February, 8 2024 Minutes

February 8, 2024 Minutes

PRESIDENT'S BUDGET ADVISORY COMMITTEE

February 8^th, 2024

MEMBERS PRESENT:

Karen Moranski	Provost, Vice President of Academic Affairs; Chair
M. Monir Ahmed	CFO, Vice President of Administration and Finance; Vice-Chair
Troi Carleton	Dean, School of Social Sciences
Laura Krier	Chair of the Faculty, University Library
Puspa Amri;	Chair of APARC, Economics Department
Laura Lupei	Associate Vice President for University Budget and Resource Planning
Clayton Trent	Vice President of Finance, Associated Students
Ed Mills	Ex-officio, Vice President of Strategic Enrollment Management
Mike Ogg	Ex-Officio, AVP for Academic Resources
John Lynch	Staff Representative, Center for Teaching and Educ Technology

STAFF PRESENT:

Hayley Avery

Budget Manager, Administration and Finance

GUESTS PRESENT:

Mike Lee	President, Sonoma State University
Anna Reynolds-Smith	Assistant Vice President for Admin and Financial Planning & Business Ops
Ian Hannah	Assistant Vice President for Advancement Operations
Natalie Sanchez	Budget Director, Administration and Finance

MEMBERS ABSENT:

Jerlena Griffin-Desta	Ex-officio, Chief of Staff and VP for Strategic Initiatives and Diversity
Napoleon Reyes	CFA Representative, Criminology & Criminal Justice Studies
Cassandra Garcia	President, Associated Students
Emily Acosta Lewis	Vice-Chair of the Faculty, Communications Department

AGENDA

Call to Order and Welcome
Approval of the Minutes: November 9^th, 2023
President’s Updates
24-25 Budget Planning
Announcements for the Good of the Order

Call to Order and Welcome
Provost and Vice President of Academic Affairs, Karen Moranski, welcomed the committee and began the meeting at 8:30 a.m.
Approval of the Minutes: November 9^th, 2023
Moranski introduced the agenda and asked if there were any additions. Hearing none, Moranski requested a motion to approve the minutes of the November 9^th meeting. The minutes were approved unanimously.
President’s Updates
It was the first meeting of the Spring semester and President Lee opened with a welcome and thanked the committee for their service on this committee and the important work that is done each year. President Lee spoke about recent enrollment figures, noting that the campus is seeing better numbers in retention and that the University will continue to invest in retention and recruitment to help grow enrollment. The University is working to close the budget deficit by the 2024-2025 fiscal year but there have been considerable changes in the state budget that will have worsening effects on the campus budget. There is a large amount of unfunded compensation being passed on to campuses to cover as well as the Chancellor's Office (CO) enrollment reallocation reduction, both of which will contribute to the campus's budget deficit. The President remains steadfast that the campus will solve the portion of the deficit that he was committed to closing, which does not include the compensation or the enrollment reallocation.

The President spoke briefly about the January Governor’s budget by outlining the Governor’s plan for funding the CSU compact for the 2024-2025 fiscal year. Given the State’s budget deficit, the Governor is deferring the 2024-2025 compact funding to the 2025-2026 year. As a result of the state budget deficit, the CO will be utilizing reserves to cover the compact funding for 2024-2025. The Governor will then pay back the CSU for the one-time funds used in 2024-2024 in the 2025-2026 fiscal year and allocate the base funds in 2025-2026.
24-25 Budget Planning
Laura Lupei presented the 2024-2025 Budget Planning update. To discuss the January Governor’s budget, the presentation opened with a reminder of what the Board of Trustees (BOT) budget request included from September. The BOT request included a total of $557M increase for the CSU System for 2024-2025. Of the $557M, $148M would be revenue from the tuition increase the BOT passed in September, outlining a 5-year 6% tuition increase. $24M would come from tuition from new enrollment growth, $240M is from the Governor’s compact funding increase, and the BOT requested an additional $145M in new unrestricted general fund dollars. The total $557M increase in revenue would support the following initiatives: increases to Financial Aid: State University Grant ($58M), Student Access and Enrollment ($55M), Graduation Initiative ($30M), Student Basic Needs and Mental Health ($7M), Compliance Programs ($20M), Required Operational Costs ($63M), Academic Facilities and Infrastructure ($25M), Faculty and Staff Compensation ($221M), and Health Premiums ($78M).

The January Governor’s budget included a $412.9M increase to the CSU: $148M from the tuition increase, $24M from tuition from new enrollment growth, and $240M from the Governor’s compact funding increase. As President Lee outlined in his updates, the Governor will be deferring the 2024-2025 CSU Compact funding. Lupei further discussed that the state budget is facing a multi-year budget shortfall estimated to be between $38-$58 billion. To help close the gap the Governor outlined several budget fixes including deferring the CSU compact funding of $240M for the 2024-2025 year. To fund the 2024-2025 compact increases, the CO has decided to access system-wide resources to allocate to campuses. The Governor will then provide the base funding for the compact for 2024-2025 and 2025-2026 in the 2025-2026 year.

The committee then reviewed the preliminary impact the January Governor’s budget would have on Sonoma State’s budget. In this estimated budget, Lupei is projecting the campus will receive a total of $6.9M in additional state allocation: $66K for student basic needs, $223K for compliance programs (title IX and CalNAGPRA), $774K for operational costs, $1.7M for mandatory costs: health, and $4.2M for the 2023-2024 and 2024-2025 compensation pool. Lupei then noted it is still early in the budget planning process and all of the projections are subject to change. In May, the Governor will release a May revision of the state budget that will give a clearer picture of the CSU budget.

Lupei discussed an additional update that will affect the University's deficit in the coming years. President Lee also touched on the topic in his updates, but to give more specific figures, the University will need to cover a portion of the estimated compensation increases for 2023-2024. In 2023-2024, the campus will need to cover $2.3M in one-time funding for the increases and subsequently cover that amount in base funding in 2024-2025.

Lupei also updated the committee that the campus received a memo from the CO requesting multi-year plans for the Operating Fund and Self-Support Funds as well as quarterly budget to actuals reports. The first report was submitted to the CO on January 31^st. Puspa Amri asked if there has been any recognition for the work the University has done to solve the deficit. Moranski noted that the budget to actual requests is not a reflection of a lack of planning. The University has become a mentor to other campuses and has been noticed for the work it has done so far. The budget to actual requests is more so that the CO can monitor that the campus is continuing to implement strategies.

The committee then reviewed the 2024-2025 projected campus deficit detail. The campus is currently working on plans to eliminate the estimated $6.3M deficit by the end of the 2024-2025 year. The $6.3M deficit consists of $9.3M from the prior year's unresolved budget deficit; the $9.3M is then partially offset by a $1.8M increase in tuition revenue from slight enrollment growth and a $2M increase in cost allocation revenue. There are then some unfunded mandatory costs and some unfunded new positions in the Title IX and SEM departments totaling $743k in increased costs, bringing the deficit to $6.3M. The $6.3M is the amount the President was charged with solving by the 2024-2025 year. It does not, however, capture the entire deficit. As noted previously, there will be unfunded compensation and an enrollment reallocation and an increase in tuition revenue that will all factor into the 2024-2025 budget. Considering those factors, the total estimated deficit for 2024-2025 is $12.9M. The difference of $6.6M can be broken down as follows: an increase in revenue of $1.9M from the 6% tuition increase, $6.2M in unfunded compensation for 2023-2024 and 2024-2025, and a $2.3M reduction from the CO enrollment reallocation.

The University will need to explore ways to resolve the entire $12.9M deficit. The current proposed strategies include: increasing the student-faculty ratio (SFR) to pre-pandemic levels, reducing the base amount for the University Contingency, reducing low enrolled courses, Academic Affairs reorganization reductions, and reducing division operating expense budgets. Conversation about the strategies ensued, and there was concern about the number of strategies that would result in reductions in Academic Affairs and particularly instruction. Monir Ahmed commented that the proposed reductions to instruction are looking to align instructional costs with our current FTES and that we have taken reductions in other areas of the University as much as we possibly can before exploring this option. Moranski added that the strategic scheduling happening in Academic Affairs should help with two of the ideas outlined (SFR & reducing low-enrolled course sections).
Announcements for the Good of the Order
Ahmed announced the return of Culinary Service’s Fridays at Four and the next one will be on Friday, February 9^th.

Moranski adjourned the meeting at 10:00 a.m.

Minutes prepared by Hayley Avery.