Governor’s Proposed Reductions Include Mid-Year Cuts to CSU

In acknowledgement of the state's worsening economic condition and sharp revenue decline, Gov. Arnold Schwarzenegger called the Legislature into a special session on Thursday to make spending reductions and revenue increases. The Governor's plan proposes further budget cuts of $66.3 million to the California State University for the current 2008-09 budget.

The proposed mid-year cut would come on top of the final 2008-09 budget that was $215 million below CSU's operational needs for the fiscal year, and in addition to a previous one-time $31.3 million reduction.

“We recognize that the state's fiscal situation is increasingly deteriorating, but these potential mid-year cuts combined with reductions already made to our budget will result in fewer qualified students being admitted to our universities. I have been advocating that the state needs to increase revenues in order to offset continued deep cuts in higher education,” said CSU Chancellor Charles B. Reed. “The CSU prepares the majority of California's workforce, and these budget cuts will have a direct impact on the state's economy if we are unable to provide graduates for California's key industries.”

“This also comes at a time when the CSU is experiencing a 20 percent increase in the number of applications we are receiving from students wanting to enroll next fall. Unfortunately, we will not be able to meet this demand without adequate resources.”

To help close the gap, the Governor is proposing a combination of spending reductions totaling $4.5 billion and $4.7 billion in revenue increases to close an estimated revenue shortfall of $11.2 billion this year.

The CSU receives a total of $2.97 billion from the state General Fund and $1.5 billion from student fee revenue. This year's budget provided no funding for enrollment growth, nor did it provide funding for mandatory cost increases such as energy and employee health benefits. CSU anticipates that further budget reductions will likely result in increased class sizes, fewer course sections, additional temporary instructors and the scaling back of other services.