Budget Central

2017-18 SJSU Budget Planning Update

Published March 9, 2017

As mentioned in the January SJSU Budget Central 2017-18 State Budget Update, SJSU has begun preliminary planning for the 2017-18 budget cycle. A significant portion of planning takes place in the spring of each year in anticipation of having a final budget by July 1, the start of the next fiscal year.   However, there are many areas of uncertainty as we work towards budget decisions for next year.  As the budget planning process unfolds, more information will be provided at the annual April Open Budget Forum.  This event is scheduled for the morning of Tuesday, April 25 from 10:00-11:30 AM in King Library Community Room 255. 

UNKNOWN

The list of current unknown determinations includes:

  • State Funding – Will the governor and legislature provide any additional funding beyond the 4% appropriation increase proposed in January? The Board of Trustees final support budget request exceeds the governor’s proposed budget plan by $167.7 million.
  • Tuition Increase – Will the Board of Trustees vote to adjust tuition by approximately 5% at the meeting later in March? The timelines established in the Working Families and Fee Transparency Act require the Board to decide on tuition rates in March, well before the governor and legislature revise funding proposals in May and finalize them in June.
  • Compensation Increase Funding – Will the CSU provide permanent funding for compensation increases awarded over the past year and the coming year? SJSU received one-time funding from the CSU for the past year but these increases represent an ongoing cost to the university.

KNOWN

In spite of these unknowns campus leadership must proceed with planning efforts based on the information that is available combined with some educated assumptions about what we believe is likely to happen.  Undisputed facts available at this time:

  • Enrollment – CSU is not funding enrollment growth in 2017/18. Furthermore, SJSU experienced an enrollment decline during the 2016/17 College Year.
  • Base Deficit – SJSU is carrying forward a base deficit at the university-level. The deficit has been reduced somewhat by reallocation of resources that had been set aside for MPP compensation which were funded by the CSU.  This deficit needs to be addressed as part of next year’s allocation process.

BUDGET PLANNING ASSUMPTIONS

The following is a list of all assumptions for budget planning in the coming cycle based on currently available information.  Conservative planning enables the campus to adjust in the event of a windfall, rather than a shortfall.

  • Compensation – At this point, the planned budget for 2017/18 assumes the campus must fund a 1% salary increase. This projection is based on guidance from the CO Budget Office and pertains to the CSU Support Budget and Governor’s Budget shortfall of $170 million.
  • Enrollment – Enrollment planning is projecting fewer students in 2017/18 than in 2016/17.
 
2016/17
2017/18
Variance
 
Base
Surplus
Total
Base
Surplus
Total
 
Resident
22,507
979
23,486
22,507
348
22,855
-631
Non-Resident
2,650
275
2,925
2,650
70
2,720
-205
 
25,157
1,254
26,411
25,157
418
25,575
-836

 

  • Tuition – SJSU is not anticipating a tuition increase from the Board of Trustees due to increasing political pressure and the possibility that the state will provide a nominal augmentation of earmarked 1x funding to the CSU System.
  • State Support – At this point the university is not planning on any permanent funding increases from the State beyond the 4% appropriation adjustment offered by Governor Brown in his January budget proposal.

TIMELINE

The goal is for budget planning to conclude by June 30.  This will enable divisions and campus units to make preparations in time to have their budgets updated in the summer.  The remainder of the spring timeline follows the following schedule:

March

  • Divisions have completed review of their program allocations received in 2016/17 to determine if some of the funding can be returned to the university for re-allocation in 2017/18. The Budget Office and CFO will be confirming and finalizing this planned return of funding to include in available resources for the next year.
  • Divisions have been asked to review their primary operating fund needs for the next 3 years.
  • A review of operating funds being held within each division for facilities related projects is underway. Current conversations relate to a more efficient method of reporting and tracking.
  • The CFO and Budget Office will be conducting due diligence and developing materials for Cabinet/President review.

April-June

  • Campus leadership discussions will be on-going and the University Budget Office will be monitoring the CSU and State processes.  Budget Central updates will be provided as additional information is available.

 

2017-18 State Budget Update

Published January 10, 2017

On January 10, Governor Brown released his proposal for the 2017-18 state budget. The forecast for 2017-18 suggests that the trajectory of state tax revenues is slowing compared to projections and recent trends. Emphasizing prudence with regard to new permanent funding commitments, the governor, as in years prior, indicated that bolstering the rainy day fund remains a priority given the likelihood of a recession in the near future.

Under Governor Brown’s preliminary proposal, the CSU operating budget would increase $162.2 million over the 2016-17 level, while assuming a sixth consecutive year of flat tuition at $5,472 per semester. The Governor’s proposal consists of $131.2 million in general operating funds, $26 million to support the Middle Class Scholarship program, and $5 million to support the CSU capital program, totaling $162.2 million. The proposal falls $181.5 million short of the Trustees’ $343.7 million request for 2017-18. Furthermore, current contractual obligations and mandatory costs alone exceed the governor’s proposal by $2.9 million, leaving no room for other support budget priorities. The Governor’s budget did not mandate flat tuition for the CSU, as he has in past years which will enable the CSU to consider tuition as a way to cover the gap in funding between the state and the university system. The Board of Trustees will deliberate over a potential tuition increase worth $77.5 million as they weigh support budget priorities at their meeting at the end of January, with a vote expected in March. The tuition increase would allow the CSU to meet contractual obligations and mandatory costs, but would not enable full implementation of the Trustees’ adopted support budget.  In essence, Governor Brown’s budget plan for the CSU leaves no room for the system to expand enrollment capacity, pursue the Graduation 2025 initiative, or provide any new compensation increases for staff and faculty. As SJSU begins preliminary planning for the 2017-18 budget cycle, updates will continue to be provided to the campus.

A complete report on the 2017-18 Governor’s Budget proposal will be made at the January 2017 Board of Trustees meeting which can be streamed live at www.calstate.edu on January 31.  The budget cycle evolves in three 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.

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 website at www.ebudget.ca.gov.

 

2017-18 CSU Support Budget Update

SJSU and the CSU are state entities and a significant portion of our funding is determined in part by the state budget process, which begins by January 10 of each year with the Governor’s Budget Proposal.  This deadline is mandated by the California State Constitution.  In order to meet the January timeline, it is necessary for the Board of Trustees to adopt a formal support budget request by November each year. 

At the recent November meeting, the CSU Board of Trustees adopted a resolution approving the 2017-18 CSU Annual Support Budget request.  The request includes a $324.9 million increase in state support and $18.8 million in new tuition revenue from enrollment growth for a total increase in revenues of $343.7 million.  The final support budget request exceeds the governor’s proposed budget plan by $167.7 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.  Each year in recent memory, the governor has cited the need for restraint in providing permanent, base-funding for commitments.  However, in 2015-16,  the governor deviated from the multi-year funding plan and provided full-funding for the CSU Trustees’ Support Budget.  This offers hope that more funding will be forthcoming from the state than originally promised for the upcoming cycle. 

This year’s (2017-18) CSU proposed budget reflects commitments for new programs such as Graduation Initiative 2025, while also honoring (and funding) existing contractual commitments to staff and faculty that were made as part of the collective bargaining process.

 

Proposed Incremental Increase in Expenditures (USES):

NEW COMMITMENTS

  • Graduation Initiative 2025/ Student Success                 $75.0
  • Compensation: New Contracts & Non Represented Staff    55.1

New Commitments Subtotal                                     $130.1

CURRENT/ONGOING COMMITMENTS

  • Compensation: Current Contracts                                 139.1
  • One Percent Enrollment Growth Increase (3,616)             38.5
  • Facilities and Infrastructure Needs                                  10.0
  • Mandatory Costs (health benefits, pensions, & new space maintenance)                                                               26.0

Current/Ongoing Commitments Subtotal                $213.6


 Total Ongoing Expenditure Increase                       $343.7              

Proposed Incremental Increase in Revenue (SOURCES):

  • State General Fund Support from Governor’s Funding Plan                                                                                     $157.2
  • Net Tuition from Enrollment Growth                               18.8
  • Board of Trustees Additional Funding Request               167.7

Total Ongoing Revenue Increase                            $343.7                   

At this point in time, the Board of Trustees is submitting the support budget request to the state in anticipation of the state fulfilling its obligation and commitment to the bold student success initiatives. The request will be accompanied by intense advocacy efforts to encourage the governor and legislature to support the CSU.  Advocacy efforts will include working with stakeholders and partners across the system including trustees, students, faculty, staff, union leaders, alumni, business partners and friends to make the case in Sacramento for the level of new funding that supports our stated priorities, all leading to greater student success.  While additional state funding is the highest priority and the best option for the university, the state allocation will not be known until a final state budget agreement is reached in June, 2017.

To that end, the CSU must regrettably continue a conversation with the California State Student Association (CSSA) about a possible tuition increase.  In the event that full funding from the state is not forthcoming in this cycle, the additional $167.7 million funding gap will need to be addressed through a tuition fee increase and programmatic adjustments.  A proposed tuition increase would generate up to $77.5 million in revenue systemwide.  The potential tuition increase, not-to-exceed $270 per resident undergraduate student, would take the annual tuition price from $5,472 per student to $5,742.  If the CSU is unable to secure funding from the state or through a modest increase in tuition fee rates, only minimal investments in the CSU priority areas listed above will be possible.  SJSU would need to redirect funding from existing programs and services included in our Graduation Initiative 2025 plans to fund mandatory cost obligations and employee compensation increases, which are ongoing obligations regardless of revenue available.

At this time, the CSU, and by extension SJSU campus leadership, remains optimistic that the strong advocacy efforts and compelling need for resources will be recognized and addressed at the state level.   SJSU multi-year budget planning is underway to assess the range of potential outcomes during the upcoming funding cycle.