ABA Management Council
May 19, 2008
State “May Revise”
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$17.2 B projected state deficit in 08/9 ($133B)
$802 M ‘over-appropriated in 07/08
Health and Human Services - largest cut
Rainy Day Fund
– borrow from future Lottery revenue, or
– 1% sales tax increase (only when triggered)
• Governor’s tax modernization commission
– Sound, predictable budget situation
CSU Trustee Action
• $97.6 M more to keep at current level
• Reduced ‘competitive Cal Grant; left
need-based Cal Grant intact
• No information about specific campus
changes, if any
• Trustees approved 10% student fee
increase (State University Grant fee)
UBAC Considerations
– Strategic Goal #1
• Meet Enrollment Targets
– Recruit New Students
– Class Schedule Supports
Enrollment Targets
• Student Retention
• Graduation Rates
– Cross Division Collaboration
– Division Priorities
– Multi-Year Financial Planning
• Position campus for recovery
Process
• Extensive Review of Campus
Financial Information
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Carry-forward Funds
Reserves
Baseline Allocations
All University Expenses/Central Costs
Long Term Obligations - Loans
• Conversations with the
Provost and Vice Presidents
• Questions/Conversation with
President and Cabinet
January Financial Assumptions
- $4.4 M Campus Carry Forward Gap
$1.9 M Net New fees - 4%
- $6.3 M Net Reduction - Governor’s Budget
Funding to meet CSU “enrollment growth”
and 4% cost increases
10% General Fund reduction ($16.6M)
- $2.0 M Unfunded Costs
- $ .5 M Reduction in Retirement Costs
-$10.3M Projected Structural Deficit
Recommendations
1. Eliminate Structural Gap in 08/09
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Concern for 2009/10 and beyond
2. Use One Time Funds
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Reduce Structural Gap
Large One-Time Costs
3. Reserves
Recommendations – Step 1
1. Eliminate Structural Gap in 08/09
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Concern for 2009/10 and beyond
2. Use One Time Funds
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Reduce Structural Gap
Large One-Time Costs
3. Reserves
1a. Reduce Gap from $10.3M to $7.1M
- $4.4 M Campus Carry Forward Gap
$4.8 M Net New fees 10% (+ $2.9 M)
- $6.3 M Net Reduction - Governor’s Budget
Funding to meet CSU “enrollment growth” and
4% cost increases
10% General Fund reduction ($16.6M)
$1.3 M Interest Earnings (+ $1.3 M)
- $3.0 M Unfunded Costs ( - $1.0 M)
- $ .5 M Reduction in Retirement Costs
- $7.1 M Projected Structural Deficit (+ $3.2M)
1b. Eliminate Remaining $7.1M Gap
• All University Expense $2.2M
– Pay Off Loans
• $1.445M Baseline Savings
– Various All University Cost
Decreases - $.7M
• Research Admin Space
• Sac State Magazine
• Risk Pool Premium
1b. Eliminate Remaining Gap (cont’d)
•Baseline Reductions to Divisions - $4.9 Million
–Academic Affairs
–Admin and Business Affairs
–Athletics
–Govt & Civic Affairs
–Info Resources & Tech
–Student Affairs
–Human Resources
–Office of the President
–University Advancement
-3.5%
-3.5%
-1.0%
-0.0%
-5.0%
-2.0%
-3.0%
-3.5%
-3.5%
Recommendations – Step 2
1. Eliminate Structural Gap in 08/09
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Concern for 2009/10 and beyond
Use One Time Funds
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Reduce Structural Gap
Large One-Time Costs
1. Reserves
Sources of One-Time Funds - $8.61 M
• 2006/07 Central Carry Forward
– $3.1M AUE/Mandatory Costs
– $1.8M Interest Earnings
• 2007/08 Central Projected Surpluses
– $1.9M Benefits Pool
– $1.8M All University Expenses
• Insurance, Utilities, Space Rental, etc.
Use Central One Time Funds - $8.34M
• Pay Off Loans – $4.3 Million
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2 CMS Loans
Benicia Hall
Energy Bond
Electrical Sub
$3.356 Million
$ .350 Million
$ .515 Million
$ .120 Million
– Baseline Savings $1.445 Million
• Old Bookstore Remodel - $3.5 Million
• One-Time Funding Requests - $.5 Million
Recommendations
1. Eliminate Structural Gap in 08/09
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Concern for 2009/10 and beyond
2. Use One Time Funds
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Reduce Structural Gap
Large One-Time Costs
3. Reserves
Reserves
• Reserves
– $3.75M - Emergency/Disaster Reserve
• This is NOT and operating reserve!
– $0.25M - Liability Claim Reserve (1 claim)
• Should be at least $.5M (2 claims)
– $1.80M - Operating Reserve (< 1%)
• Cushions
– $0.75M – Fee Waivers, Enrollment
– $3.00M – Unfunded Costs
Not Addressed….
• Surprises in 08/9 State Budget
• Future State or CSU Cuts – 2009/10 and beyond
– State Structural Gap – expect multi-year
– Unfunded Mandates
• Divisions’ Structural gap
• Ongoing renewal costs
– Equipment, computing, telecom, voice mail, vehicles,
furniture, etc.
– 60 year old campus – Deferred Maintenance
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mechanical/ electrical
heating/cooling,
water/sewer,
painting, carpet, flooring, etc.
Questions?