Budget ReportPresident’s Cabinet - August 11, 2008University Budget Advisory Committee

- August 14, 2008

08/09 Budget Report to FOA 08/06/08

• Lots of drama – not much action

• CSU’s biggest push - restoring capital budget – Revenue Anticipation Bond (source?)– Science Building for Sac State

• Operating Budget– Trying to hold onto Governor’s May Revise budget

CSU Overview – May Revise Budget

• 2007/8 GF Appropriation– GF Base Adjust– 2008/9 Workload– Unallocated Reduction

• 2008/9 GF Appropriation

January May$2,985.9M $2,985.9M

- 16.1M -16.1M216.2M 216.2M-312.9M -215.3M

$2.873.1M $2,970.7M+97.6M

Governor’s May Revise Budget

• Restored $97.6 million to CSU

• Worth about $5.7 million to Sac State

• Anticipate additional cuts before final budget is signed

CO Budget Detail – Fee Increase Pays All New Costs

+$6.333M State University Fee Revenue Increase(not $7.686M per C.O. – resident/non-res)

-$2.562M 1/3 Financial Aid Set Aside-$4.638M Mandatory Costs

-$1.356M Health-$ .248M SSI Full Year Compensation-$ .238M New Space (Broad AF)-$ .203M Utilities-$2.594M Faculty Compensation (SSI/Merit)

-$ .867M Net Cost

University Baseline Funding

08/09 Campus Budget- Sources and Uses of Funds

Sources– GF Appropriation $165.6 M– Revenues (campus calculation) 84.1 M

Subtotal $249.7 MUses (includes Mandatory Costs) $256.9 M

Structural Deficit - $7.2 MDivision Baseline Reductions $4.9 MAUE Baseline Reductions (Net) $2.2 M

*** Projected Balance*** -$.07M08/09 Interest Income (% rate drop; cash use) $1.0 M

Baseline Reductions - Divisions

•Baseline Reductions to Divisions - $4.9 Million–Academic Affairs -3.5% -$3.566 M–Admin and Business Affairs -3.5% -$.561 M–Athletics* -1.0% -$.032 M–Govt & Civic Affairs -0.0% -$.000 M–Info Resources & Tech -5.0% -$.287 M–Student Affairs -2.0% -$.182 M–Human Resources -3.0% -$.055 M–Office of the President -3.5% -$.035 M–University Advancement -3.5% -$.144 M

Pending Baseline Allocations

Augmentations - from $1M “Unfunded” Estimate• 54 FTES Increase – Non-resident – marginal cost allocation

– Academic Affairs - Instruction $191,754– benefits pool $69,660

• EdD Cohort #2 $?• Athletics Academic Performance $?• Government & Civic Affairs $?

Baseline Changes All University Expenses

Baseline Changes - AUE

• Transfer to Division Baseline– ABA

• Tax Relief Act $36,000• Public Safety Special Pay $45,800• Public Safety Uniform Allowance $18,600• Quality Improvement $20,000

– University Advancement• Emeritus Association $2,600

Baseline Changes – AUE (cont’d)

• Transfer to Divisions – cont’d• IRT - Repurposing Funds 07/08 08/09

– CMS/IRT* $2,824,952 $2,100,418– Transfer to Student Affairs* - $198,000– Accessible Technology* 348,800 308,160– Information Security* 312,518 298,000

$3,288,270 $2,706,578– Mainframe $562,000 0– Campuswide Software/Hardware 165,800 1,629,134– Telecommunications 1,394,500 1,464,225

$5,410,570 $5,799,937

Reserves

• Reserves – $3.75M - Emergency/Disaster Reserve

• This is NOT an operating reserve!– $0.25M - Liability Claim Reserve (1 claim)

• Should be at least $.5M (2 claims)– $1.80M - Operating Reserve (< 1%)

• Cushions– $0.75M – Fee Waivers, Enrollment– $1.00M – Unfunded Costs

Not Addressed….

• Surprises in 08/9 State Budget• Future State or CSU Cuts – 2009/10 and beyond

– State Structural Gap – expect multi-year– Unfunded Mandates

• Divisions’ Structural gap• Ongoing renewal costs

– Equipment, computing, telecom, voice mail, vehicles, furniture, etc.

– 60 year old campus – Deferred Maintenance• mechanical/ electrical • heating/cooling, • water/sewer, • painting, carpet, flooring, etc.

Carry Forward and One-Time Funds

07/08 Carry Forward Funds* * * Preliminary * * *

Carry Forward Max Target Under/(Over)

• Divisions $16.4 M* $16.1 M ($0.3 M)• Restricted 1.0 M $1.0 M $0.0 M• AUE/Benefits $10.2 M** $9.0 M ($1.2 M)• Reserves $4.0 M 4.0 M $0.0 M• Interest Earnings$4.0 M** 1.5 M ($2.5 M)• Misc. Fees $3.8 M $0.0 M ($3.8 M)

$39.4 M* $31.6 M ($7.8 M)* Includes $5M encumbrances; Athletics deficit of $470k**Includes $5M recommended by UBAC for remaining loan pay-offs and one-time allocations. $3.3M CMS loans were paid in 07/08.

Carry Forward Issues

• We’re over 3% allowance– How policy would affect Divisions

• Divisions over maximum target• Deficit - Athletics

• Miscellaneous Fees are new and unplanned

• Must submit plan for use of excess to CO

Additional State Budget Reductions?Use of Carry Forward

Resources• AUE/Benefits Carry Forward $10.2 M• Interest Earnings Carry Forward $4.0 M• Interest Earnings – 2008/09 $1.0 M• Less AUE Recommend - $5.0 M

$10.2 M Un-Budgeted

• If CSU cut by $97.6M (one-time 08/9?)-$5.7 M• Del Norte remodel/equipment/rent ?• Infrastructure (technology, building systems) ?

One Time Fund Allocations UBAC Recommendations

Loan Payoff Baseline Payoff Est.• Benicia Hall $135,868 $351,000• Energy Bond $515,000 $515,000• Elect Sub Station $120,000 $120,000

$986,000One Time Funds• ABA – Public Safety Patrol $83,000• ABA – Liability claim reserve $250,000• IRT – Emergency Phone Lines $92,000• IRT – Electronic Signage $75,000• Del Norte renovation $3,500,000

$4,000,000

Putting It All Together

• May Revise Budget = Balanced for Sac State– Additional State Cuts to CSU = Cuts for Sac State

• Baseline Changes – Sources/Use– Pending Augmentations– Baseline Reductions to Divisions

• AUE Reallocations• Use of Carry-Forward Funds (one-time)

- Plan for Use of Funds (for C.O.)- Division allocations – Carry Forward Policy

- Divisions above Max; Athletics Deficit– Uses of Central Funds

Next Steps

• Preliminary allocations to Divisions– Baseline and AUE – Selected One-Time Fund Allocations– Carry Forward Funds – Divisions

• State Budget Signed – Remaining Decisions• Additional Reductions to CSU/Sac State? – One

Time or Baseline in 08/9?• Remaining Loan Payoffs• Other One-Time Funding Needs

Questions?

Thank You!