February 2, 2023 Minutes

PRESIDENT'S BUDGET ADVISORY COMMITTEE

February 2^nd, 2023

MEMBERS PRESENT:

STAFF PRESENT:

GUESTS PRESENT:

MEMBERS ABSENT:

AGENDA

1. Call to Order and Welcome

2. Approval of the Minutes: December 8^th, 2022

3. President’s Updates

4. 23-24 January Governor’s Budget Proposal

5. Working Group Report

6. System-wide Enrollment Planning

7. Multi-Year Budget Planning Update

8. Spring Budget Forum Planning

9. Announcements for the Good of the Order

1. Call to Order and Welcome
   Provost and Vice President of Academic Affairs, Karen Moranski, welcomed the committee and began the meeting at 8:30 am.
    
2. Approval of the Minutes: December 8^th, 2022
   Moranski introduced the agenda and asked if there were any additions. Hearing none, Moranski requested a motion to approve the minutes of the December 8^th meeting. The minutes were approved unanimously.
    
3. President’s Updates
   President Lee was in attendance to provide the committee updates on various items. President Lee thanked the committee for participating in this budget climate and the many conversations about the budget. The University is currently working on the multi-year budget and enrollment plan and making positive progress, especially with the recent close of the Voluntary Separation Incentive Program (VSIP). The President discussed some other percolating factors that could impact the University's budget in the coming months. The staff union is currently in negotiations regarding salary step increases, but the Governor’s budget did not include funding for any step increases in his Preliminary January Governor's budget. If the step increases were to be approved, and the University does not get fully funded for the increases from the state, it would put the Campus in a poor financial position. The President also briefly discussed the recent enrollment memo the Chancellor’s Office (CO) sent to the campus. The detail of the memo and the discussion that followed are reflected in the System-wide Enrollment Planning agenda item.
    
4. 23-24 January Governor’s Budget Proposal
   Laura Lupei presented the 2023-2024 January Governor’s Budget. The BOT requested a total of $529.8M of increased base revenue for the CSU system for the 2023-2024 year. The request was split into two categories, within the compact and above the compact. The compact was a promise from the Governor to increase the CSU operating fund budget by 5% each year through 2026-2027. The BOT structured its request incorporating first the 5% base increase from the compact, totaling $243.4M. The request includes an additional $286.4M above the compact amount. The total $529.8M increase would support the following initiatives: Graduation Initiative 2025 & Basic Needs ($75M); Faculty and Staff Compensation Pool ($261M); Health Premium Increase ($50.5M); Academic Facilities and Infrastructure ($50M); Strategic Resident Enrollment Growth ($50.6M); Maintenance of New Facilities ($6M); Liability & Property Insurance Premium Increases ($13.7M); Inflation on Non-personnel Costs ($23M).
   
   The Governor’s budget reflected an increase of $243.4M to the CSU for 2023-24, which is only the funding within the compact. The $243.4M is allocated as follows: the Graduation Initiative ($30M), Faculty and Staff Compensation Pool ($92.6M), Health Premium Increase ($50.5M), Strategic Resident Enrollment Growth ($50.6), Maintenance of New Facilities ($6M), Liability & Property Insurance Premium Increases ($13.7).
   
   Lupei provided preliminary projections on what Sonoma State’s portion of the $243.3M Governor's proposal would be based on the prior year's allocations. The University could potentially receive about $3.6M of increased General Fund base budget in the following categories; Graduation Initiative ($300K), Faculty and Staff Compensation Pool ($2.1M), Health Premium Increase ($1.2), and Liability & Property Insurance Premium Increases ($315K).  It is not anticipated that the campus will receive any of the enrollment growth funding.  Lupei then reviewed the upcoming stages for the Spring CSU Budget Timeline. In April the Chancellor’s Office will release its initial budget memo. Then, in May, the Governor will release a budget revision followed by the final budget in June. Once the budget is approved and released in June the CO will release the final budget memo to the Campuses in July.
    
5. Working Group Report
   The working group provided the first draft of their report for the committee to review and provide feedback. The role of the working group was to summarize feedback and write a report to the President on the committee’s response to the Multi-Year Enrollment and Multi-Year Budget Plan. The working group members were Lauren Morimoto, Bryan Burton, Mike Ogg, Ian Hannah, and Anna Reynolds-Smith. Lauren Morimoto summarized the working group's thoughts while presenting the report. The working group was overall appreciative that President Lee put out these plans and actively sought feedback from the committee and campus. The working group summarized that their main feedback on the multi-year enrollment and budget plans was regarding the enrollment projections. The working group thought the enrollment projections, given the demographics of college-ready students, are unrealistic and forces the campus to a reactive mode as opposed to a proactive approach to solving the budget deficit. The group felt there should be another set of enrollment projections that the campus is planning that may be more realistic.
   
   The working group was in agreement with almost all the cost-reduction tactics that were outlined in the budget plan. The one area the group debated was the tactic to potentially reduce assigned time. Since the tactic would only potentially result in $200k savings, the working group didn't feel it was worth the angst it would create among faculty to reduce assigned time. Moranski thanked the group for their thoughtfulness and time in creating the report. The report will be finalized and given to the President.
    
6. System-wide Enrollment Planning
   The committee reviewed a memo that was released from the Chancellor’s Office to all CSU campuses. The memo outlined a plan that would reduce Full-Time Equivalent Students (FTES) targets to campuses that are under-enrolled and increase the FTES targets to campuses that are over-enrolled. In addition to reallocating FTES targets amongst CSU campuses, the plan outlined in the memo, would also reallocated the associated funding, meaning campuses with low enrollment would receive a budget reduction, and campuses with over-enrollment would receive additional budget allocations to support increased enrollment targets. Campuses that are at their set FTES target would receive no change to their target or budget. The plan from the CO would be effective from 2024-2025 through 2026-2027. This could result in an approximately $3.5M enrollment related reduction each year to Sonoma State’s budget.
   
   There was a lengthy conversation with the committee about the affects this realignment plan would have on the University, especially the budget reduction piece. There was a clarification that any potential budget reduction would be to the state allocation, if the University increases enrollment by any amount, the tuition and fees associated with that increase would benefit the University and remain with the University. There was a conversation about the amount of funding the campus currently receives and if with the lower enrollment the campus is currently experiencing, the campus is properly funded in relation to other campuses. All the leadership agreed that is accurate, but are not confident the CO is looking at it that way. The argument that Sonoma State would now be properly funded, without a budget reduction from the CO, is actively being made to the CO. With these potential budget reductions from the CO's enrollment realignment plan, the committee expressed extreme concern about what that would mean for the campus and how much that would impact the already increasing budget deficit.
    
7. Multi-Year Budget Planning Update
   As an update to the multi-year budget plan, the results from the Voluntary Separation Incentive Program (VSIP) were shared with the committee. This program was offered to employees as a tactic to achieve some base budget savings to apply to the deficit as a part of the multi-year budget plan that was submitted to the CO. The VSIP resulted in 39.39 vacated FTE in the operating fund, with position and benefits savings of about $4.4M. In addition to VSIP vacancies, there were also vacancies in positions from prior attrition-related actions. With these additional vacancies, the entire vacancy pool totaled 94.52 FTE, with positions and benefits totaling around $10.3M. The goal of the VSIP and reviewing other position vacancies was to save about $9M.  The work is to now look at where the vacancies are and what needs to be rehired to maintain the integrity of the University before a final savings figure can be determined.
    
8. Spring Budget Forum Planning
   The Spring Forum is scheduled for March 16^th at 8:30 AM. The forum will include presentations to update the campus on the 23/24 Budget Planning progress and then will have a town hall question and answer similar to the Fall forum. The event will be both in-person and live-streamed.
    
9. Announcements for the Good of the Order
   None.

Moranski adjourned the meeting at 9:55 am.  

Minutes prepared by Hayley Avery.