September 9, 2021 Minutes

PRESIDENT'S BUDGET ADVISORY COMMITTEE

September 9th, 2021

AGENDA           

1. Call to Order and Welcome
2. Welcome & Introductions
3. Approval of the Minutes: May 13^th, 2021
4. President’s Response & Charge: Time Certain 8:45 am
5. PBAC Orientation
6. Fall Budget Briefing
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. Welcome & Introduction
   Everyone on the committee introduced themselves and described their role on the committee.
    
3. Approval of the Agenda and Minutes
   Moranski introduced the agenda and asked if there were any additions. Hearing none, Moranski requested a motion to approve the minutes of the May 13th meeting.  Minutes were approved unanimously.
    
4. President’s Response & Charge
   (Please see the September 9^th agenda packet for related documents)
   President Judy Sakaki joined the meeting to set goals for committee for the 2021-2022 year. The President expressed her appreciation for the Annual Report that was submitted and thanked the committee for all the work done in 2020-2021. The President was grateful for the work the committee accomplished despite the main focus of the year being 2021-2022 budget planning.
   
   The committee was able to achieve the contingency framework, the reserve policy revision, multi-year budgeting, and two virtual budget forums in addition to 2021-2022 budget planning. The President reiterated the importance of this committee to the campus’s understanding of the budget process.
   
   The President then discussed the goals to focus on for the upcoming year. For the 2021-2022 year, the main focus will be providing feedback, as well as communicating out information, on resolving the budget deficit. The strategic budgeting framework will be vital in aligning our core values and strategic priorities to our budget during times of reduction planning.
   
   Understanding the multi-year plan for the Operating Fund, the strategic enrollment goals, as well as a cost of education analysis, will be crucial as the committee expands on their knowledge and prepares to provide guidance on approaches to resolving the deficit. The President continued to discuss the importance of the committee’s role in the economic future of the campus and for everyone to think about how to set the University up for future success. It may include making tough decisions as the University faces more enrollment revenue losses but the committee should be a part of those decisions providing feedback where necessary.
    
5. PBAC Orientation
   (Please see the September 9^th agenda packet for related documents)
   Laura Lupei provided a presentation beginning with an orientation on the campus budget basics for new PBAC members. The presentation summarized the composition of the campus budget, the state, system and campus budget planning timeline and commonly used terms.  Lupei also provided an overview of the campus strategic budgeting framework.
    
6. Fall Budget Briefing
   (Please see the September 9^th agenda packet for related documents)
   Lupei provided the Fall Budget Briefing summarizing the 2021-2022 budget. The prior year's campus budgeted revenue was $131M. For 2021-2022, the campus will receive increases to revenue of about $11.6M from the following sources: restoration of the 2020-2021 state budget reduction ($8.5M), new space allocation ($773k), Graduation Initiative ($1.8M), and AB1460 Ethnic Studies Requirement ($579k).
   
   There are also decreases to campus revenue in the following categories: employee salary & benefit increases ($-521k), reduction to campus allocation for systemwide priorities ($-3.3M), redistribution of CSU Financial Aid State University Grant ($-389k), and other campus budgeted revenue decreases ($-1.8M). With the revenue increases and decreases, the total 2021-2022 campus budgeted revenue is $136M.
   
   Budgeted Expenses for 2021-2022 total $147.5M and, with expenses exceeding revenues, there is a base deficit of $11.2M. The main driver of this deficit is the decrease in the campus headcount of students since 2018-2019. This has resulted in a loss of $11.7M in revenue. In addition to the enrollment-related revenue loss, there are cabinet one-time priorities of $815K and an additional year of a CalPERS loan payment of $425K, increasing the deficit to $12.43M for 2021-2022.
   
   While the deficit is substantial, there is a plan to address it utilizing various one-time funding sources for the 2021-2022 year. Funding sources include University Reserves ($600k), Higher Education Emergency Relief Funds (HEERF) ($7.5M), Estimated Hiring Slowdown savings ($540k), Under Enrollment Funding from AA ($1.13M), Academic Affairs Roll Forward ($872.5k), Student Affairs Roll Forward ($600k), New Funding Held Centrally Until Needed ($900k), and Other Division Roll-forwards ($173k).
   
   This plan addresses the deficit for the current year. It is important to note that the strategies used to address the deficit this year are all one-time funding sources. The base deficit of $11.2M continues each year that we do not address it with base solutions.  The major takeaways were that the campus did receive some new funds from the state this year, but those funds are primarily designated for specific priorities and are not enough to offset the losses we are still incurring due to lost headcount. We will need to plan to address the base budget deficit in 2022-2023 with base budget reductions.
    
7. Announcements for the Good of the Order
   None.

Moranski adjourned the meeting at 10:03 am. 

Minutes prepared by Shawn Taylor.