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Dear SDSU Community,

While we are still working to address the unexpected financial impacts brought on by the ongoing coronavirus (COVID-19) pandemic, we remain thankful for the collective efforts of our university community, which allowed us to quickly determine ways to mitigate the budget gap using mostly one-time solutions.

Although 2020 is behind us, its financial implications remain present. There have been, however, some positive signals for the year ahead.

With this message, we are sharing the first budget update of the year with known information about:

  • The California State University (CSU) operating budget request for fiscal year 2021-22.

  • Encouraging details from Gov. Gavin Newsom’s preliminary budget proposal for fiscal year 2021-22.

  • An update regarding SDSU’s enrollment and Early Exit Program (EEP).

  • Information on the newly approved COVID-19 Relief Bill, to include funding support for our students.
 
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Proposed CSU Operating Budget Request for FY 2021-22

As part of its budget planning, the CSU Board of Trustees (BOT) met in November 2020 and approved the proposed $7.5 billion CSU Operating Budget Request for 2021-22. The request represents $4.2 billion in general fund support from the state and $3.3 billion in tuition and fee revenue. This included a request to increase the base budget to the CSU by $556 million.

This CSU budget request included the following:

  • $155 million to support Graduation Initiative 2025.

  • $57 million to cover mandatory cost increases, to include the $16.5 million for the new ethnic studies requirement, $23.8 million to fund health benefits, $11.3 million to fund the maintenance of new facilities, and $5.4 million to fund the minimum wage increase.

  • $50 million in academic facilities and infrastructure needs.

  • $299 million for general fund restoration to restore the general fund/base reduction that was eliminated from the 2020-21 CSU Operating Budget.
 
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Governor’s Budget Proposal for FY 2021-22

The state’s revenue is largely dependent on personal income tax and in this very early phase of the 2021-22 budget cycle, economic projections for the fiscal year are not yet clear. However, the state has seen several positive economic indicators since July 2020, which include actual state tax revenue receipts ahead of forecasts and the welcome news of a decline in California’s unemployment rate.

On Jan. 8, Gov. Newsom released his proposed state budget for fiscal year 2021-22, the first step in the budget cycle. The preliminary budget provides $225 million one-time funds to the CSU and a $144.5 million base increase over the current year, which is short of the $566 million requested in the CSU budget request.

The proposed base budget funding increase includes:

  • $111.5 million for a three-percent increase in base resources for general operating costs.

  • $15 million for Graduation Initiative 2025.

  • $15 million for student mental health and technology needs.

  • $2 million to support a common learning management system (Canvas) across higher education segments.

The proposed one-time funding includes the following:

  • $175 for deferred maintenance, energy efficiency, and facility improvement projects.

  • $30 million for student emergency assistance grants.

  • $10 million for professional development.

In the coming weeks, the CSU will be deliberating and, ultimately, determining how to allocate the $144.5 million base increase to campuses and how to best address unfunded requests, such as mandatory cost increases, employee health benefits, and minimum wage increase pay.

The governor’s preliminary budget was proposed with the expectation that the CSU will maintain resident undergraduate tuition and fees at current levels for the 2021-22 academic year and take action to significantly reduce equity gaps and other priorities outlined in the CSU Operating Budget Request for 2021-22.

Changes to the governor’s proposed budget will be made during the May Revision, when the latest economic forecasts will be taken into account. The final state allocation will not be known until after the final budget agreement is reached in June 2021.

 
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SDSU Operating Budget FY 2020-2021

The President’s Budget Advisory Committee (PBAC) met in November 2020. Both PBAC and President Adela de la Torre approved a recommended one-time budget allocation of approximately $5.8 million to support critical/emergency needs for spring 2021.

The allocation includes approximately $5 million to support both the summer enrollment incentive and the spring installment of enrollment growth funding for spring course sections. The remaining balance supports assigned time for research, scholarship, and creative activities ($300,000); critical staffing to provide additional student services ($179,542), critical information technology software and services ($144,720); and funding for implementation of actions across our five-year strategic plan ($150,000).

Since the onset of the pandemic, we have been faced with numerous unplanned expenses and financial losses. This modest one-time budget allocation supports our committed obligations and unplanned urgent needs.

 
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Enrollment

At this point in the registration cycle, spring 2021 enrollment is on target. SDSU’s spring 2021 enrollment data mirrors the fall 2020 enrollment trend. Non-resident enrollment remains down comparable to fall, largely due to the loss of international student enrollment, while being up in our number of in-state residents.

Fall 2021 Application Update

The pandemic has resulted in changes to the volume of admission applications received by colleges across the nation. The CSU system as a whole was down 5% in undergraduate applications after the Dec. 15, 2020 application deadline, with 19 of the 23 campuses experiencing declines, consistent with the national trend.

However, SDSU is among the few universities seeing application growth. SDSU received more than 67,500 first-time freshmen applications, up 5% compared to this time last year, including a record number of domestic non-resident applications at approximately 6,000. SDSU received 24,000 transfer applicants, up 1% compared to this time last year, and 7,500 graduate student applications, which is up 72% compared to this time last year. While we are currently behind by approximately 9% in international applications compared with the same time last year, our deadline for international applicants is April 1.

Early Exit Program (EEP) Update

Given the 2020-21 base budget reduction of $35 million at SDSU, the university has worked to find ways to save on base expenditures. Considering 85% of the base budget accounts for salary and benefits costs, SDSU announced in September 2020 the development of an Early Exit Program (EEP) to encourage the voluntary attrition of faculty and staff.

We had 130 employees participate and separate from the university on Dec. 30, 2020. As a result:

  • The fiscal year 2020-21 university operating fund one-time payout expense was $5.5 million.

  • The ongoing annual savings for fiscal year 2021-22 are approximately $9.4 million to the base budget.

  • Self-supporting funds, such as Housing Operations, also had one-time payout costs and ongoing savings to their base budgets.

While the intention of offering the EEP was to reduce ongoing base budget expenditures and not backfill positions, the university recognizes there may be critical needs, and has set aside a portion of the salary savings in order to backfill critical positions if necessary.

COVID-19 Relief Bill

The long-anticipated COVID-19 Relief Bill passed in December 2020, and will provide SDSU with additional federal funding.

Earlier today, the U.S. Department of Education (DOE) released the amounts allocated to each university. SDSU will receive $45.9 million in total and $14.7 million of the allocation will be available specifically for direct financial aid grants to support students for cost of attendance or emergency costs associated with the pandemic.

In addition, it is expected that the COVID-19 Relief Bill will allow for greater flexibility in allowable spending, which will provide one-time funding to help defray institutional and instructional expenses and lost revenue due to the pandemic.

Once we review the DOE’s guidelines regarding the acceptable use of COVID-19 Relief Bill appropriations, it will be possible to start the disbursement of funds. SDSU will make student grant disbursement a priority.

Conclusion

The preliminary governor’s budget proposal exceeded our expectations by offering funding for CSU priorities rather than proposing additional cuts. The proposal highlights the criticality of investing in higher education and our students as an essential element to the recovery and revitalization of California’s economy. Meanwhile, the CSU will work diligently throughout the budget hearing and enactment process, advocating on behalf of the university system.

Even so, as mentioned in our earlier updates, due to the significant financial difficulties caused by the pandemic, the state is expecting to confront three full years of economic challenges. While the governor’s preliminary budget is positive, we remain committed to pursuing and implementing additional long-term budget solutions, revenue generation strategies, and cost-saving habits.

We will continue to engage the campus community during the fiscal year 2021-22 budget planning cycle through our shared governance process, which includes consulting with PBAC to develop the budget. As always, we will share updates as more information becomes available, and we encourage you to email your questions and comments to [email protected].

Adela de la Torre, Ph.D.
San Diego State University President

Agnes Wong Nickerson, MBA
Interim Vice President for Business and Financial Affairs and Chief Financial Officer

 
 
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