The California State Legislature has yet to adopt Gov. Arnold Schwarzenegger's proposal for the 2010-2011 academic year budget. Although the proposal is supportive of California State Universities, the budget will not be fully restored to its original resources from the 2007-2008 academic year.

"You do realize this is the third or fourth time that we have started the fall semester without any budget in the time that I have been President here," said Cal State Fullerton University President, Milton Gordon. "You can't wait for the budget … you have got to start the semester."

In spite of this, the constitutional deadline for the state of California to adopt this year's budget has passed. The deadline was June 15 and as of July 1 the budget year began.

"So we are technically in a budget year that we don't have a budget for," said Erik Fallis, public media relations specialist for the California State University Office of the Chancellor.

For the past two years the CSUs have faced a significant reduction in state funding, losing $625 million. The loss would have been more devastating had President Obama's federal stimulus package not come into effect, canceling out the $717.5 million cut that would have been put in place on top of the $625, Fallis said.

"It all comes down to the fact that the state has a significant budget deficit … one of the ways to close the deficit was by significantly reducing the CSU, which is something we asked they not do because we believe that higher education is one of the ways that the state will actually come out of the deficit and into recovery," Fallis said. "You have to keep in mind that California as a state used to have a budget in the 100 billions and is now significantly less to about the 80 billions."

Prior to this decline in funding, there was a period of time from the 2005-2006 academic year to the 2007-2008 academic year when the CSU had a Compact Agreement for Higher Education with the state legislature and governor's office.

"During the budget crunch of 2002-2003 we took budget reductions as well and when we took those reductions it was with the promise and the compact with the governor that then the CSU would be guaranteed a certain level of funding and certain level of enrollment growth every year there after for the period of the compact," Fallis said. "That obviously has not happened within the last two years but the compact is what the CSU based our proposal from."

Students are directly impacted by the state budget because when revenues fall short from the state, the CSU makes up for it in tuition and fee increases. For example, the state's decision on where to allocate funds is the reason that from the fall 2008 semester to the fall 2009 semester CSUs experienced a 32 percent increase in the State University Fee. When reaching the CSUF level it became a 27 percent increase. Similarly for this academic year the CSU has decided to raise the University Fee by 5 percent. Because of the importance of this issue, the Daily Titan has put together the following Q&A to help students understand the complexities.

CSU Budget Loss and Gain

When were the CSUs at the peak of growth in funds from the state?

- The 2007-2008 academic year was when the CSU reached its peak, with its funds at $2.97 billion. The funds allocated from the state had been steadily growing each academic year under the compact agreement.

Are there other agreements besides a compact agreement?
- Yes. As stated previously, a compact agreement causes steady growth in funds over a period of time. Other agreements include base and one-time reduction. If the state is making a baseline cut to the CSU, then the CSU won't get those funds back, it's permanent. If the state is making a one-time cut to the CSU, then that means it is just for that fiscal year and funds will be restored. That is what happened when the CSU took the $625 million hit, it was labeled as one time.

When did the CSUs lose funds and enter into reduction?

- Over a period of two academic years from 2008-2010 the CSUs took a $625 million hit in funds. Specifically entering into the 2008-2009 academic year the CSU lost roughly $100 million, reducing the system's budget to $2.87 billion. Then entering into the 2009-2010 academic year (last year) the CSU took a $525 million hit in funds reducing the budget significantly to $2.35 billion. This budget deficit isn't standard because of the fact that it spanned over two years.

Will the budget funds for the 2010-2011 academic year continue to decline? Or will they increase and by how much?

- If the state legislature adopts the governor's January proposal, then an increase in funds will be allocated to the CSUs. The increase will be divided as follows:
$305 million for restoration, $60.6 million for enrollment and $11 million for technical adjustments. With this increase in funds, the CSU budget will raise from last fiscal year's $2.35 billion to $2.72 billion.

So why is the $305 million called "restoration?" What falls under "restoration?" How will the $305 million be used?

- "(Restoration) means that there were certain cuts taken over the last two years that were designated by the legislature and governor's office as quote unquote one time," Fallis said.
- The $305 million restoration funds cover specific areas. That money is designated for specific uses. Examples of where the funds are distributed from this general budget include: academics, operations, financial aid, accounting office, people who tend to the grounds and utilities, professors, classes and part-time lecturers.

How will the $60.6 million enrollment be used?

- Enrollment, it is designated specifically for expanding access to the CSUs, for accepting more students. It cannot be used for anything else. This will help boost enrollment for the CSUs again and ensure that students will be accepted for the spring 2011 semester.

"The CSU as a whole received a 9.5 percent reduction in enrollment for the 2010-2011 academic year," said Associate Vice President of Finance, Brian Jenkins.

What is the $11 million for technical adjustments?

- Technical adjustments covers small interest payments and of that nature.
"Relatively small things in the budget that the state automatically figures in," Fallis said. "It maintains the status quo for a couple of technical things."

Could any of this money go toward or have gone towards the building of a parking structure? Such as the $24 million Eastside Parking Structure?

- No. Money for building comes from separate designated funds for capitol projects. Some of these funds are bonds that are issued by the CSUs and paid over time by identified resources for the purpose of building. The $305 million for restoration and the $60.6 million for enrollment cannot be used for anything else, that money cannot be translated over and the money specified for building cannot be translated over to the areas that fall under restoration or enrollment.

Furloughs … Where did they go?

- "Our employee labor furloughs ended June 30 and were part of an overall plan to address the massive budget cuts of the past two years," said CSU Chancellor Charles B. Reed. "We have not proposed to renegotiate furloughs with our employee labor unions."

Given that the 2010-2011 state budget has not been adopted by the governor's office yet, how can the CSUs afford to not have furloughs?

- We had furloughs to begin with because of the $625 million decrease / 21 percent decrease.
"It was something that the CSU was not given a lot of time and notice about so it was difficult to plan for so we ended up needing to take a very large percentage of our budget out in a very short period of time," Fallis said.
In a typical year, student fees fund about 1/3 of the total academic and operational costs for the university. The state of California comes in with the remaining 2/3.
At least 80 percent or more of the CSU budget is tied up in salaries and benefits which gives them few options to go to for funding.

So where did the CSU go for funding given that they had little options?

- Losing the $625 million in state support made the CSUs more reliant on the student fee funding and took out large portions of the budget that had previously supported enrollment and the number of classes CSUs can offer and services. Furloughs were put in place, faculty hiring decreased, enrollment suffered and tuition increased.

Given the deficit that occurred over the past two years, how has financial aid been hit?

- CSU sets aside one-third of student fee increases (tuition increase) to augment financial aid, so that provided some additional support.

"There is one other thing to consider, more than half of all CSU students receive some form of financial aid to assist with meeting their educational expenses, and 45 percent of undergraduates have their fees fully covered by grants or waivers," Fallis said.

The proposal favors the CSU and if adopted, Fallis said that the CSUs could serve as many as 29,000 more students and restore additional classes and sections. When trickling down to the level of CSUF, the 11 thousand qualified students that were denied acceptance into CSUF could possibly gain acceptance in the spring or following fall semester. Gordon sat down with the Daily Titan along with his Executive Assistant Pat Carroll, Vice President of Student Affairs, Robert Palmer and Acting VP of Academic Affairs, James Dietz to discuss the matter.

To find out how the state budget impacts CSUF, what it means for students, faculty and administration once passing through the CSU level and to read the one on one discussion between the Daily Titan and CSUF's administrators, pick up Part Two of this budget breakdown on Monday, Aug. 30.