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Proposed State Budget Includes Funding Increase
A proposed $211.7 million in new revenue for the CSU system's 2005-06 budget will include an increase in general operations funding and financial aid for students.

February 3, 2005

Honoring the higher education compact with the California State University, Gov. Arnold Schwarzenegger has proposed $211.7 million in new revenue for the university system’s 2005-06 budget.

The proposed revenue fully funds the CSU budget request and represents a 4.4 percent increase in general fund support. If approved, the proposed budget would provide state general fund revenue of approximately $2.6 billion for the CSU, including a 2.5 percent increase, or $63.7 million, for enrollment growth in 2005-06.

“We are encouraged by the support the CSU is receiving from the governor in this budget cycle,” said CSU Chancellor Charles B. Reed. “Funding for enrollment growth begins to restore student access from the previous year’s enrollment decreases and reductions in CSU operations. It also enables the CSU to continue producing job-ready graduates for a wide range of California industries, helping them to remain competitive in the global economy.”

The 2005-06 budget includes a general operations increase that will provide $88.1 million to support a 3.5 percent compensation increase for faculty and staff, effective July 1, and designates $23.3 million for financial aid, which brings the State University grant funding to $232.6 million, or 101,200 state grants.

Based on the compact, the CSU would receive $101.2 million in student fee revenue generated by a fee increase effective in the fall. The budget requests an 8 percent state university fee increase for undergraduates and students enrolled in teacher credential programs, or $186 and $216, respectively, for a full-time student. Fees for graduate students will increase by 10 percent, or $282.

Under this budget, undergraduate students will pay $2,520, teacher credential students $2,922 and graduate students $3,102 annually in state university fees.
The compact funding provided in the governor’s budget begins to restore student access, employee compensation and mandatory costs for health and dental benefits, new space and increasing insurance and energy costs. The governor’s budget authorizes a $44.4 million increase for 2004-05 employer-paid PERS retirement benefits. The budget has been reduced by $11.9 million to reflect lower charges for retiree dental benefits and to remove one-time discre tionary funding CSU received in 2004-05.

Over the past three years, the CSU has seen a net budget reduction of $522 million that resulted in enrollment reductions, cuts in student services, and an inability to make progress on a growing faculty and staff salary gap.

The higher education compact is a six-year agreement from 2005-06 through 2010-11. It promises to fund at least a 2.5 percent annual enrollment growth, allowing the CSU to stem enrollment decreases experienced in 2004-05. It also provides a 3 percent minimum general fund increase in 2005-06 and 2006-07, and a 4 percent minimum increase in 2007-08 through 2010-11 for basic needs, including salary increases, health benefits, maintenance and inflation. For 2008-09 through 2010-11, the compact provides an additional 1 percent for core academic needs.

Next steps in the budget review process include the following timelines: February, budget review by Legislative Analyst’s Office; March/April, budget subcommittee meetings; May, governor announces May revise to the January budget projections; June, two-house conference committee and deadline for budget adoption.


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