Chancellor's Video Message to Employees July 29, 2009

Chancellor Charles B. Reed:

Today I want to talk to you about how the California State University is managing during one of the most difficult times in its history.

Yesterday, the governor signed the state budget to close a $26.3 billion dollar gap. That resulted in the California State University's budget getting cut a record $584 million dollars, or 20 percent. This is the largest budget cut the CSU has ever received.

To put that number in context, $584 million dollars is the amount of state funding needed to educate 95,000 CSU students. That is the number of students the CSU graduates each year.

A budget cut of this magnitude is too large to cover from one single area. Instead, we have had to consider many different ways we can cover this deficit.

These are uncharted waters for the California State University and for all of public higher education in California. In my more than 40 years in public service, I have never seen a state reach an economic crisis of this proportion.

For many months now, we have sat with the presidents and with the trustees, with our student leaders and our alumni, with the heads of our labor organizations and with our faculty, to talk about how to manage this situation. These have not been easy discussions because many difficult choices have had to be made. And I realize that these are choices that affect people's livelihoods.

I have asked that our decisions be guided by two things:
One, that we serve as many students as possible without sacrificing quality; and
Two, that we preserve as many jobs as possible.

Through all of this, I want to make sure that we serve our students and our employees to the best of our ability.

That will come with some sacrifice. I believe, however, that the pain may be a little more tolerable if we all share the responsibility.

Since 85 percent of the CSU's operating budget goes to employee salaries and benefits, we must reduce salary expenses to manage this deficit. For our employees, this means taking 2 furlough days per month, or roughly a 10 percent pay reduction, for this fiscal year.

For our students, the state's budget cut to the CSU has forced us to take several actions.

First, we will reduce our enrollment by approximately 40,000 students in the next two years.

Second, we have to close winter and spring 2010 enrollment.

Third, we have increased student fees approximately 20 percent for this fall.

These are painful actions we have been forced to take. And in doing so, it is critical that we try and help our students as much as possible.

So one-third of the fee increase will be set aside for financial aid. This set-aside will fully cover the fee increase for 187,000 of our CSU students.
The CSU also expects to receive an additional $81 million in Pell Grant awards for our neediest students. The CSU is the largest recipient of Pell awards in the United States.

Lastly, federal tax credits, increased work study, and student loan improvements will also offset the fee increase for many of our students.

These are difficult times for the California State University. And these are tough decisions because I worry about serving our students and helping our employees.

I believe the difference between good universities and great universities is its people. And I believe in the people of the California State University because I know how hard each of you work to make a difference.

I see it every day in the teaching and the research that goes on at our campuses. And I see it in the innovative and creative ways we are working to solve the issues that people care about, from homeland security initiatives to the state's nursing shortage, to finding better ways to educate our underserved students. The CSU will prevail because great ideas are born when people come together during challenging times.

I want you to tell people about the great work we do. The next time you talk to your neighbors or friends, tell them what you do every day at the California State University makes a difference.

Tell them that the CSU provides the teachers who teach our children, the architects who build our buildings, and the scientists who are working on sustainability. It is the CSU that makes California better, stronger and economically more sound.

And you help make that happen by the outstanding work you do. I thank each of you for helping to make the California State University the nation's greatest university. I will continue to keep you updated on our budget and our progress in the coming months. Thank you.