Academic Affairs Budget

Enrollment growth target increased to 387 full-time equivalent student (FTES) over 2015-16, or 1.36% growth. Our prior growth target was 265 FTES, or 0.93% growth. Therefore, our enrollment growth funding is now $2,248,000 rather than $1,539,000.
Student success and completion funding of $809,000 has been provided.

A CSU total of $125 million in one-time funding ($87 million in 2016-17 funds and $38 million in 2015-16 funds) will eventually be allocated. At this time, the $35 million in 2016-17 funds for graduation rate goal setting is not being allocated. Of the $90 million that has been allocated, our allocations are as follows:
$2,650,000 of unused 2015-16 faculty compensation of 2%.
$2,075,000 for deferred maintenance.
$408,000 for student success and completion.
 
The student success funds are limited to campus priorities related to student success including tenure track faculty hiring, increasing professional advising staff, high impact practices that improve student outcomes, and other campus specific investments that contribute to increased graduation rates and reduce time to degree.

Compensation increase funding has come in just as expected. Between base funding and the one-time funds of $2,650,000 mentioned above, we will be responsible for funding approximately a 1% funding shortfall totaling about $2.8 million in 2016-17. We will utilize $1.8 million in base funds and $1 million in one-time funds to resolve this shortfall in 2016-17.

2017-18 will be a challenge. One-time funds from the CO and the campus totaling $3.6 million utilized in 2016-17 must be replaced with base funds in 2017-18. In addition, the faculty increase effective July 1, 2017 is 3.5% and faculty SSIs of 2.65% go into effect.

While the proposed CSU budget is short of the Board of Trustees’ request, we are grateful for the addition of new funds and the ongoing support of the governor and legislature.

The California Faculty Association (CFA) and the CSU reached a multi-year agreement in April 2016. Under the agreement, faculty employees received a 5% general salary increase (GSI) on June 30, 2016, a 2% GSI on July 1, 2016, and will receive an additional 3.5% GSI on July 1, 2017. The agreement also includes a 2.65% service salary increase (SSI) for all eligible faculty employees in fiscal year 2017-18. This agreement was ratified by CFA members in early May 2016 and approved by the CSU Board of Trustees in late May.
 
With the approved budget the funding for 4% general salary increase for faculty employees is available for 2016-17 (2% from 2015-16 and 2% for 2016-17 based on current CSU budget projections). However, based on the agreement and the implementation timeframe, the cost to implement the salary increases will be 7% in 2016-17, resulting in a funding shortfall of 3%. CSU will utilize one-time system-wide funds in 2016-17 to cover two-thirds of the 3% shortfall. Campuses are expected to cover the additional one-third shortfall from campus resources. In 2017-18 the 2% increase covered temporarily in 2016-17 with one-time funds must be replaced with permanent funds. Moreover, the system will need additional funds to support the 3.5% GSI to be awarded July 1, 2017. Finally, the 2.65% SSI must also be permanently funded beginning 2017-18. At its July meeting, the Board of Trustees approved a 2016-17 compensation pool of 2% for management and confidential employees.

Many of the other bargaining unit contracts contain “me-too” clauses based on the CFA agreement. Staff bargaining units including the CSUEU, APC, SETC, and the Physicians unit recently agreed to the terms of their “me-too” clause. These unions have agreed to a 7% GSI, but the timing is quite different from the CFA. These employees already received a 2% GSI effective July 1, 2015. A 3% GSI was effective July 1, 2016 and another 2% will be effective June 30, 2017. At this writing, only the UAW unit remains outstanding. Unknown at this time is what rate of increase non-faculty employees may be awarded effective July 1, 2017.

The estimate of compensation costs for 2016-17 in excess of our 2% funding pool is $5,400,187. The one-time funding for 2016-17 committed by the CSU equating to a 2% increase for faculty is approximately $2,650,000, leaving a funding shortfall of about $2,750,187 for 2016-17. Fortunately, during the 2014-15 and 2015-16 RPP budget planning processes, we set aside $1,800,000 of permanent funds pending compensation negotiations. After applying these campus base funds the 2016-17 compensation funding shortfall of just under $1 million will require one-time campus funds. In summary, the campus will contribute $1.8 million in base funds and almost $1 million in one-time funds to the campus compensation pool for 2016-17. For 2017-18, the campus will likely need to find $1 million in base funds to replace the one-time funds utilized in 2016-17.

Each year salary savings associated with anticipated retirements are projected as part of the Division of Academic Affairs budget planning for the subsequent year. The recent contract settlement means that some faculty contemplating retirement may defer retirement for at least a year in order to add the 7% increase to their retirement benefits. The Division of Academic Affairs had been projecting salary savings but in this situation, some portion of these projected savings may not be available. If so, this may create a cash flow problem for the division in 2016-17. This situation may balance out in a subsequent year if there is an increase in retirements but it will likely mean a somewhat counter-intuitive belt tightening for the academic division in 2016-17.

Final budget allocations to campuses for 2016-17 were made recently. Based on these budget allocations from the Chancellor’s Office, final campus budget plans will be made later this summer or early fall 2016.