TO: Campus Community
FR: Karen Moranski and Joyce Lopes, Chair and Vice Chair of the President’s Budget Advisory Committee
RE: 2020-21 Budget Planning Update
Last week, the governor signed the 2020-21 state budget. The governor’s May Revision projected a $398 million base reduction to the CSU and, in the final state budget, the reduction has been adjusted to $299 million, reflecting various deficit-narrowing strategies utilized by the state to limit the reductions to the CSU.
Here, on campus, we are continuing to work diligently on budget planning for the 2020-21 year. In our last campus communication, we outlined the approximately $21 million projected deficit in the university’s Operating Fund. We have developed a number of strategies working with the President’s Cabinet and the President’s Budget Advisory Committee to address the budget deficit, but at this time, we have not identified enough funding to fully resolve the budget shortfall.
We do not yet know how the adjusted state budget reduction will be distributed to our campus and so, at this time, we are still planning for a total budget deficit for 2020-2021 of at least $20 million. Though the adjustments to the state budget reduction may provide some relief for our budget plan, it is important to note that we are still working to find ways to close our current budget gap, which is also impacted by our reduced enrollment projections. Currently, the university plans to employ the following strategies to meet the budget deficit:
Utilization of Reserves
The university’s Operating Fund reserves will be utilized for a portion of the projected deficit in accordance with the University Operating Fund Reserve Policy. Cabinet has approved the use of $1 million dollars from the Operating Fund reserve for the 2020-2021 year.
The 2020-21 Budget Call was reissued to the Divisions asking for a 12% Operating Fund reduction. The 12% reduction in the Operating Fund budget amounts to approximately $15.2 million.
Hiring Slowdown Salary Savings
The system wide hiring slowdown that is still in effect has resulted in, and will continue to result in, salary savings from positions that are not immediately filled. Cabinet has determined that these savings, starting in the 2020-21 year, will be applied towards the budget deficit. We know units utilize a portion of these salary savings for temporary hires to help mitigate critical staffing needs, and they may continue to do so. The University Budget & Planning Office will work with units to ensure those staffing needs are still funded before any savings are utilized for the deficit.
Pause Phase II Staff Equity
Phase I of the Staff Equity increases were rolled out in the 2018-19 year with a planned phase II to be rolled out in the 2019-20 year. With the quick and unexpected changes brought on by COVID-19 and the impacts they have had on the university’s budget, the Cabinet has made the decision to pause the implementation of the Phase II Staff Equity roll out. This will allow the university to allocate the funding to the projected budget deficit and, in the long-term, look to re-identify funds for phase II. We assure you this decision was not made lightly, and we are committed to funding equity increases as our budget allows. Unfortunately, the significant projected deficit we are facing in 2020-21 does not allow us to fund these equity increases at this time.
The University has received $9.7 million from the Federal government’s Coronavirus Aid, Relief, and Economic Security Act. Half of the CARES Act funding has been given directly to students as financial aid grants. The remainder of the funding will not be used towards the projected Operating Fund budget deficit as we must follow federal guidelines for utilization of this funding. The funding will instead help relieve a portion of lost revenue from the 2019-20 year for our self-support programs, as well as cover some unforeseen expenses from the sudden transition to a remote environment. For more detailed information on the use of the CARES Act Funding, please visit our CARES Act OpenBook report on the University Budget and Planning Office website. We want to make sure we are providing the necessary tools for our campus community to be heard during these tough budget decisions. If you have any thoughtful solutions on ways to find efficiencies in cost savings and budget reductions, please submit your ideas through this suggestion form.
We hope this message finds you safe and well. On behalf of President Sakaki and our Cabinet colleagues, thank you for all you are doing to support our students and our campus community during this difficult time.