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CFA President-Elect sends letter to Academic Senate
May 24, 2007
CFA President-Elect Lillian Taiz sent the following letter to the Statewide Academic Senate to correct innacurate statements recently made by the Chancellor.
Click here to get the PDF of the letter
Dear Colleagues,
In a number of recent public meetings, Chancellor Charles Reed and members of his administration have made intemperate and inaccurate statements about the impact the recently ratified faculty contract will have on local campus budgets.
The administration has claimed bringing salaries up to a level that will retain faculty members, align with the rising costs of living, and allow us to adequately support our families, must result in funding cuts for classes and other instructional needs
In effect, they are arguing that improving our salaries and maintaining instruction are mutually exclusive goals. Either the faculty can be paid properly or sufficient class sections and services will be offered to our students, but not both. This is an unacceptable approach to what are essentially questions about budget priorities.
All of us had hoped the Chancellor would recognize that the new contract protects the main mission of the university—instruction—by making it easier to attract and retain our faculty. Now is the time when we should be healing the rifts and getting back to the business of stabilizing our teaching workforce, rebuilding our programs and providing our students with the quality education they deserve.
We challenge the Chancellor, Trustees and campus presidents to examine and reorder their budget priorities to protect the system’s primary assets—the faculty, students and staff who carry out the main mission of the university.
We hope you will read the enclosed statement that clarifies some of the confusion swirling around these issues. You also can locate the statement on the CFA website
Thank you for your thoughtful attention to issues that affect every member of our CSU campus communities.
LillIan Taiz
President-Elect, California Faculty Association
To find the facts about post-ratification compensation click here
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The truth on how the faculty contract affects the CSU
May 23, 2007
While the ink on the newly ratified faculty contract was still wet, the CSU Administration propaganda machine was moving at top speed last week to spin the faculty’s contract victory. The Administration has chosen to use the new faculty contract as a scapegoat for the financial problems plaguing the system rather than taking a long hard look at their budgetary priorities.
The Administration now is stating the system will face budgetary shortfalls due to the new faculty contract by inflating the potential costs of the deal and overstating the potential fiscal impact that increased spending on salaries could have on the system.
The reality of the situation is that faculty salary raises represent a very small
proportion of the overall CSU budget. Implementation of the new contract will not cost as much as the CSU Administration insists. As they did during bargaining, the administration continues to overstate the cost of the raises through what CFA Bargaining Strategy Committee chair George Diehr gently calls “naïve accounting.”
To find the facts about post-ratification compensation click here
ANALYSIS: CSU HAS $1.2 BILLION IN UNRESTRICTED ASSSETS
March 20, 2007
Despite their continued assertions of poverty in the face of a contract impasse and recent 10% student fee hike the CSU Board of Trustees were revealed this week to have more than enough discretionary income to honor faculty salary demands.
According to a financial analysis conducted by an indepedent forensic accountant, the CSU administration's unrestricted net assets have ballooned this year to more than $1.2 billion. This analysis was bolstered by a report from Moody's Investor Service's who upgraded the CSU’s bond value due to the more than $1 Billion the system had in reserves.
California State University’s Off-Budget Cash Flows: An Initial Analysis of CSU’s Budgetary Discretion and Cash Flow Flexibility
• The CSU’s administrators have access to large discretionary cash flows. In other words, they sit on a very large pile of cash with which to do as they wish.
• Moody’s Investor Services raised the CSU’s bond rating earlier this month on reports that Unrestricted Assets (cash to use as management pleases) increased by 45% over the past five years to about $1.2 billion.
• This increase in money in the bank is a remarkable feat considering the state has been in a deep budget crisis, that CSU funding from the state was cut deeply two years in a row, and that since 2004 increases were restricted below the actual needs of the university by the compact between the chancellor and the governor.
• Yet, the Chancellor’s staff and the CSU Trustees claim the system is short of cash (“In a bind” Trustees Finance Committee Chair Bill Hauck told students when voting to raise their fees earlier this month) and therefore is forced to raise student fees steeply while refusing faculty necessary salary increases.
• The CSU’s positive cash flows are not captured in any budget document, so looking only at the budget does not let an observer understand the CSU’s financial strength. This was clearly recognized by Moody’s when it wrote: “We expect that the System's reserve base will continue to grow largely as a result of continued positive operating cash flow.”
• These flows are on a much larger scale than any of the amounts contemplated in the CFA salary proposal that is disputed in bargaining.
• In addition to the “University” itself, the CSU has 89 Auxiliary and Foundation “subsidiaries.” These also have sustained positive cash flows. Since they are “non-profits” not subject to the same public reporting requirements as the university it is difficult to get a precise fix on their operations and finances.
• CSU obviously spends – or saves – these cash flows each year. That choice, as well choices as to what is important to spend them on, are value decisions made by CSU management — the Chancellor, the Chief Financial Officer and his staff, and at least some Trustees.
• The magnitude of these positive cash flows, combined with very large cash and short-term investment reserves:
1. Demonstrate that CSU management has had more than enough liquidity to manage substantial swings in working capital and other cash-impacting flows;
2. Provide CSU management with sufficient financial flexibility to fund the salary increases for the faculty that CFA has proposed, and,
3. Furnish CSU management with a large cushion that would enable a change in its budgetary priorities, — if it had the will to do so, — to spend more on instruction of students than it does now.
For a copy of the full report prepared for CFA, please send email to <editor@calfac.org>
For information from Moody’s Investor Service, search for “California State University” at Moodys.com
Moody’s Investor Service report, “MOODY'S UPGRADES CALIFORNIA STATE UNIVERSITY'S SYSTEMWIDE REVENUE BONDS TO Aa3, FROM A1, AND ASSIGNS Aa3 TO $333 MILLION OF SERIES 2007 SYSTEMWIDE REVENUE BONDS; RELATED DEBT ALSO UPGRADED; OUTLOOK IS STABLE,” Global Credit Research,12 Feb 2007, available for purchase. A summary of all Moody’s rating actions for California State University can be obtained at http://www.Moodys.com (search “California State University”). Registration (free) required.
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2007/08 CSU BUDGET NOW BEING DEVELOPED
September 6, 2006
When the CSU System Budget Advisory Committee met last week to discuss the administration’s preliminary recommendations for the 2007/08 budget request, members were offered a glimpse of the Chancellor’s ambiguous plans for the coming year.
Apparently unsure about the outcome of the gubernatorial race, the administration plans to cancel the annual October Board of Trustees meeting that usually focuses on the following year’s budget request. They intend to take up the final budget request only after election day has passed—at the Trustees’ November 14-15 meeting.
The CSU also is hedging its bets when it comes to student fee revenue in the 2007/08 budget. The budget plan it developed counts on almost $68 million in additional student fee revenue—apart from revenue generated by enrollment growth. However, whether that money will come in the form of a 10% student fee hike or a fee buyout in the state budget, like this year’s, remains to be seen.
The chancellor’s preliminary budget leaves open the possibility for either scenario. Discussion at the meeting left it unclear whether the CSU administration plans to advocate for another fee buyout.
CFA will press for a fee buyout and as well as another 2% added to the CSU’s base budget for instruction, student services, and employee salaries.
CFA was encouraged that at the meeting, the administration, in recognition of the severe gap in employee salaries, flirted with the possibility of approaching the legislature for 1% “above the compact” for employee salaries. But this funding, which is about $25 million, was not included in the revenue and expenditures estimates.
Finally, this initial administration budget plan contains at the end a list of “budget challenges” (to the tune of $120 million-plus) and “funding deficiencies” (now estimated at over $1.4 billion). So, once again, the CSU seems poised to simultaneously acknowledge the staggering funding shortfalls it faces yet refuses to request a budget that takes these shortfalls seriously.
CFA President John Travis joined representatives from the statewide Academic Senate and CFA’s sister union, CSUEU, in urging the administration to propose a budget request that reflects the university’s true needs, especially the increasingly large salary lags experienced by faculty and staff.
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CFA CALLS ON CSU BUDGET COMMITTEE
TO SEND TRUSTEES A PLAN TO MEET THE CSU’S REAL NEEDS IN 2007/08
August 28, 2006
Will this finally be the year in which the CSU administration and Trustees, led by CSU Chancellor Charles Reed, send a budget proposal to the governor that will meet the real needs of the California State University?
As you know, since 2003 when Reed and Schwarzenegger shook hands on the funding “compact” for the CSU, the administration’s budget requests have been limited to that deal. The impact has been chronic under-funding of instruction, which means inadequate salaries, higher tuition, fewer classes and all the fallout of too few dollars devoted to teaching students.
Each year at this time, the CSU’s System Budget Advisory Committee takes up the next year’s budget request. From the SBAC it goes to the Trustees in September to be finalized at their special budget meeting in October. They send it to the state Dept of Finance, which packages it for the governor’s budget plan to be unveiled in January. After that the legislature haggles over it, the governor revises it in May and it gets adopted by the legislature the following summer. It is supposed to be sent to the governor’s desk for signature by June 15, a date rarely met.
CFA President John Travis (political science, Humboldt) will go to the SBAC meeting tomorrow where he will call on Chancellor Reed to stand up for the CSU.
“The governor puts great pressure on the chancellor to treat the compact as a ceiling, meaning we would be limited to funding that will never let us catch up from the budget cuts a few years ago. But the CSU can’t afford for the chancellor to buckle under again.
“Instead of taking a strong stand for the CSU, the chancellor is letting students, the faculty and the staff – our CSU campus communities – bear the weight of higher fees, salaries that keep falling further behind, too few classes. It’s just not good enough. We need a budget that meets the real needs of the CSU.”
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Travis Sends letter to Trustees:
"Budget request must reflect the CSU's true needs"
October 4, 2005
At their meeting on October 27, 2005, the CSU Board of Trustees will adopt a 2006/07 budget proposal for the California State University to send to the state Department of Finance. John Travis, CFA president, sent a letter to Trustees Chair Murray Galinson requesting that the Trustees make a budget request that reflects the true needs of the CSU and not just rely on the Compact agreement between the Governor and the Chancellor. The Compact agreement “falls short of compensating the nearly half-a-billion dollars in state general fund cuts the CSU budget has endured in recent years,” Travis wrote. See the full text of Travis' letter.(pdf)
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