Dear Faculty and Staff Colleagues:

Soon after my recent budget Q&A e-mail to students, a number of faculty and staff expressed interest in a similar update. If you attended one of our October Town Hall meetings on the budget, you may be familiar with some of the information below. Much of it, however, reflects information we have received more recently and campus-based planning that we have engaged in all semester.

I want to emphasize that this is what we know and where we stand as of December 2003. We can expect more news and numbers to emerge in January, when the legislature reconvenes and the Governor releases his proposed 2004-05 budget. I will send you another budget update when we get additional information. In the meanwhile, if you have budget questions of general interest that you would like to see incorporated into a future Q&A, please e-mail them to me at president@sfsu.edu.

Of course, whatever the budget picture, our dominant goal in planning San Francisco State's budget is preservation of the academic program to the greatest extent possible. At the same time, we are well aware of the needs of other areas of the University, and we are seeking to maintain a positive working environment for all on campus. Keep that in mind as you review the following information, and have a joyous and peaceful holiday season.

Robert A. Corrigan President

Budget Q&A

1. What budget reductions is San Francisco State University dealing with during the current academic year?

As you are aware, the State's budget difficulties hit the California State University system hard in fiscal year 2003-04. The state reduced the CSU's budget by $452.4 million and also asked it to absorb an additional $78.6 million in unfunded mandatory costs. San Francisco State's share of these reductions and unfunded costs totaled $30.2 million. That represents almost 21% percent of our general fund budget.

Two things helped us cope with this. Our enrollment grew, which brought us more funds, and the 30% increase in the State University Fee voted in by the CSU Trustees also provided critically needed revenue. With these additional revenue sources, we started planning for the 2003-04 year with a net budget deficit of $14.1 million. For how we handled it, look at the next question.

2. I had heard that the University made big budget reductions this year, but I didn't notice a significant change in course offerings or much else. What was cut?

We saw these budget problems coming and began our intensive planning for this year 18 months ago. We saw 2003-04 as a transitional year -- one in which we could find ways to plug our $14.1 million budget gap for this year, while starting to put bigger, permanent cuts in place for the coming years, when we were quite sure the budget problem would be even greater.

We began with the goal I mentioned earlier: preserving the class schedule and maintaining our academic commitment to our enrolled students. For 2003-04, we first drew on one-time revenue sources such as lottery reserves and on new permanent revenue sources such as enrollment growth monies. This brought the year's $14.1 million shortfall down to $8.3 million.

Each major campus area -- Academic Affairs, Administration & Finance, Executive, Student Affairs and Advancement ­- was asked to take a share of that cut. Largely by reducing infrastructure and support services that have limited direct and immediate impact on students, these areas made one-time reductions of $6.6 million. They also made $1.7 million in permanent reductions. This fall, we also made the difficult decision to identify and begin the approval process to move selected general fund student support units to fee-based support -­ more on this subject in question #8.

For this academic year, we have succeeded in protecting the class schedule. We reduced summer course sections slightly, but we are offering very nearly the same number of fall and spring sections as last year (7296 sections in 2002-03 compared with a projected 7102 sections for this fall and spring). By the end of this fiscal year we will have exhausted available reserves and one-time funding sources. Yet the budget crisis is far from over, and we must plan for next year, and even beyond.

3. What reductions has the administration taken to help the campus absorb budget cuts?

When the first signs of serious budget problems appeared, we reorganized top administration in order to reduce the number of vice presidents from five to four. This change, while adding to the responsibilities and work load of several vice presidents, has worked out well and produced ongoing savings. We have a record of deliberately limiting MPP (Management Personnel Plan) positions. As I mentioned in my August speech to the faculty, despite fluctuations over the years, the number of MPPs is the same as it was 16 years ago. This is especially notable because 13 of these so-called “administrators” are Development Officers, who were not included as MPPs in 1988.

4. To what extent did the recent student fee increases offset this year's budget reductions?

The 30% fee increase covered only $8.6 million of San Francisco State's $30.2 million budget gap this year. Without the fee increase, we would have had to cut that much more, and we certainly would have had to make significant cuts in the class schedule. By the way, Academic Affairs ­- classes, faculty salaries, staff, the library and academic support services -­ takes up about 63% of the University budget, so any substantial cuts are going to have a significant effect on academic life.

5. I read that the Governor has just implemented mid-year budget cuts. What does this mean to the CSU and to us?

On Dec. 18, the CSU received word that the Governor had used his mid-year budget authority to reduce the CSU's 2003-04 budget by an additional $23.7 million. We and the CSU had been preparing for this reduction, and the CSU has informed us that our campus share is approximately $1.5 million. Fortunately, we are going to be able to address this reduction completely from unbudgeted fees generated by the enrollment increase the campus is experiencing this academic year. Therefore, we are going ahead with the spring class schedule, though we may make minor adjustments to it. As the CSU had urged, the entire reduction is unallocated, meaning that CSU campuses will not be required to cut outreach programs or EOP, as the Governor had originally proposed. Chancellor Reed, I and the other CSU presidents will continue to oppose such cuts strongly. (For the latest in CSU budget information, go to the Chancellor's Office "Budget Central" Web site.)

6. How are these budget cuts affecting staff and faculty hiring?

On Dec. 18, in response to two Executive Orders issued by the Governor, Chancellor Reed imposed a system-wide hiring freeze. For us, this will mean little change, because we established our own staff hiring restrictions two years ago, requiring cabinet officer approval for all staff hires and limiting new hiring to 7-month appointments. The notable change for us now is the requirement that the president also approve all temporary and probationary appointments, temporary reappointments and all employment status changes that involve an expenditure or an increased expenditure (increases in time base, salary -- including bonuses and honoraria -- and so on). All changes in employment status must be requested in writing and justified as essential to the educational mission of the University (see 12/22 memo from AVP Denise Fox Needleman) These requirements apply to both General Fund and non-General Fund (excluding grant funded) positions, including administrators, staff, faculty, student assistants and special consultants. However for faculty, we are able to continue with tenured and tenure-track searches in accordance with a Chancellor's Office directive and collective bargaining provisions. Reappointment of temporary employees will, of course, depend on next year's budget.

7. What is the University's budget forecast for next year? Will more reductions be required?

As you know, the Governor and the State Legislature continue to grapple with how to manage the State's monumental budget deficit. Whatever their decision, the CSU -­ and therefore San Francisco State -­ are virtually certain to face further reductions in funding.

But even before we learn about next year's budget, we know that we have an $11.2 million problem. This shortfall consists primarily of continued and new unfunded mandatory costs such as increases in our risk pool premium and certain bargained faculty pay increases (SSI's) that the University is required to expend, but given no money to pay for. Furthermore, we cannot expect to get additional funds from an increase in our enrollment target, as we did this year. And, as I noted earlier, our reserve funds will be gone.

As I mentioned, we have taken steps this year to move two units -- Counseling & Psychological Services and Athletics -- off the state budget, using those funds to help close our budget gap. Counseling & Psychological Services is now a part of Student Health Services, supported by the Student Health Services fee. Next year, Athletics will continue to receive the IRA funding voted in by students in 1992, but not its $1.4 million state budget allocation. We plan to put the Career Center on a self-support basis. With these changes and some planned permanent reductions in each major campus area , we can reduce our $11.2 million shortfall to $2.9 million ­- that is, if the CSU receives no additional cuts for 2004-05.

To deal with that $2.9 million budget gap, we will need to go more deeply into the University budget in ways that are bound to affect academic offerings and/or we will need to develop campus sources of revenue.

8. What do you mean by campus sources of revenue? Is this connected with the student fee referendum recently announced in the Xpress?

Yes it is. As the earlier answers have, I hope, made clear, we have explored and exhausted all existing sources of funds in the course of this year's cuts. Because the Chancellor's Office has told the campuses that in the current funding climate they are not to increase enrollment in 2004-05, we know that we cannot expect growth monies to help us out, as they did this year. Our one positive possibility for new revenue lies with campus-based student fees. We believe, and extensive conversations with student groups have borne out, that faced with a choice between significant loss of classes and services and modest campus fee increases, students would choose the increase. Accordingly, a semester-long process, governed by both campus and CSU policy, has culminated in a request from the Student Fee Advisory Committee for an Advisory Student Referendum on a package of new fees. On March 2 and 3, 2004, all students will have the opportunity to vote on fee proposals totaling $138 per semester. They include: Academic Instruction ($75), Athletics and Recreation ($33 - increase), Career Center ($14 ) and Student Health/Counseling & Psychological Services ($16 - increase). The outcome of such referenda is advisory both to the campus president and to Chancellor Reed.

If enacted, these fees would enable us to avoid the loss of approximately 575 course sections next year, would maintain athletics and recreation programs at their current level, and would ensure that the Career Center and Counseling & Psychological Services can continue to serve the campus as they now do.

CSU and SFSU policy specify extensive circulation at least 30 days before the vote of pro and con information regarding the fee proposals, so you can expect to see much more information around campus by the opening of the spring semester.

9. When will we really know what next year's budget situation will be?

Here's a quick rundown of the 2004-05 state budget process as it is meant to function. As we know from years past, the legislature has often been unable to reach agreement until well after the constitutional deadline for approval of the next year's budget. The earlier steps, however, can be expected to proceed on schedule.

January: The State Constitution requires that the Governor submit a balanced budget to the legislature by January 10, giving us our first look at his 2004-05 proposal for the CSU.

February: The non-partisan state Legislative Analyst will release her analysis of the Governor's budget; the Senate Budget and Fiscal Review Committee and the Assembly Budget Committee will be meeting on the budget; CSU campuses expect to receive preliminary allocations from the Chancellor's Office, so that we can begin to plan for 2004-05.

March/April: Legislative budget subcommittees will hold hearings and seek public reaction to the budget. This will be the CSU's opportunity to react to proposed allocations and to work for any changes it would like to see in the Governor's May Revision and update of the budget.

May/June (and perhaps beyond) : Senate/Assembly conference committee will work to reach agreement on the budget.

June 15: Constitutional deadline for the legislature to pass the budget.

Obviously, we will be following closely, and planning carefully, as the budget adoption process runs its course. While we cannot know when the 2004-05 budget will be in place, we will be planning, starting in January, applying all the unfolding information to our plans.

10. What effect would that budget shortfall ­- and possible additional cuts ­- have on class sections next year?

If Academic Affairs absorbs the entire $2.9 million shortfall currently projected for 2004-05, approximately 575 class sections will be canceled. Further cuts to the campus budget beyond the initial $11.2 million will result in additional section cancellations.

11. Who determines which class sections are cut? Will class size be increased to help make up for reduced sections?

The college deans, in consultation with their department chairs and faculty, will ultimately decide which class sections to cancel. To compensate for the reduced number of classes, class sizes will most likely increase. However, not all classes can accommodate additional students (laboratory, computer, writing, etc.), and even for classes that can, there is a limit to the increase before the student learning experience is compromised. Consequently, class availability and access will eventually be affected.

12. Is there any danger that campus programs or departments may face elimination?

No University programs or departments are being considered for elimination as part of the current budget reductions.

13. How are decisions concerning the budget and possible budget reductions made at San Francisco State University?

The University Budget Committee, a 17-member group with faculty, Academic Senate, staff and student representation, which I chair, meets throughout the year to discuss and advise on overall budget issues and to review and advise on the budgets prepared for the University as a whole and the individual major divisions. UBC meetings are announced in CampusMemo and are open to the University community.

Once budget allocations are determined by area (Academic Affairs, Student Affairs, etc.), the vice presidents allocate funds to the areas they supervise, and departments determine ­- in consultation with the appropriate vice president or dean ­- how best to use their funds.

For the academic units, allocations are made by College, and then from the dean to the academic departments. Faculty, working with their department chair, have a voice in the choices that the department makes about the class schedule.