Update on CSU Budget, March 9, 2012
Dear Colleagues and Students,
Well, I think that may be a record — we went 81 days without a budget email from me. But now we’re entering the last lap of developing the FY13 budget, and I thought it might be useful to offer another update.
Executive summary: For those not prone to reading all of these, here’s the big news: not much changed. But that’s hardly likely to keep me from writing about it …
Now, for those of you who pushed through that Executive Summary, I’ll try not to make this so long it becomes your spring break reading list. Back in August and September, we pulled together the initial draft FY13 budget around some options/assumptions on state funding, tuition and expenses. Throughout the fall, units were asked to plan for 3% and 6% budget reductions and in January, following an improved December revenue forecast from the state of Colorado, our strategic planning retreat and the planning & budget hearings set the stage for the budget that Provost & Executive Vice President Rick Miranda unveiled at the budget open forum on Wednesday. (If you missed the open forum, you can still watch it online at www.formerpresidentfrank.colostate.edu/budget/).
In brief, the budget anticipates a 9% ($567 per year) resident undergraduate tuition increase, a 3% ($660 per year) non-resident undergraduate tuition increase, a 5% graduate tuition increase ($400 for residents and $979 for non-residents), and implements the 2nd of the 3-step implementation process for differential tuition approved by our Board last year. These changes are all modeled on an assumption of no enrollment growth for next year. We typically use this conservative model and, if enrollment actually does increase, then we deploy those additional revenues for various one-time expenses during the first year (typically controlled or deferred maintenance), and then we build them into the budget the following year.
For FY13, there will be $4.5M of enrollment-growth related tuition revenue from enrollment increases that occurred during this year. Those funds are primarily from non-resident enrollment growth. Together, these changes in enrollment and tuition generate $21.6M of revenue, of which $4.3M will be passed directly through to our academic units via differential tuition and a few smaller tuition sharing models. We are still anticipating a $6M reduction from the State of Colorado (the third quarter revenue forecast is out in a couple of weeks, but the Legislature’s Joint Budget Committee has finished its higher-education figure setting — and I think it’s unlikely this figure will shift much).
We’ll essentially match that state reduction with $5.7M of unit expense reductions (roughly a 2.5% cut — below the lowest levels anticipated in the fall planning exercise). The remaining revenues will be deployed into our average 3% ($7.1M including promotions) faculty, GTA, and Administrative Professional salary increase (after three years, it is SO nice to be able to type the phrase ‘salary increase’ without ‘no’ in front of it, by the way); financial aid ($3.2M) and mandatory costs ($2M).
We’re also increasing the budget for the Graduate School to cover GTA and GRA tuition ($1.1M), and there are $3.8M worth of quality initiatives including $2M for academic initiatives, $1M for student programs and engagement, $0.4M for academic infrastructure, and $0.2M for safety and compliance. (Alas, the rates we all pay for parking will go up next fall — after holding off on rate increases the past two years, we’ll be moving forward with the scheduled increase that the Board approved three years ago.)
The budget summary is available on the Office of the President’s website. It’s worth noting that this is only a summary of the changes to the education & general (E&G) fund portion of the budget, which in total is approximately $430M. The entire University budget, which includes directed funding for specified uses (research grants and contracts, housing and dining revenues, directed philanthropy, etc.) is about $850 million. And, while you’re browsing the web, you may want to check out our Accountability website. There’s a wealth of great reading here — enough to cover not only spring break, but summer as well…
On the up side, the budget has smaller cuts than anticipated, a salary increase after 3 years without one, and — including the financial aid funding — reflects our focus on students and academics, with our tuition remaining below national averages of comparable institutions.
On the down side, this budget continues to reflect the privatization of public higher education with state support declining and students paying a greater share through tuition. In the annual Financial Accountability Report, there’s a graph on page 6 that shows this long-term trend all too plainly. This, to my mind, is the fundamental question for American public higher education (since all of us are facing different versions of this problem): Can we effectively make the case to our fellow citizens to stop and reverse this trend?
The budget also contains additional cuts that, while smaller than anticipated, will still be painful after three years of previous expense reductions. And while it’s refreshing to offer a salary increase that averages 3%, we understand that 3% is not where we need to be to recruit and retain the best people, particularly following on the heels of 3 years without salary increases. And it’s important to remember that the state is not offering a salary increase to state classified personnel; because of this, we will be providing staff with an additional pay increment roughly equivalent to an additional 3%, but this is on a one-time basis. The 3% funding pool covers just 1-year and will not build the base salary for these employees. We’ve worked closely with the Classified Personnel Council to assure we’re doing everything we can for our people in these positions, given what’s happening at the state level.
So, all in all, I have mixed emotions about this budget. It’s far better than the last two years and my sense is that we can look to building an FY14 budget without state funding cuts (I may well have forgotten how to do that, we’ll see…), but it’s still a budget that reflects the effects of the recession. I remain incredibly grateful to all of you for helping us come through these very difficult budget years with a university that has grown and improved in many real ways despite the stormy fiscal climate. I’d especially like to thank ASCSU, the AP and Classified Personnel councils, and the Faculty Council for their engagement with and help building the FY13 budget.
From here, we’ll be taking additional input on the budget at email@example.com, and Rick and I will be presenting the budget to various groups across campus. We’ll consider all the feedback in the final budget we take to the Board’s Finance Committee in May and that the Board will approve in June to go into effect July 1. On July 2, we’ll start building the FY14 budget assumptions and the “fiscal cycle of life” will begin anew.
Speaking of life beginning anew and spring … wait for it … spring training is underway and the Ernie Banks-autographed bat in my office seems to almost twitch on sunny afternoons. But I know that not all of you are Cubs’ fans (life is never perfect) and we do have the privilege of living in Colorado, so I’m going to put in a little plug for the Colorado Rockies. The Rockies are a wonderful partner with CSU and they do a lot to support Colorado higher education generally.
They’re launching the idea of “Purple Mondays” — wearing purple each Monday that the Rockies play at home. The first one will be opening day (April 9). I’m thinking that if we combine this with wearing green on Fridays and continue the trend, we’ll be able to remove all the decision making out of dressing and think how much time that will give all of us to write and read budget emails! I love it when a plan comes together.
For those of you taking some time off for spring break, safe travels, and my best wishes for some R&R for all of you — you’ve earned it.
Thanks for everything all of you do for our university.
Dr. Tony Frank