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This is the first in a series of informational memos about the fiscal year 2020/21 San Diego State University Operating Budget.

This memo provides information about the budget process for the California State University and SDSU 2020/21 budgets. Updates will be provided throughout the spring semester as new information becomes available and developments occur.

CSU Operating Budget Plan for FY 2020/21

The CSU Board of Trustees met in September 2019 and began the planning process for the fiscal year 2020/21 CSU Operating Budget. The board met again in November 2019 and approved the 2020/21 Operating Budget request for a base increase of $648 million. The ask included $563 million in new general fund support from the state and an additional $85 million in new tuition revenue from a proposed 5 percent increase in full-time equivalent students (FTES).

Proposed increases in expenditures included:

  • $105 million to support Graduation Initiative 2025;
  • $177 million in salary and benefits increases;
  • $249 million for a proposed 5 percent increase in enrollment;
  • $75 million for academic facilities and infrastructure;
  • $27 million in mandatory cost increases; and
  • $15 million for basic needs partnerships.

The proposed operating budget request also included a one-time funding request of $500 million to help address the deferred maintenance backlog on campuses throughout the system.

The proposed $177 million increase in salary and benefits includes $140 million to fund 2020/21 compensation increases, subject to collective bargaining, for all employee groups. Many of our collective bargaining agreements expire on June 30, 2020, so we anticipate a very busy spring on the bargaining front for the CSU.

Governor’s Budget Proposal for 2020/21

On January 10, 2020, Governor Gavin Newsom released his proposed state budget, the first step in this budget cycle. The proposed budget provides a $199 million base increase and $12 million one-time funds to CSU. This is short of the $563 million requested in the CSU budget request.

The new, recurring base funds ($199 million) are not categorized for specific uses. Instead, they are flexible and will be used to address a portion of some of the Board of Trustees’ budget priorities. The proposed one-time funds of $12 million include the second year of a two-year commitment of $6 million annually for summer term financial aid programs, and $6 million to support the development and expansion of degree and certificate completion programs, with an emphasis on online programs.

The CSU Board of Trustees met January 28 and 29 to discuss Governor Newsom’s proposed CSU budget for 2020/21. While the proposed budget fully funds anticipated mandatory cost increases, it falls short of the request, and does not provide support for Graduation Initiative 2025, facilities or infrastructure, nor any increases in resident enrollment.

The 2020/21 budget and its impact on the CSU will be evaluated throughout the spring as the legislature convenes. There will be a May revision to the proposed budget, and a final budget in June.

AB 48: Public Preschool, K-12, and College Health and Safety Bond Act of 2020

The 2020 Bond Act places a $15 billion general obligation bond on the March 3, 2020 ballot for consideration by the voters. The bond would help the CSU address academic infrastructure and deferred maintenance. The last general obligation bond to support the CSU was approved in 2006.

If approved by voters, K-12 would receive $9 billion in funding and each segment of higher education would receive $2 billion. As a condition of receiving bond funds, the University of California and CSU would be required to adopt a five-year affordable student housing plan for each campus.

SDSU Budget Process for FY 2020/21

Based on Governor Newsom’s January budget proposal, SDSU will keep its resident enrollment flat in 2020/21 because funding is not being provided for enrollment growth. As a result, after funding all anticipated mandatory cost increases, there will be approximately $2.4 million in new base funding and $20 million in one-time funding available to meet the strategic and critical needs for 2020/21. These amounts are more modest compared to the 2019/20 budget.

Over the next few months, there will be a series of budget discussions and meetings on campus leading to the development and recommendation of the university budget for 2020/21. Additional information about the 2020/21 budget process and submitted budget requests is available on the Open Budget Process site, located on the SDSU Budget Hub.

Newly launched, the SDSU Budget Hub also hosts a new budget transparency dashboard, which includes an interactive display of revenue, expenses and reserves for the university operating fund. We will continue to update the campus community with information about the budget and the budget process.

SDSU Mission Valley

On January 29, the CSU Board of Trustees approved the SDSU Mission Valley Final Environmental Impact Report and Campus Master Plan. The board also gave the chancellor authority to execute a Purchase and Sale Agreement with the City of San Diego that is consistent with SDSU’s written offer to the city.

The CSU Board of Trustees also approved an initial investment of $350 million to cover the property acquisition, off-site mitigation and site infrastructure development, including the construction of the River Park. The $350 million comes from systemwide revenue bonds ($250 million) supported primarily by public-private partnership (P3) ground lease revenues, the CSU ($60 million) and SDSU ($40 million). SDSU’s investment of $40 million will be funded through auxiliary resources and not from SDSU’s operating fund, state appropriation, student tuition or student fees. In addition, as P3 ground lease revenues grow beyond those levels required to meet debt service requirements, excess revenues will be available to meet general campus operating needs and replenish any campus auxiliary resources utilized to meet earlier financing needs.

In March 2020, the CSU Board of Trustees will consider approval of the new multi-use stadium which will be funded primarily through systemwide revenue bonds, philanthropic gifts, and acquisition gifts from premium seat holders. These revenue bonds will be repaid through annual gifts, sponsorships, ticket revenues, naming rights, facilities rental revenue and concession revenues.

SDSU Mission Valley is an investment in the future of the university and represents an unprecedented opportunity to expand and transform San Diego State University for thousands of more students.

Conclusion

Current economic forecasts indicate that the State of California will continue to have a positive but slower growth in FY 2021. The governor’s January budget is in line with that outlook. In the next few months, CSU will work diligently with the governor and legislature to advocate for additional revenue to fund its essential and aspirational needs. As in prior years, the governor’s January budget proposal is only the beginning of a six-month budget process and more changes often come between now and June.

If you have any questions, please contact Crystal Little, Interim Associate Vice President for Financial Operations, ([email protected]) or Dana Smith, Interim Budget Director ([email protected]).

Links to Useful Information:

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

 
 
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