Planning for Budget Reductions

BACKGROUND (FEBRUARY 2018)

In September 2016, President Rossbacher sent a letter to the University community outlining the budget situation and setting the reduction planning process in motion. While the initial request was for divisions to identify +/- 5% options, the focus soon shifted to -5% as the President’s Cabinet, at the request of the URPC, recommended a three-phased approach "to both address the deficit issue and strategically reinvest our resources to advance Strategic Plan initiatives and achieve the Graduation Initiative 2025 goals." Phase I embodied changes that could be implemented relatively quickly; Phase II reflected strategic changes that have widespread impacts and require broad campus engagement; and Phase III was a planned future phase based on strategic reinvestment.

In February of 2017, the URPC provided commentary and recommendations to the President regarding Phase I and II, and reduction efforts continued to move forward. The URPC emphasized that “this 5% reduction is necessary to ensure HSU operates with a balanced budget and ceases the unsustainable practice of deficit spending” and that “addressing the deficit will require difficult decisions and it will take the entire University community working collectively together to implement the changes and successfully reshape our financial structure.”

By August 2017, when the 2017-18 budget was approved, HSU had successfully reduced the budget deficit by $1.5 million via the initial Phase I implementation. However, this left a remaining base deficit in 2017-18 of $1.6 million (excluding spending beyond budgeted levels in the academic colleges and Intercollegiate Athletics). Meanwhile, efforts continued on the development of Phase II reductions. On October 31, 2017, a preliminary list of Phase II ideas totaling $3.8 million in estimated savings was provided to the campus for feedback and discussion, with a goal of ultimately achieving savings of $2.8 million. The URPC then led a broad public vetting process over the ensuing two months, culminating in a summary memo to President Rossbacher on January 24, 2018 and posting of Phase II feedback online.

While Phase II efforts continued to move forward, it became increasingly apparent that the deficit was growing. This was due to both internal and external factors, as initially described in President Rossbacher’s letter to the campus community on January 19, 2018, and in more detail on February 2, 2018 at the Budget Open Forum and in President Rossbacher’s post-forum message to the campus. Factors that contribute to HSU’s larger projected deficit include:

  • Continued spending beyond budgeted levels in some areas of campus, including the academic colleges and Intercollegiate Athletics;
  • Unfunded increases in salaries, benefits, and other mandatory costs that have been approved by the CSU Board of Trustees for 2018-19; and
  • Lower than anticipated projections for additional state appropriation based on the most recent budget proposal by Governor Brown for 2018-19.

A decline in enrollment is another factor in HSU’s projected deficit. For fall 2018, the Office of Institutional Effectiveness (OIE) projects that HSU will have 300 fewer students than fall 2017, which would represent a decline of about 800 students from our peak enrollment in fall 2015. This enrollment decline is projected to contribute $1.8 million to the 2018-19 budget deficit.

  • New student enrollment has declined in recent years. First-time freshmen enrollment (headcount) decreased by almost 7% in fall 2017 to 1,210, down from 1,295 in fall 2016 and down from 1,420 in fall 2015. Transfer enrollment was up slightly in fall 2017 (953 upper-division transfer) but is still down from fall 2015 (1,035 upper-division transfer). First-time freshmen and transfer student enrollment is expected to be flat or slightly down in fall 2018.
  • A significant contributing factor regarding overall enrollment, retention of first-year students has declined in recent years. In fall 2017, 68.3% of freshmen returned for their sophomore year, a drop from 70.2% first-year retention in fall 2016 and 74.5% first-year retention in fall 2015.  Smaller incoming classes of freshmen and transfer students coupled with lower retention rates compounds each year, resulting in lower numbers of continuing students.
  • At the same time, graduation rates have increased. HSU’s four-year graduation rate was 17% in spring 2017 (six-year graduation rate was 45.5%). The four-year rate is up from 15.8% in spring 2016 and 14% in spring 2015 (six-year rate is steady). Increasing graduation rates is a major priority as we strive to reach the Graduation Initiative 2025 goals.
SUPPORTING DOCUMENTS

September 2016 letter to the UniversityStrategic Priorities and HSU's Budget

January 2017 letter to the URPCStatus report on fiscal planning for -5% budget reduction for FY 2017-18 

February 2017 URPC letter to the PresidentURPC follow-up letter to the President regarding 5% reduction planning

March 2017 President's response to the February 2017 URPC letter to the President: Approval of Recommendations: Letter to the URPC

August 2017 letter from the President’s Cabinet to URPC: Phase II Update

January 2018 President's letter to the campus: HSU Planning for the 2018-19 Budget

January 2018 URPC letter summarizing Phase II feedback: Feedback Received on Phase II Proposals

February 2018 Budget Open Forum: PowerPoint Presentation

February 2018 post-forum President’s message to the Campus: Update on Campus Budget Challenges