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Dear SDSU Community,

As we have shared before, the ongoing COVID-19 pandemic has introduced various disruptions to our daily lives. It has also presented significant ongoing financial challenges for both individuals and institutions. While our San Diego State University community has experienced unexpected difficulties while navigating the evolving financial landscape, we continue to identify solutions to close the budget deficit and implement necessary changes to prepare for the uncertain economic future.

With this message, we are providing a budget update with more information about how we are addressing the realities surrounding the permanent reduction to our 2020-21 fiscal year base budget. We also share how the state, California State University (CSU) system, and SDSU are preparing for the financial obstacles expected in the forthcoming fiscal year.

California State Budget

As you may recall, there had been some hope that the federal government would provide additional funding to state and local governments with an additional stimulus package this fall. That additional funding would have provided necessary one-time resources to restore the budget cuts and deferrals introduced in the 2020 Budget Act. However, at this point, we do not expect any amendments to be made to the CSU’s state appropriation. As a result, the CSU budget will continue to reflect a net general fund decrease of $299.1 million base dollars.

In response to the pandemic, the tax filing deadline for 2019 was extended from April to July. Despite unemployment claims and a fluctuating stock market, state tax receipts for the first two months of the fiscal year were $4.5 billion above the 2020-21 Budget Act forecast of $35.6 billion. While this is welcome news, it is critical to understand the extent of the state’s budget gap for this fiscal year, which is estimated to be a $54 billion deficit.

Considering the size of the current state budget gap, coupled with the unpredictability of the pandemic, and the wildfires throughout the state, the state is expecting to confront three full years of economic challenges.

CSU Budget

Recurring funds from the state appropriation is one of the main sources of the CSU's operating budget. There is a great deal of uncertainty surrounding the state appropriation to the CSU for the 2021-22 fiscal year. While the CSU will request an increase in state allocation to meet our needs during these difficult times, we are also preparing for the possibility that the state’s financial condition will not significantly improve.

The CSU Board of Trustees (BOT) will review and approve a budget request to the state for the 2021-22 fiscal year at its November meeting. The CSU will have a clearer picture of future state funding when the governor issues his proposed budget in January.

Capital needs for the CSU in the next fiscal year are estimated to be $3.8 billion. Proposition 13, which was on the March 2020 ballot, would have issued $2 billion to the CSU to finance these capital improvements. Because the proposition did not pass, the CSU anticipates very limited capital funding will be available to support new academic projects over the next several years, and that the deferred maintenance backlog on campuses will remain an issue throughout the system.

We are, however, pleased to share that the CSU was able to leverage the record-low interest rate in August to refinance existing debts, which ultimately saved $64 million in today’s dollars for the CSU system, including $2.2 million savings for the auxiliaries at SDSU.

SDSU Operating Budget

The campus census was completed in September for Fall 2020 enrollment. It is thanks to the collective efforts of our colleagues across campus that the summer and fall actual enrollments, as well as the spring projected enrollment, surpassed the worst-case scenario applied in our conservative budget model. Our non-resident enrollment is below target but consistent with the national trend. Resident enrollment, however, is over target. This enrollment has resulted in higher tuition revenue than initially predicted in the preliminary fiscal year 2020-21 budget.

As a result, 15 searches for faculty lines that had been on hold due to the CSU systemwide hiring chill will now resume. Additionally, approximately 22 faculty lines — that are from resignations or retirements prior to the Early Exit Program (EEP) offering — are also now eligible for replacements.

We are very pleased that we will be able to refill faculty lines during this difficult economic downturn. Provost Salvador Hector Ochoa has asked that deans submit prioritized faculty hiring requests for consideration. The decision metrics to allocate these lines include the following: rationale provided by the dean, accreditation requirements, particular expertise needed to teach courses within a given discipline, program enrollment growth, student-to-faculty ratio within programs, linkage to an existing cluster hire initiative, and consistency with strategic priorities, including growing programs to support our longer-term academic and research goals at SDSU, SDSU Imperial Valley, and SDSU Mission Valley.

As a reminder, the 2020-21 fiscal year budget is balanced by using one-time cost savings, reducing President's Budget Advisory Committee (PBAC) allocations, and utilizing "carry forward" reserves — it does not include cuts to the instructional budget. We are continuing to identify and develop permanent solutions to address our base budget reduction of $35 million.

Early Exit Program

In consultation with the CSU, an Early Exit Program (EEP) was announced at SDSU in September. The application process remains open for eligible employees. The EEP will allow for faculty and staff to voluntarily separate and receive an expanded severance package.

Please note that applications are being processed on a first-come, first-served basis, and all must be submitted by 11:59 p.m. on Oct. 31, 2020 to be considered. We are also pleased to report that more than 100 applications were received on the first day of the program launch this month. If you are interested, we encourage you to apply immediately as four bargaining units have already met their cap for program participation.

We are offering this program in order to lower ongoing salary and benefit costs through a voluntary program. Therefore only a limited number of the vacant positions will be refilled.

The EEP is one of our efforts to reduce the budget gap. The campus must pursue additional cost-saving practices, such as implementing a shared services model; applying more efficient workflow practices, and reevaluating tasks and/or programs that are not critical, essential, or strategic for potential suspension or elimination.

Revenue Generation

The Revenue Generation team continues to develop plans for generating new dollars for the university. The goal of all efforts is to provide funding for research, academic programs, and student support.

The team has offered several solutions for consideration, including exploring mission-oriented corporate and public partnerships, developing summer high school academics, growing summer enrollment, and increasing non-resident enrollment. We anticipate that carrying out these recommendations will contribute positively to the budget in the next several years and, again, specifically to benefit students, faculty and staff.

SDSU Budget Process for FY 2021-22 Budget Cycle

In accordance with our commitment to transparency, we will continue to consult with shared governance groups on campus, including PBAC and the University Senate Committee on University Resources and Planning (UR&P) to develop the 2021-22 fiscal year budget. Unlike the current budget cycle, we will have more time (between now and May 2021) to review the budget planning process and solicit input from our campus constituents.

Conclusion

As mentioned in our earlier updates, SDSU took a conservative budget approach to the fiscal year 2020-21 budget. We planned with the intention of confronting the unplanned financial consequences of the pandemic while still hoping to bring in better-than-expected revenue. Our commitment to the effective implementation of long-term budget solutions, revenue generation strategies, and cost-saving habits remains critical. Moving forward, we are continuing to enlist the support and participation of our campus community as we propose and pursue solutions to help us overcome this year’s budget gap and the challenging years ahead.

We will continue to provide updates and announcements, and as always, we welcome you to share questions or comments by emailing [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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