Date:      March 26, 2010 To:         Faculty and Staff From:     President Karen S. Haynes Subject: Budget Update Before we leave for spring break, I want to share with you an update on planning for the 2010-11 budget and other related actions. After reviewing the recommendations put forth by the University Budget Committee, careful analysis of our budget planning scenarios and the mid-year budget report, and because of prudent decisions made early on and your vigilance in cost savings, I am taking the following actions: We  have determined there will not be layoffs of permanent employees at this time. We will meet our $6 million permanent budget reductions in a variety of ways. We anticipate reducing our expenditures through employee attrition and the non-renewal of temporary staff appointments where appropriate.    Further, divisions have already eliminated many vacant positions and have identified other vacant positions that will be eliminated. We will reduce travel, supplies and services budgets, and where possible, will shift general fund expenditures to different funding sources. We will use carry forward funds from campus-wide activities and unallocated revenues to avoid the 5 percent in fiscal reductions planned for next fiscal year in each division. I have directed the provost and vice presidents to reinvest these funds in their division, giving preference to those items identified as highest priority by the University Budget Committee. We continue to plan for a 6 percent reduction in enrollment. Enrollment Management Services put a number of tools in place early on to meet that reduction. As is the case every year, it is difficult to project the number of first-time freshmen and transfer students until we have passed the May 1st deadline for admitted first-time freshmen and the June 1st deadline for admitted transfer students to submit their “Intent to Enroll” and enrollment deposit. The first-time freshmen yield is most critical for completing planning for the fall course schedule and the number of sections offered.     The supplemental allocation of $1,272,500 received from the Chancellor to support additional course sections, revenue generated from offering summer through self-support, and the reinvestment of the restored 5 percent fiscal reduction, or $1.9 million, to Academic Affairs will all help mitigate the impacts of the 6 percent enrollment reduction on course section offerings. We continue to operate on the same planning assumptions – a $6.1 million permanent reduction, a $2.5 million fiscal reduction and a 6 percent enrollment reduction.  In January, the provost and division vice presidents developed budget reduction plans which included a 10 percent permanent reduction and a 5 percent fiscal reduction for their respective divisions. From those plans, they presented categories targeted for reduction to the University Budget Committee for their deliberation and recommendations for reinvestment priorities should funds become available. This week, I received the recommendations from the UBC. The committee prioritized the categories to align with the campus strategic priorities and our budget reduction principles to serve students, protect as many jobs as possible and continue to build for the future. The committee members’ “university first” perspective was evident in the recommendation put forward. The categories given highest priority for reinvestment include activities from across the University and represent core University functions, rather than privileging one division over another. The high priority categories included student academic support, course sections, faculty course release for service, library collections, enrollment management, student development, safety and emergency assistance, financial reporting, and support of campus operations and building for the future. Indeed, members of the University Budget Committee not only recommended that they be the first priorities for reinvestment, but that my executive council look for means to fund these categories whether CSUSM’s budget is cut less than expected or not. My executive council and I have continuously reviewed budget planning scenarios, information from the Chancellor's Office, and, this week, the mid-year budget report from the University Budget Office. Since the beginning of this crisis, I have asked you to keep a watchful eye on spending for the fiscal year in order to maximize our carryover funds. Because of your efforts at cost savings, the University Budget Office projects divisions will carry forward $2.4 million in non-designated general funds to 2010-11. As in recent years past, these funds will not be swept from divisions. We will also carry forward $2.5 million from campus-wide activities and unallocated revenue. Significant challenges and uncertainty remain. Over the past two years, the CSU budget has seen a 21 percent or $625 million decrease in state support. The governor has proposed to restore $305 million to the California State University’s 2010-11 budget.  Should the CSU, and therefore CSUSM, receive an increase, reinvestment will be made keeping in mind the priorities recommended by the UBC. However, the reality is that significant challenges to the state’s financial situation remain, and it is highly unlikely the CSU will receive the increase. In late February, the Chancellor’s Office released the 2010-11 Governor’s Budget Allocation Memo which directed us to expect and plan for a flat budget.  We expect a very long budget season with continued contingency and uncertainty about how the CSU will end up with the final budget bill. Cal State San Marcos is a campus poised for growth. We sit in a region that will see significant population growth and our applications continue to increase each year.  That is why we made a commitment to continue to build for the future.  That commitment includes serving as many students as possible and facilitating their progress toward graduation, not suspending or discontinuing academic programs at a point in our maturation where we are still developing our academic offerings, and protecting as many jobs as possible to both prepare for growth and support growth when it continues. We must continue to advocate for the CSU and for CSUSM by delivering a strong message to Sacramento that funding for public higher education must be a top priority. We must take every opportunity to send the message loud and clear that an investment in higher education has a guaranteed return because it is an investment in the most promising and essential assets we have: educated and prepared leaders of tomorrow. I will continue to hold budget forums and provide updates as we receive new information or we reach critical milestones in our 2010/11 planning process. I look forward to seeing you when we return from spring break as we begin the countdown to Commencement and enjoyment of the many year-end activities celebrating the achievements of our graduating students.