2016-17 SJSU Fiscal Outlook

On May 13, 2016, Governor Brown revealed his proposed revisions to the 2016-17 California budget with a cautious outlook of $122.2 billion (6% increase over 2015/16) in general funds for the coming fiscal year.  The revision reflects no cuts in the current plan but does include $25 million in one-time funding for the CSU. This one-time funding is contingent upon the trustees articulating clear, coherent plans for the University as a whole and for each campus, that indicate the timeframe by which the system and campuses will (1) increase four‑year graduation rates and two‑year transfer graduation rates to at least the rates of other institutions and (2) increase the graduation rates for Pell‑eligible students to at least the rates of their non‑Pell‑eligible peers. There is currently no indication how the CSU will allocate the funds.

The governor also emphasized the state’s need to prepare for a potential economic downturn and amass general fund reserves of $6-8 billion. According to Moody’s, the average recession lasting 3 years will cost the state $50 billion, or roughly $17 billion a year. Governor Brown also indicated that pursuit of new initiatives should be curtailed, contingent on renewal of Proposition 30. Proposition 30 provides significant support to higher education and is scheduled to sunset over the next two years. The governor has stated that the voters of California must decide whether to extend the temporary revenue measure.

In light of this revision, the overall CSU budget for next year is largely unchanged versus what was offered in January. SJSU will be able to cover all mandatory costs while continuing to pursue two primary university priorities over the coming fiscal year.  These include improving graduation rates through broader course availability (Average Unit Load), and recognizing the talent and hard work of university faculty and staff with a general salary increase. Available one-time funds used to support a variety of division priorities that improve the ability of SJSU to achieve its mission of accessible, high quality, global education in the heart of Silicon Valley are still under discussion with Interim President Martin, incoming President Papazian, and the Cabinet.

 

2016-17 State Budget Update

On January 7, Governor Brown released his proposal for the 2016-17 state budget. The forecast for 2016-17 suggests that state tax revenues will continue their climb, while expenses will remain relatively flat, resulting in a budget surplus. Emphasizing prudence with regard to new permanent funding commitments, the governor indicated that a large portion of the surplus will be directed toward paying down the state's debt and bolstering the rainy day fund.

Under Governor Brown's preliminary proposal, the CSU budget would increase $140.4 million over the 2015-16 level with a fifth consecutive year of flat tuition at $5,472 per semester. The proposed funding increase is $15 million greater than the scenario outlined by the governor's multi-year funding agreement, and represents the most generous January budget proposal since the governor began his multi-year funding agreement plan. Furthermore, in addition to the overall base increase, the governor has also proposed $35 million in one-time funding to be made available immediately on July 1, 2016 to address urgent facility and maintenance needs, and $35 million in one-time cap and trade funds to support new energy projects.  In spite of the positive start, the proposal still falls $103.1 million short of the trustees' $241.7 million request for 2016-17.

The chart below provides a rough depiction of the difference between the CSU's support budget plan adopted by the Board of Trustees as compared to the Governor's January budget.

 

 

A complete report on the 2016-17 Governor's Budget proposal will be made at the January 2016 Board of Trustees meeting which can be streamed live on January 27. The budget cycle typically evolves in three distinct phases, with the January proposal representing the first step toward an adopted budget. This spring, the budget will be discussed at legislative hearings before both the assembly and senate, and the governor will release a revised budget in May, at which point final negotiations between the governor's administration, legislature, and program officials will be codified in the enacted state budget, expected to occur in mid to late June.

As for the impact to San Jose State University, the University leadership is beginning the planning phase for the campus 2016-17 budget. At a minimum we are expecting to increase our academic year enrollment by slightly over 200 Full Time Equivalent Students (FTES) and are working diligently on plans to reduce time to degree in particular improve access to bottleneck courses. Stay tuned as planning efforts proceed.

In the meantime, if you would like more information on the Governor's proposal, please contact Bradley Olin in the Budget & Risk Management Office, or visit the Department of Finance's budget website.

 

2016-17 CSU Support Budget Update

At their November meeting, the CSU Board of Trustees adopted a resolution approving the 2016-17 CSU Annual Support Budget request. The request includes a $241.7 million increase in state support and $55.9 million in new tuition revenue from enrollment growth (not tuition increase) for a total of $297.6 million. The final support budget request exceeds the governor’s proposed budget plan by $139.4 million, but the Board of Trustees remains committed each year to adopting an aspirational support budget that is truly reflective of the CSU’s needs. While the governor has promised to adhere to his funding plan, last year’s full funding of the CSU Trustees’ Support Budget offers hope that more funding will be forthcoming from the state than originally promised. The proposed budget places continued emphasis on supporting the initiatives identified in the 2015/16 support budget. The list below offers a brief overview of the funding priorities and initiatives that the Board of Trustees has identified for the upcoming year:

Proposed Incremental Increase in Expenditures:

Funding Priority	Amount (in millions)
3% Funded Enrollment Growth	$110.0
Student Success and Completion Initiatives	$50.0
2% Compensation Pool	$69.6
Facilities and Infrastructure Needs	$25.0
Mandatory Costs (health benefits, pensions, & new space maintenance)	$43.0
Total Ongoing Expenditure Increase	$297.6

In January, the governor will release his preliminary proposed budget for 16-17, and the CSU will begin negotiating with the legislature on various scenarios to fund as much of the support budget as possible. In the meantime, SJSU is planning conservatively for the likelihood that the governor will only provide the base level of funding identified in his multi-year funding agreement.

SJSU Budget Update

SJSU’s annual budget report has been finalized and released for campus review. You may access the Budget Report: Fiscal Year 2015/16 (PDF) on the Annual Budget Report page.  

The annual budget report provides an overview of the university’s resources and how those resources are allocated across the University for the 2015/16 fiscal year. The report is driven by campus planning decisions related to the number of students enrolled at the University along with augmented resources provided by the State of California (State Budget) and the CSU Board of Trustees (Support Budget). This year, SJSU received a state general fund augmentation that allowed for the campus to address increased health care costs, fund a compensation increase for faculty and staff, and support enrollment growth. In conjunction with this state support, our campus budget plan enabled funding for a number of campus priorities including addressing critical infrastructure needs, improving student success pathways, capital construction, and a new cabinet-level Office of Diversity and Inclusion.

The CSU (and State of California) practices incremental budgeting: year-to-year changes in the campus operating budgets resulting from increases or decreases in the funding authorized by the state. The focus of the CSU’s budget process is on predicting the changes from the current year and allocating resources to meet the priorities of the Board of Trustees. These details are contained in the CSU Support Budget documents:

• 2015/16 Support Budget

Planning is currently underway for the 2016/17 Support Budget and the Board of Trustees is expected to adopt a $295 million budget increase request in November, 2015. The proposed support budget is $137 million larger than the governor’s proposed budget plan, but the Board of Trustees remains committed each year to adopting an aspirational support budget that is truly reflective of the CSU’s needs. While the governor has promised to adhere to his funding plan, last year’s full funding of the CSU Trustees’ Support Budget offers hope that more funding will be forthcoming from the state than originally promised. The proposed budget places continued emphasis on supporting the initiatives identified in the 2015/16 support budget. As a reminder, those initiatives include: compensation increases, addressing mandatory costs such as health care increases, and facilities/infrastructure needs.

All CSU system documents may be found on the CSU Budget Office website: http://www.calstate.edu/budget/

SJSU OpenGov Financial Transparency

San Jose State University has partnered with OpenGov, a web-based application, to facilitate communication about the budget process, revenue streams, and actual expenditures on campus. This web-based tool simplifies complicated financial data into an easy-to-read and understand format. Visit SJSU's OpenGov site.