October 20, 2022 Minutes

PRESIDENT'S BUDGET ADVISORY COMMITTEE

October 20^th, 2022

MEMBERS PRESENT:

STAFF PRESENT:

GUESTS PRESENT:

MEMBERS ABSENT:

AGENDA

1. Call to Order and Welcome
2. Approval of the Minutes: September 22^nd, 2022
3. Fall Budget Briefing
4. YE Balances & Reserves
5. 23-24 Budget Planning
6. Budget Forum Planning
7. 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: September 22^nd, 2022
   Moranski introduced the agenda and asked if there were any additions. Hearing none, Moranski requested a motion to approve the minutes of the September 22^nd meeting. The minutes were approved unanimously.
    
3. Fall Budget Briefing
   Laura Lupei presented the Fall 2022 Budget Briefing to the committee. The beginning of the presentation reviewed some of the campus budget basics for new committee members. The presentation summarized the composition of the campus budget, the state system and campus budget planning timelines, and commonly used terms.  Lupei also provided an overview of the campus's strategic budgeting framework.
   
   Lupei then provided the Fall Budget Briefing summarizing the 2022-2023 budget. The prior year's campus budgeted revenue was $136.3M. For 2022-2023, the campus will receive increases to revenue of about $7.5M from the following sources: designated funds for employee salary increases and benefits ($7.2M), and foster youth programs ($288k). There are also decreases to campus revenue in the following categories: redistribution of CSU Financial Aid State University Grant ($-437k), and other campus budgeted revenue decreases ($-5.4M). With the revenue increases and decreases, the total 2022-2023 campus budgeted revenue is $137.9M.
   
   Budgeted expenses for 2022-2023 total $151.8M and, with expenses exceeding revenues, there is a base deficit of $13.9M. The majority of the $13.9M base deficit consists of the $11.2M base deficit that was not resolved in the prior fiscal year that carried over to 2022-2023. The remainder of the $13.9M deficit consists of various revenue decreases including an enrollment decrease ($3.3M), a reduction in cost allocation revenue ($2.1M), and a reduction in other campus revenue ($38K). In addition to revenue reductions contributing to the deficit, there were also various mandatory cost increases totaling $2.3M. The University did take $5M in base reductions this year which brings the base deficit for 2022-2023 to $13.9M. In addition to the base deficit, there are $2M in unfunded onetime compensation stipends that bring the total deficit, base and onetime, to $15.9M.
   
   While the deficit is substantial, there is a plan to address it utilizing various one-time funding sources. The one-time funding sources include; net interest revenue ($300K), excess funds from 21/22 deficit strategies ($3.1M), remaining HEERF funding ($2.5M), use of campus operating fund reserves ($850K), use of campus capital fund reserves ($1.5M), hiring slowdown savings ($500K), new funding held centrally ($172K), and onetime funding from divisions ($7M). It is important to note that these strategies are one-time funding strategies being used for a base shortfall and the base deficit will continue to next year until it is resolved with base funding.
    
4. YE Balances & Reserves
   Lupei presented the 21/22 Year End (YE) Balances and Reserves to the committee. This information is annually reported to the committee per the University Operating Fund Reserve Policy. To begin, the committee reviewed the YE balances for each division. The YE balances graph shows the starting base budget and revised budget for each division, as well as expenses for the year. The year-end balance amount is the sum of the revised budget less expenses. No division ended the year in deficit and all rolled balances into the 22/23 year.
   
   The committee then reviewed the 21/22 YE campus designated balances and reserves.  The total 21/22 campus budget YE balance was $26.2M. Of the $26.2M, $11.7M was kept within the divisions as designated balances, leaving $14.5M in University-Wide. The $14.5M in University-Wide consisted of, $671K in the operating reserve, $3.1M in the capital reserve, $524K in the maintenance and equipment reserve, $943K in remaining HEERF funding, $3.1M in 21/22 deficit strategy savings, $871k to various University Wide designated balances, leaving $5.3M to be allocated to the Operating Fund Reserve to end 21/22.  These funds were allocated according to the Operating Fund Reserve Policy and the four categories within the policy. Including the 21/22 Reserve Balance and the 21/22 YE distribution to the Reserve, the 22/23 opening reserve balances are as follows; Operating Reserve $1.7M, Maintenance Reserve $970K, Capital Reserve $6.7M, and Equipment Reserve $280K.
    
5. 23-24 Budget Planning
   Lupei then briefly reviewed the multi-year plan to discuss the 2023-2024 budget planning. The multi-year plan consists of enrollment projections through 2027-2028. The projection for 2023-2024 shows the University will decline for one more year due to the large graduating class expected this year, and then will start to grow as long as the incoming classes continue to increase. For the budget piece of the multi-year plan, for 2023-2024, there is a projected $14.7M base deficit; $13.9M of the $14.7M is from the prior year's base deficit that was not resolved. The current plan is for the University to reduce the base budget through various strategies by $7.6M in 2023-2024, leaving $7.1M in base reductions to be taken in the 2024-2025 year. The various strategies that will be utilized to take base reductions will include a combination of revenue enhancement strategies and expense reduction strategies, which were discussed in detail at the September 22^nd PBAC meeting.
   
   The final piece of the presentation was a call for members for a PBAC Feedback Working Group. The Working Groups assignment is to review the multi-year enrollment and budget plan from the September 22^ndmeeting and provide a written summary of the committee’s analysis and feedback. The submission will be reviewed by the entire committee and submitted to the President.
    
6. Budget Forum Planning
   The committee was not able to discuss, in detail, the Fall 2022 Budget and Planning Forum due to time. The tentative plan is similar to prior forums where there will be presentations at the start of the forum, then roundtable discussions led by PBAC members for the campus to provide feedback and ask questions about the presentations.
    
7. Announcements for the Good of the Order
   President Mike Lee shared with the committee that he had been at a two-day-long retreat at the Chancellor's Office focusing on student recruitment and retention. The entire CSU system is down in enrollment from 2021 to 2022 by 7%. The CO is assembling a working group intending to bring back the lost enrollment and maintain the CSU enrollment levels. The President told the committee this all means there is more competition for students nationwide and now is the time to put strategies in place to get students and get Sonoma State’s name out there. One of the strategies in process is the Sonoma promise. The Sonoma Promise would be a program where if a student is within Sonoma State's Service area, and they meet the A-G requirements, they will receive automatic admission.
   
   President Lee also discussed that with lower enrollment systemwide it will be more difficult for the CSU system to advocate for more funding from the state, which makes it more crucial for universities to increase enrollment. The committee discussed many factors that are contributing to the difficulties to attract and retain students. One of the main difficulties is the impaction of popular majors. The committee discussed how there needs to be a better way to reroute students who don't get their first choice major. Rerouting students to either to another major at the same University, or make it a systemwide effort to reroute across all campuses, so students aren't leaving the school or the system. Faculty on the committee expressed concern that if other Universities within the CSU are told to un-impact and let more students in, then it could have unfortunate effects on Sonoma State's enrollment.  Specific to Sonoma State there are a few majors that are impacted (Psychology, Biology, Business), if the impacted departments were told to un-impact and resources didn't follow, then it would be an extreme strain on the departments and the faculty.
    

Moranski adjourned the meeting at 10:00 am.  

Minutes prepared by Hayley Avery.