I am writing today to share with you what I know about the state budget shortfall's impact on San José State. I am going to get right to the point, and then provide some background. There is no gentle way to put this. In the very near future, SJSU will need to make major changes to the way it does business in order to align our revenue and expenses.
As you know, Governor Arnold Schwarzenegger and the state legislature are in the process of passing a budget for 2009-2010. They are working on the assumption that the state faces a $24 billion deficit. The governor has proposed a $584 million reduction for the California State University system, representing a staggering 16 to 20 percent cut to state General Fund support.
CSU Chancellor Charles B. Reed discusses this in the following memo, which I encourage you to read. Note his guiding principle for CSU budget reductions is "to serve as many students as possible without sacrificing quality and to preserve as many jobs as possible." He also touches on possible tactics, including systemwide furloughs.
Many of you learned about this possibility from your union representatives. Please keep in mind all plans are tentative. The chancellor met with all presidents in early June to discuss the budget. We will do the same at the end of the month. Our goal is to develop an action plan for consideration by the CSU Board of Trustees during a special meeting planned for early July.
Because of the tremendous number of variables at play, we have yet to learn the exact amount of San José State's budget reduction. But I do know without a doubt that the shortfall will be significant, and will force us to make operational changes.
Budget planning for an organization as large as ours requires myriad decisions on many levels. San José State will need help from all of you. But we will not do this in a haphazard way. We must coordinate our work to build a strong foundation for the future. To that end, I have developed the following budget reduction guiding principles, which incorporate and expand on those described by the chancellor:
What happens next? While we await systemwide news, we will proceed with our own planning process. As we have done in the past, San José State will prepare for the long term to maintain a stable environment for everyone. My senior leadership team is working now on action items for each of the principles listed above.
Having said that, there are changes we will implement immediately. We will reduce spending on travel, campus events, outreach events, community partnerships, organizational memberships, and CSU projects and partnerships. We will not eliminate these activities, but we will cut what we spend on all of them.
I have directed our vice presidents and athletic director to provide detailed guidance on these measures. We will also continue to limit hiring and salary increases, and we will not admit new students for spring 2010. Very soon, Vice President for Student Affairs Veril Phillips will send you an admissions and enrollment update.
Because I know many of you are worried about how all this will affect you, your workload and your employment situation, I am committed to providing you with as much information as I can as soon as it is available. Meanwhile, please lend me your patience and support, and feel free to write with your questions, comments and concerns.
Sincerely,
Jon Whitmore
[Chancellor Reed has asked that we provide the following material, prepared by his office, to all employees.]
CSU and Labor Unions Discuss Budget Reductions
The CSU has begun meeting with its labor unions to discuss ways to mitigate the impact of the projected $584 million budget reduction on the university and its employees. The cut, which represents a reduction of 16 to 20 percent of state General Fund support to the CSU for 2009-10, was proposed as part of Gov. Arnold Schwarzenegger’s May revision of the state budget which aims to close a $24.3 billion deficit.
Chancellor Charles B. Reed has recognized that the magnitude of the cuts means that all options need to be on the table as no single solution or approach can create the needed savings. The guiding principle behind the decisions, Reed has said, will be "to serve as many students as possible without sacrificing quality and to preserve as many jobs as possible."
The CSU is considering introducing furloughs for all CSU employees, including management and executive levels, to protect the maximum number of jobs while generating essential salary savings in fiscal year 2009-10. Applied systemwide, a two day furlough per month for all employees would generate approximately $275 million in salary savings. Although the furlough plan alone will not generate enough savings, it will produce significant savings that could otherwise only be achieved through a massive immediate program of layoffs and/or non-renewal of temporary employment contracts. Approximately 80 percent of the CSU's costs are salary and benefits payments.
A furlough is a mandated period of time off without pay. Furloughs differ from salary reductions and pay cuts in that they are temporary and do not affect employment status, or health or retirement benefits. Also, employees are not required to work on furlough days.
The CSU management team is discussing the projected budget reductions with CSU labor leaders. This includes the possibility of furloughs as one of the means to mitigate the projected reduction. The CSU will continue to move forward with its planning, regardless of whether or not the 2009-10 state budget is implemented on time. The chancellor is expected to bring a cost-savings action plan to the Board of Trustees in July.
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