑18 Proposed Change From 2016‑17 Amount Percent Core Funds General Fund Ongoing a $3,271 $3,479 $3,714 $235 6.8% One time 5 110 1 ‑109 ‑99 Subtotals ($3,276) ($3,589) ($3,715) ($126) (3.5%) Lottery $58 $55 $55 — — Tuition and feesb 3,022 2,963 2,963 — — Subtotals, Core Funds ($6,357) ($6,607) ($6,733) ($126) (1.9%) Other Funds Federal funds $1,256 $1,385 $1,385 — — Other CSU fundsc 2,104 1,844 1,899 $55 3.0% Subtotals ($3,360) ($3,228) ($3,284) ($55) (1.7%) Totals $9,717 $9,835 $10,017 $182 1.8% a Includes CSU debt service on general obligation and lease‑revenue bonds and funds for pensions and retiree health benefits.
bIncludes funds that CSU uses to provide tuition discounts and waivers to certain students. In 2017‑18, CSU plans to provide $662 million in such aid.
cIncludes funds such as housing fees, parking fees, and extended education charges.
Governor’s Budget Proposes $3.7 Billion in General Fund Support for CSU. Under the Governor’s budget, ongoing General Fund support for CSU would increase by $235 million (6.8 percent) over 2016‑17 levels. This increase is offset by $109 million in expiring one‑time funds provided to CSU in 2016‑17. Altogether, General Fund support for CSU would increase a net of $126 million (3.5 percent).
Most of CSU’s General Fund Augmentation Unrestricted. Figure 16 details General Fund changes for CSU under the Governor’s budget. As the figure shows, the Governor proposes a $157 million ongoing unrestricted increase. This funding is a continuation of the Governor’s original long‑term plan for the universities, which since 2013‑14 has sought to provide annual unallocated base increases. In addition, the Governor’s budget provides a total of $78 million in earmarked augmentations. Specifically, the budget proposes (1) $50 million for increased pension costs, (2) $23 million for higher retiree health care costs, and (3) $5 million for higher lease‑revenue debt service for previously approved capital projects. (In an effort to encourage CSU to consider pension costs as part of its new hiring and salary decisions, the state changed how it budgeted for CSU pension costs a few years ago. Under the new policy, the state provides direct funding for CSU’s pension costs attributed to its 2013‑14 payroll level, but CSU is responsible for funding any additional pension costs using its unrestricted funds.) The Governor’s budget does not directly fund enrollment growth.
2017‑18 California State University General Fund Changes
2016‑17 Revised Funding $3,589 Unrestricted base increases: Funding per Governor’s original long‑term plan $131 Redirected savings from Middle Class Scholarship modifications 26 Subtotal ($157)a Pension adjustment $50 Retiree health benefits adjustment 23 Lease‑revenue bond debt service adjustment 5 Remove one‑time funding provided in prior year ‑87 Other adjustments ‑21 Total Changes $126 2017‑18 Proposed Funding $3,715 aCSU indicates that it would use these funds to cover recently ratified bargaining agreements ($139 million) and various other cost increases ($18 million).
Governor’s Budget Does Not Assume Tuition Revenue Increases. The Governor’s budget assumes that CSU does not raise its tuition charges. Unlike recent years, however, the Governor does not condition his proposed General Fund increases on CSU holding resident tuition levels flat.
CSU’s Spending Plan
CSU Proposes to Spend the Vast Majority of Its Unrestricted Base Increase on Compensation Commitments. Of the $157 million unrestricted base increase proposed by the Governor for 2017‑18, CSU indicates that it intends to spend $139 million (88 percent) for collective bargaining agreements ratified by the CSU Board of Trustees in spring 2016. CSU indicates that the remaining $18 million would fund basic cost increases, such as higher medical and dental premiums for current employees and additional pension costs (on payroll exceeding the 2013‑14 level).
CSU Proposes to Support 12 Previously Approved Capital Projects. CSU’s 2017‑18 capital outlay request includes 27 projects totaling $1.6 billion. Of these 27 projects, 17 were previously approved by the state (virtually all of them as part of the 2016‑17 budget process) but have not yet been funded by CSU. The other ten requests are new submissions. At its November 2016 meeting, the Board of Trustees approved a multi‑year plan for CSU to finance up to $1 billion of the $1.6 billion in submitted capital projects using university revenue bonds. Using this bond authority, the Chancellor’s Office would fund 12 of the previously approved capital projects. The associated annual debt service is estimated to be about $50 million.
CSU Proposes Using Existing Funds for Projects. CSU indicates it would support this associated debt service using existing core funds. This is possible because a like amount of monies were “freed up” from expiring debt from former projects as well as restructuring of outstanding State Public Works Board debt. (Under recent changes in state law, CSU is permitted to pledge its General Fund main appropriation—excluding the amounts necessary to repay existing debt service—to issue its own debt for capital outlay projects involving academic facilities.) The CSU estimates that the first $200 million in CSU revenue bond proceeds would provide $35 million for new facility space at CSU Monterey Bay as well as $165 million for building replacements and renovations to facilities and infrastructure at most campuses in the system.
CSU Indicates It Would Not Be Able to Fund Several Other Priorities Under Governor’s Budget. Due to the size of the employee contract costs that CSU is committed to funding in 2017‑18, CSU indicates that the augmentation provided in the Governor’s budget is insufficient to address other budget priorities. These priorities include enrollment growth, additional targeted funding for the segment’s Graduation Initiative, and a compensation pool for represented employee groups that have open contracts in 2017‑18 (as well as nonrepresented employees, such as administrative managers).
CSU Considering a Tuition Hike to Boost Funding Primarily for Graduation Initiative. Given that CSU believes the funding included in the Governor’s Budget is insufficient to address all of its budget priorities, CSU is considering a tuition increase. Under the proposal discussed by the Board of Trustees at its January meeting, tuition for resident undergraduates would increase by 4.9 percent. Tuition for nonresidents and resident graduate students would increase by about 6.5 percent. The proposed increase would generate $78 million in additional net revenue, which CSU officials have indicated would be used primarily to augment funding for the Graduation Initiative. The Board of Trustees likely will vote on the tuition proposal at its March 2017 meeting.
CSU’s Spending Plan Raises Several Issues for the Legislature. We think the Governor’s funding plan and CSU’s spending plan is a mixed bag, with some components more warranted than other components. Below, we provide our assessment of several key budget components—compensation, enrollment growth, and the Graduation Initiative. In the final part of this section, we consider the trade‑offs between additional state funding increases and student tuition increases.
Compensation Is the Largest Component of CSU’s Core Budget. Like other departments and agencies, salaries and benefits make up a significant share of CSU’s core budget (more than 80 percent). As noted earlier, compensation also accounts for the largest augmentation in CSU’s spending plan, with almost all unrestricted state General Fund allocated for compensation increases. The Legislature has several compensation‑related issues to consider.
Board of Trustees, Not the Legislature, Approves CSU Collective Bargaining Agreements. For most departments and agencies in the state, the California Department of Human Resources represents the Governor in labor negotiations between the state and its employees. The resulting agreements must be ratified by the Legislature before going into effect and the state directly funds the associated costs of the agreements. In the case of CSU, state law gives the Board of Trustees authority to negotiate collective bargaining agreements. The Chancellor’s Office represents the Trustees during these negotiations and the resulting agreements must be ratified by the Trustees before going into effect. The Trustees are expected to manage these agreements within CSU’s overall budget.
Trustees Recently Approved Sizeable Collective Bargaining Agreements. The CSU system has 13 represented employee groups. The largest group is the California Faculty Association (CFA), which represents more than 25,000 CSU faculty, librarians, counselors, and coaches. After extensive negotiations with CFA (and a near‑strike by union members), in spring 2016 the Trustees ratified a multiyear contract. Under the agreement, all faculty unit employees receive a cumulative 10.8 percent general salary increase effectively over a two‑year period and eligible faculty unit employees receive an additional 2.7 percent increase in 2017‑18. Ratification of the CFA contract triggered revised agreements with several other CSU bargaining units, which resulted in general salary increases for those members. Altogether, the Chancellor’s Office estimates these new contracts will cost CSU an additional $139 million in 2017‑18.
Virtually All Other CSU Bargaining Units Have Open Contracts in 2017‑18. With a few exceptions, CSU’s contracts with its other represented employee groups expire at the end of 2016‑17. The Chancellor’s Office has expressed a desire to provide funds for 2017‑18 to support a compensation pool for these represented groups, as well as nonrepresented employees. The Chancellor’s Office calculates that every 1 percent increase for such a compensation pool would cost $18 million. Were the Legislature to want compensation to keep pace with inflation year over year, it might consider increases between 1 percent and 3 percent. (In 2017‑18, the state and local government price index is expected to increase 1.1 percent, whereas the California Consumer Price Index is expected to increase by 3 percent.) Were CSU to increase tuition levels in 2017‑18, some or all of the resulting revenue could be dedicated to the desired level of compensation increases.
CSU on Track to Meet Enrollment Target for 2016‑17. The 2016‑17 Budget Act sets an expectation for CSU to increase resident enrollment by 1.4 percent (an additional 5,194 FTE students) over 2015‑16. Based on preliminary enrollment data provided by CSU, campuses appear to be on track to meeting this target, with fall 2016 FTE student enrollment about 1.3 percent higher than the previous fall.
Several Factors for Legislature to Consider in Deciding Whether to Grow Transfer Enrollment in 2017‑18. The past several years CSU has reported denying admission to some eligible transfer students. Given this development, together with statute that requires CSU campuses to prioritize eligible transfer applicants over freshman applicants, the Legislature may want to consider targeting enrollment growth funding for transfer students in 2017‑18. Every 1 percent growth in transfer enrollment would result in about 3,600 more FTE students—for a total cost of $38 million ($20 million state General Fund and $18 million in tuition revenue generated by the additional students).
Could Withhold Decision on Freshman Enrollment Growth Until May. Existing data suggests CSU is drawing from beyond its freshman eligibility pool. Given that a freshman eligibility study is currently underway and that CSU must report by March 2017 on recommended budget or policy changes to produce more bachelor’s degrees, the Legislature may wish to wait until the May Revision before deciding on enrollment growth funding for freshmen. Regarding potential changes to its policy on the size of CSU’s freshman eligibility pool, we encourage the Legislature to take time to explore the potential consequences of any specific proposal. Any change to this pool would have significant fiscal and programmatic implications moving forward not only for CSU but also CCC, UC, and the state.
CSU Has Set Ambitious Performance Targets. As noted earlier, the state and CSU currently are funding a Graduation Initiative. The goals of this initiative, which was originally launched by the Chancellor’s Office in 2009, are to boost graduation rates for freshmen and transfer students as well as eliminate achievement gaps for low‑income and other traditionally underrepresented students. For example, CSU seeks to more than double its four‑year graduation rate (for all entering freshmen) between now and 2025, moving from its current rate of 19 percent to 40 percent.
CSU Implementing Various Improvement Strategies as Part of Graduation Initiative. These strategies include hiring more faculty and increasing the faculty‑to‑student ratio, encouraging faculty to adopt new instructional methods, and providing enhanced student support services such as tutoring and advising. CSU reports spending $48 million in base funds on these Graduation Initiative strategies. CSU maintains it will need additional resources to carry out campus plans and achieve the segment’s performance goals. CSU has not undertaken a systematic evaluation to assess the impact each of these strategies is having on its graduation rates.
CSU Has Much More Work to Do on Rethinking Assessment and Placement Policies. Though the above strategies may be helping more students graduate and graduate on time, we believe CSU could be doing more to promote better student outcomes. Specifically, we think CSU could improve its assessment and placement policies. Currently, CSU primarily uses placement tests to assess college readiness. Based on these test results, CSU deems more than 40 percent of its admitted freshmen as unprepared for college‑level math, English, or both. Students who do not demonstrate college‑level skills are required to enroll in remedial coursework. National research has shown that relying solely on placement tests routinely results in college‑ready students being misplaced into remedial courses, which, in turn, increases education costs for them and the state while also reducing their chances of graduating on time. (Data from the Community College Research Center and CCC system reinforce these findings, with their data indicating about 30 percent of incoming community college students are put into remedial courses based on placement test results when they could have succeeded in college‑level coursework.) A growing amount of research is finding that a better way to assess college readiness is to use multiple measures (including data from students’ high school records) to place students.
Secondary Assessments Are Exacerbating Inefficiencies. Additionally, a number of CSU campuses currently have policies requiring even students who are deemed college ready in math to take a second diagnostic (department) test in order to enroll in many lower‑division math courses (such as calculus and college‑level algebra). Students who fail to obtain a specified cut score on these department exams may be required to enroll in precollegiate‑level courses (such as intermediate algebra), thereby delaying their progress toward a degree. These secondary diagnostic tests also are at odds with national research on effective ways to identify students who are capable of success in college‑level coursework.
CSU Also Continues to Have Problem With Students Taking Excess Units. CSU continues to have a problem with excess unit‑taking by both freshman entrants and transfer students. Students who accrue more units that their degree requires generally take longer to graduate, generate higher costs for the state and themselves, and crowd out other students. Based on the experience of other institutions, a number of causes may be contributing to CSU’s high rate of excess units, including unclear degree pathways for students and uneven articulation of lower‑division transfer courses between community colleges and CSU. Were CSU to reduce excess course‑taking, it could increase the availability of required courses within existing resources.
Recommend CSU Implement Other Strategies Before Augmenting Funding for Graduation Initiative. To date, CSU has made progress on improving student outcomes. We believe CSU would make even more progress were it to modify its assessment methods and placement policies as well as address the issue of excess units. To this end, we recommend the Legislature direct CSU to study these issues in more depth and, based on its findings, implement new policies using existing Graduation Initiative monies and other system resources. So that the Legislature is kept apprised of CSU’s activities, we recommend the Legislature require the segment to report by January 1, 2018 on (1) its plans to put in place research‑based methods for assessment and placement, as well as (2) opportunities for campuses to make available more course slots by reducing the number of excess units that students earn. Given these opportunities for further reform and given the many other competing cost pressures facing CSU in the budget year, the Legislature may wish to place a lower priority on providing additional funding for the Graduation Initiative in 2017‑18.
Weighing State Funding Increases With Tuition Increases
Legislature Has Key Choices to Make on CSU’s Budget. Each year, the Legislature fundamentally decides: (1) which costs to fund and (2) how these costs should be shared between students (and their families) and the state. In some years, the Legislature has decided to cover all CSU spending increases using state General Fund, holding student tuition levels flat. Other years, both General Fund support and tuition levels have increased to cover cost increases. (In still other years, state support has declined, with tuition levels rising to cover costs.)
CSU Facing Four Notable Cost Pressures. Most notably, CSU faces the pressure to fund the collective bargaining agreements already ratified by the Board of Trustees last spring. It also faces pressure to cover basic cost increases (for example, health care and pension cost increases). Given that CSU continues to report denying admission to eligible transfer students, another notable cost pressure is funding enrollment growth for transfer students. Given recent compensation increases for faculty, pressure also exists to provide some compensation increases for other employee groups with open contracts in 2017‑18.
Various Ways to Share Costs Between General Fund and Students. Were the Legislature to approve the General Fund level proposed by the Governor, CSU asserts that it would be able to cover the costs of the previously ratified collective bargaining agreements and basic cost increases (such as higher health care premiums). A tuition increase could provide funds for its other priorities. While CSU resident tuition charges have been flat for the past six years, a 5 percent increase might be considered high for one year. In addition, a 5 percent increase in 2017‑18 would be notably higher than anticipated inflation. If the Legislature were to consider tuition increases, we suggest it signal to CSU that a more modest rate increase would be acceptable. Based on our calculations, a 2.5 percent increase in tuition charges would generate net revenue of roughly $38 million. These funds, in turn, would be sufficient to support (1) 1 percent enrollment growth for eligible transfer students and (2) a 1 percent compensation pool for bargaining groups with expiring contracts in 2016‑17. If the Legislature wished to support even higher levels of enrollment growth or employee compensation (that is, more than 1 percent increases), the Legislature could increase General Fund appropriations for CSU above the Governor’s proposed level or permit CSU to raise tuition along the lines of what the Chancellor’s Office is proposing.