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Dear SDSU Community,

California Gov. Gavin Newsom signed the 2020-21 state budget this week, offering needed details about the budget outlook for the California State University (CSU) system.We are sharing a timely update on the budget outlook for our university, updated U.S. Centers for Disease Control (CDC) guidance on university and college reopenings, and several other campus updates.

We are also pleased to report and reinforce that our SDSU Flex plans for Fall 2020 remain in compliance with current orders, projections for the fall, and all updated guidelines.

CSU, SDSU Budget Outlook

Given the Governor’s FY 2020-21 budget signed Monday, we are now working closely with the CSU to finalize what this means for SDSU. The CSU is expecting a state budget reduction of $299 million. This final number is the result of a base increase of $199 million, offset by a “contingent” base reduction of $498 million. If the state receives additional federal funding by Oct. 15, 2020, the contingent reduction will be decreased. Further, the CSU projects an additional base reduction of $30 million from lost tuition revenue due to decreasing enrollment across the system.

Taken together, it is anticipated that SDSU can expect to see an estimated $29 million budget reduction at the campus level, absorbing approximately 10% of the cut in state funding to the system. In addition, SDSU is expected to cover unfunded mandatory cost increases of approximately $3 million, which addresses standard increases in health insurance, retirement, and other mandatory costs. In summary, there will be an expected base reduction of $32 million for SDSU in FY 2020-21. As positive news, however, we are cautiously optimistic that SDSU’s resident enrollment will be close to or on target. Non-resident enrollment is expected to be short of target, as is the case at most universities across the U.S., and within the CSU. The SDSU budget is further stressed with an estimated one-time loss of approximately $47 million resulting from refunding of housing, meal plan, and parking, and also health and safety costs associated with the pandemic, and additional investments made to support virtual instruction in the fall. Only $17 million of the $47 million is expected to be reimbursed through the CARES Act funding.

We expect to have more details about the SDSU budget by mid-July, and will provide an additional and more comprehensive update at that time.

The recession we find ourselves in, combined with a system-wide and university budget reduction pose a number of challenges. However, as we shared in April with our first budget update, the fact that we would be facing a tough budget year ahead was already apparent, and something we were taking action to address. We also shared a great number of changes both the CSU and our campus community have adopted in support of budget balancing, including: a hiring chill of open positions, which is ongoing; deferred construction and repair projects considered non-critical at this time; extended travel restrictions for university employees; and the successful application and securing of Coronavirus Aid, Relief, and Economic Security (CARES) Act funding, which has provided emergency funds to both our students and general campus needs. It is also necessary to balance the budget by utilizing campus reserves.

These early decisions generating one-time budget solutions for the 2020-21 fiscal year have partially helped to mitigate farther-reaching implications on our own campus. In addition, a team of campus leaders has been formed and tasked to explore revenue generation ideas during the summer to provide permanent budget solutions to the $32 million base budget reduction. We will engage both our shared governance practice and the President's Budget Advisory Committee (PBAC) on any assessment or adoption of additional changes as our budget forecast becomes more clear.

No Changes to SDSU Flex Plan

We have seen nationwide increases in COVID-19 cases, with California included. This week, Governor Newsom announced that several counties throughout the state must begin pausing or reversing plans to reopen, primarily focusing on the operations of bars, restaurants, movie theatres, and other specific entertainment venues.

Also, updated guidance from the CDC indicates that COVID-19 increases in severity with age. Now, those aged 85 and older are in the greatest risk category for severe illness from COVID-19. The CDC is also not recommending colleges and universities test all of their students, faculty, and staff as they return to campus given that it is unclear if such testing reduces the spread of the virus.

These updated guidelines and orders do not have any impact on our current campus operations, either in San Diego County or Imperial County, and existing health and safety processes remain in effect, and sufficient under both the Governor and Counties updated guidance.

Our SDSU Flex plan for the fall was also specifically designed with consideration for the very COVID-19 pandemic shifts we are currently seeing. The plan remains compliant in respecting physical distancing and sanitation requirements and accounts for a significant reduction in the number of students, faculty and staff who would be on campus at a given time.

SDSU Mission Valley Update

Since our last update, the City Council has approved the sale of the SDCCU Stadium site for SDSU Mission Valley. Escrow is anticipated to close in early to mid August followed by a construction start shortly thereafter.

SDSU Mission Valley continues to represent a significant opportunity for the university to expand both enrollment and our relationship with the community. As has been explained previously, SDSU Mission Valley will be primarily funded through revenue bonds, which will be repaid with revenue generated by ground leases with SDSU's public-private partners (P3s). It is an investment in the future of SDSU and our investment now will pay significant dividends down the road. SDSU Mission Valley represents an opportunity for SDSU to secure new streams of revenue. In the long-term, once ground lease revenue from the public-private partnerships exceeds the debt obligations and operational costs, excess revenue can help support needs and programs campus-wide.

In Closing

Our campus community has remained committed to the careful and purposeful planning for a gradual repopulation of campus, and we remain confident that we will offer an engaged experience for our students, whether they join us in-person or virtually. We, again, thank other campus administrators and also the faculty, staff and students we have engaged in our planning for introducing a thoughtful Fall 2020 plan.

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

Salvador Hector Ochoa, Ph.D.
Provost and Senior Vice President for Academic Affairs

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

 
 
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