latest news Cal State faces huge budget gaps, report urges tuition hike

A new report examining California State University’s finances found the system only pays about 85% of what it actually costs to meet student, staff and institutional needs, creating a funding shortfall. financing of nearly $1.5 billion.

The months-long review found a 14% disparity between what Cal State spent in its 2021-2022 year and what it actually costs to educate its students, pay faculty and staff salaries, and maintain its vast network of 23 campuses in operation, according to an almost 70-page report published this week. The gap means that staffing positions remain vacant and maintenance projects are postponed.

To begin to fill the gaps – which are only expected to grow in coming years – the report recommended tuition hikes, although the exact amount and timing have yet to be decided.

“We were trying to figure out what it costs to do what we need to do,” said Julia Lopez, a CSU board member who helped lead the sustainable finance team that worked on the report. . “We have a big gap. … The costs of running UHC are much higher than the revenues we are likely to have, or realistically will have in the years to come.

Lopez recommended that any tuition increases be “modest, gradual, [and] predictable” and accompanied by improvements to the university’s financial aid policy.

The report assessed two potential tuition hike plans: one that would implement annual increases of 3% for each student until graduation, and another that would implement a one-time increase of 5% for incoming students. The review found those increases could boost revenue by 16% to 24% by 2030, Lopez said at a meeting of the board’s finance committee this week.

“It can be a big bump with a modest increase,” Lopez said. The board plans to continue working on tuition hike proposals, with the possibility of a final decision by the fall.

California State Student Association. President Krishan Malhotra, who participated in the task force’s financial report, said his organization was not ready to take a position on the proposed tuition hikes. But he said he hoped any plan adopted would be “student-centred” and take into consideration the effects the additional costs could have on students and enrolment.

Lieutenant Governor Eleni Kounalakis agreed, calling for an analysis of the financial strength of the student body before tuition is increased.

“Most of our students struggle to make ends meet,” Kounalakis said. “Most of them need more financial help.”

But Lopez said those concerns came to the fore, and pointed out that increased income also increases the funds available for financial aid — and the majority of CSU students have such support. She also said raising tuition is the most effective way to improve CSU’s economic prospects.

“We’re really at the mercy of California’s very volatile economy,” Lopez said. “If the economy catches a cold, the general fund will get pneumonia and then we will be at the mercy of it. Tuition fees, on the other hand, are stable – these are predictable incomes for us.

Proportion of estimated costs covered by actual expenditure

(California State University)

The report identified CSU’s biggest financial gaps in student and academic services — which were identified as having gaps of 32% and 20%, respectively. The report recommended that the board adopt a new action plan that, by 2030, would better align the university’s revenues with its costs, as well as with its mission.

“We know that a large portion of our students, now and in the future, are underrepresented minority students, first-generation students, students who really need support…both academic and otherwise, so that they succeed,” Lopez said.

Many of these funding shortfalls have resulted in vacant positions, obsolete equipment or ignored infrastructure updates, among other unresolved costs, according to the report. When costs are redirected from one purpose to another, programs have been harmed, the report says.

Lopez pointed out that the variances do not account for the nearly $750 million in estimated deferred maintenance costs, but instead focus on keeping that level of deferred costs from increasing.

The financial challenges detailed in the report are not necessarily new to CSU, but have highlighted a new level of concern. For months, officials have raised concerns about CSU’s financial stability. The state’s legislative auditor found earlier this year that CSU’s projected costs will exceed its revenue by more than $100 million for the 2023-24 year.

Still, Lopez remained positive, even with the report’s findings.

“The reality is that we are strong, compared to our brethren in many other states, compared to all the dynamics of higher education today, we are in a position of strength,” Lopez said. “We are continuing this process of thoroughly examining the difficult issues we face.”

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