CSU Chancellor Charles B. Reed

Welcome to a new year and to a new term in the California State University. There have been significant developments on the state budget front, and I want to take this opportunity to bring you up to date on what we know about the CSU budget.

2004-05 Budget

Governor Schwarzenegger has proposed cutting $240 million or 9 percent from the California State University system for the 2004-05 fiscal year. This will potentially limit student access by approximately 20,000 students if the cuts are implemented as proposed.

These budget reductions are troubling because we will have to turn away qualified students who would otherwise be able to attend our universities. The proposed budget also recommends redirecting 10 percent or 4,200 of CSU first-time freshmen to the community colleges.

Limiting access poses another significant problem: Fewer students admitted means that there will be fewer educated citizens entering the workforce. The state's investment in higher education is vital to long-term economic growth, job development and the fiscal recovery plan the governor has outlined.

The governor has also called for a more stable fee policy for higher education, with a 10 percent annual cap on undergraduate fee increases. Establishing a predictable fee policy is something we have been advocating for a long time, and the CSU Board of Trustees will be discussing this further at its March board meeting.

The proposed budget also calls for steep fee increases (40 percent) for graduate level students. This could potentially discourage many CSU teacher candidates and those considering the profession from entering the field. It could also impact our ability to produce the highly
qualified teachers needed throughout California.

I am also concerned about the budget's impact on funding for programs including EOP and academic preparation programs. These have been very successful programs for students who otherwise may not have the opportunity to attend a CSU.

The governor's proposed budget also forces us to significantly reduce spending in university operations since it leaves unfunded $57.4 million in 2004-05 mandatory cost increases. These costs include collective
bargaining commitments, health benefit rate increases and insurance, and energy cost increases.

A final concern is that these continued budget cuts may ultimately result in some reductions to our institutional staff. I want to assure you that we will do everything we can to minimize these impacts.

Spreading the Message

We will know more in the months ahead as the budget process continues, but now more than ever, we need to continue to reinforce the CSU message–CSU is working for California. We need to remind policymakers and the public that our university system is vital to job creation and
to the state's economic prosperity. We need to stay focused on our mission of providing a quality, accessible and affordable education for students, and to be advocates for our CSU students.

Agreement with CFA

I also want to take this opportunity to let you know that the CSU and the California Faculty Association have reached a tentative agreement that extends the current contract until June 30, 2005, and addresses benefits for existing faculty and provisions for new faculty recruitment. The CSU and the CFA worked cooperatively amid the continuing state fiscal crisis to forge an agreement, which requires ratification by the CFA executive committee and the CSU Board of Trustees. The Trustees plan to vote on the contract at their January 27-28 meeting.

If you would like to learn more about the CSU's 2004-05 budget, please visit http://www.calstate.edu/BudgetCentral/index.shtml. If you would like to learn more about the governor's overall 2004-05 budget proposal for the state, please visit the Department of Finance at http://www.dof.ca.gov/HTML/BUD_DOCS/Bud_link.htm. And if you would like to receive regular weekly updates on CSU news, I urge you to sign up for the CSU Leader email newsletter at http://www.calstate.edu/csuleader.

Thank you for the hard work you do every day on behalf of the California State University.

Charles B. Reed
The California State University