Board of Trustees Meeting
July 7, 2009
NOTES
Called to order at 1:05.
Thirty minutes for open comments.
Chancellor Reed described the budget shortfall.
No specific actions will be taken today, but the discussion will serve as preparation for the July 21 BOT meeting.
Public speaking section.
· Unit 4 APC spoke on the hardships that furloughs will bring their members and their expectation that these sacrifices will be reciprocated.
· CSUEU has completed bargaining with CSU on implementation of furloughs. They want the campus closed on furlough days. The TA will be sent out to members for ratification.
· The BOT was asked to place an audio recording of this meeting online.
· Concern was expressed that we will lose our employees.
· Employee representatives are concerned about the impact that the furloughs will have on our employees.
· Senator Romero is concerned that BOT is considering furloughs and that the CSU has spent millions on lobbyists (statement read by a staff member).
· Lil Taiz read a statement previously distributed widely.
Chair Jeff Bleich
BOT recognizes faculty is lifeblood on campuses. Some of the statements made attacked system leadership, integrity, and the intelligence of the BOT and/or administration. He doesn’t believe that casting aspersions will move us in the right direction. We need to work together on this. We must lay out as transparently as possible the situation and the alternatives available to us. Probable cuts are $584 million on top of $100 million we’ve already cut.
Chancellor Reed reported on:
1. The budget as we know it.
2. The status of negotiations with labor organizations.
He has never seen cuts as we have seen in a single year, and he has worked in public sector over 40 years. We can make payroll through December. His goal to maintain access with quality and diversity. We have a two-year plan, and he does not expect the budget to get better in that period. Governor/Legislature want CSU to take $717 mil retroactive cut from CSU and replace it with stimulus funds. He hopes to get $640 mil in stimulus funds. We are working with labor organizations to protect jobs by putting furloughs in place. Furloughs would help serve about 22,000 spaces in sections. Chancellor Reed is asking Presidents to plan to go forward with lay-offs as per CBA.
· At BOT meeting, he will ask everyone in the organization to take a two-day per month furlough.
· Everything is on the table, including raising new revenue prior to the start of the fall semester.
· Each campus and the CO will have to bear their share of an unallocated cut of $200 million more even if furloughs, other steps are taken.
· Directed Presidents to plan for reduction in overall enrollment for 2010-11.
Ben Quillian
California budget is in an unprecedented meltdown. Based on Governor’s budgets, expect CSU cut will exceed one-half billion dollars, which is 20% of our general fund revenues. With so much uncertainty, difficult to develop plans. Challenges/potential actions:
· Student demand increasing
· Organized labor contracts do not include provision for furloughs
· Freezing salaries
· Limiting travel
· Restricting hiring
· Using technology to reduce costs
· Accelerating graduation rates
· Examining fees charged
· Pursuing system-wide contracts
· Reviewing capital projects
· Assessing investment strategies
Campuses will submit budget plans to CO for review and approval.
Robert Turnage
State budget deficit is now estimated at $26 billion. Higher education is not being singled out in budget cuts; Governor has proposed to eliminate Cal Grants, CalWorks, and Healthy Families. (See accompanying PowerPoint.)
· Goals in Achieving Budget Cuts: (1) Serve as many students as possible with quality instruction and related services; (2) Protect as many jobs as possible; (3) Preserve university’s financial integrity; and (4) Plan beyond 2009-10 fiscal year.
· Fundamental Parameters: Many…uncertainty is high; potential for smaller deficit extremely limited while potential for greater deficit is increasing.
· Chart: General Fund Revenue and CSU Percentage Share
· Chart: CSU General Fund Allocation in Billions
Governor’s July Revise includes $717 million retroactive cut that will impact CSU 2009-10 appropriations.
· State is in a Cash Crisis
· State Must Borrow Externally to Pay its Bills—Without Balanced Budget, Cannot Borrow at All
· Crisis is Affecting CSU’s Own Cash Flow
· Most University Spending is for Salaries and Benefits
Over 85% of Total Operating Budget is Salaries and Benefits (removing financial aid, lease bond payments, and retiree dental benefits).
· CSU Faces Major Operating Deficit in 2009-10
· Net Fiscal Impact of Budget Reduction in 2009-10
$584 million estimate does not include $66.3 mil permanent cut in Feb 09 budget or $40.5 mil in new mandatory costs.
· $584 Million in Perspective
Sum of operating budgets of CSULB and CSU Sacramento (GF and student fee revenue). Also equivalent to marginal cost funding provided by the state for instruction of 95,000 students.
· Planning Needs to Anticipate at Least 24 Months
Tax increases that expire in 2010 will lead to $16 Billion less for state in the next 24 months.
Gail Brooks
Update on furloughs. CBAs and Title 5 did not anticipate furloughs for employees. Changes in Title 5 on agenda at BOT to implement furloughs for non-represented employees. CSUEU has a tentative agreement. APC is currently negotiating with CSU on furloughs. CFA does not believe sufficient information to move forward on furloughs. No further meetings scheduled with them.
Physicians and Dentists have no interest in pursuing furloughs; nor do engineers.
SETC is currently in fact-finding with the administration.
Chancellor Reed
Need to reduce expenditures or enhance revenues by $584 mil.
· Cannot reduce enrollments this fall, but will implement a way to reduce our enrollment in 2010 starting this fall. In August, each campus will get an enrollment target and ways to reduce enrollments.
· A two-day furlough per month (20-days per year for faculty) would create a $275 mil cut in expenditures. Saves employee health care, retirement, jobs. Would produce about 22,000 classes for students.
· Adjust fees before classes start.
· $192 mil cuts equitably across campuses. (if all employees take furloughs).
This $584 mil cut is the best scenario. Have to figure out how to manage lower budget in 2010 due to lowered enrollments being planned. We are out of time. He has to ask the Presidents to implement planning for labor organizations who have chosen not to implement furloughs; Chancellor needs to receive the plans for layoffs from Presidents within two weeks.
Adjourned at 3:05.