Fall 2009 Convocation Speech

Eduardo Ochoa
Provost and Vice President for Academic Affairs
August 24, 2009

Fall 2009 Speakers

Ruben Armiñana

Eduardo Ochoa
Provost and Vice President for Academic Affairs

Susan Moulton
Chair of the Faculty

Heather Hanson
Associated Students President

Dolores Bainter
Staff Representative to the Academic Senate

Welcome to the 2009 fall semester. I especially want to add my warmest greetings to the new faculty and staff that have joined Sonoma State University during the summer months.

These have been particularly difficult remarks to prepare since I should report about the State budget and how it affects the University in this fiscal year. But as you know, there is no State budget at this time—53 days now into the fiscal year—and unfortunately there is no date in sight for when the budget would be approved by the Legislature and signed by the Governor. California is the only state in the nation that does not have an approved budget. We are really flying into fiscal expenditures with both eyes closed and no radar.

California has a $17.2 billion budget gap, $15.2 billion deficit and $2 billion needed for reserves. This is the result of a structural deficit, by formula we are programmed to spend more than we receive in revenues, and by a significant shortage of tax receipts due to the slowdown of the economy and the housing mortgage crisis. Recovery is not in sight for at least a year or two. Next year’s deficit is already predicted to be $10 billion if permanent actions are not taken now. There is complete agreement about the size of the budget gap, but absolutely no agreement on how to resolve it.

The Democratic legislators in the Assembly last Sunday offered a budget bill which relied heavily in increasing taxes by augmenting the tax rate from 9% to10% for Californians jointly earning more than $321,000 a year and to 11% for those making more than $642,000 a year. Under this plan there is also an increase in the corporate tax rate. California is very dependent for its revenues on high income earners whose incomes tend to be very volatile and sensitive to economic conditions.

The Democratic budget did not propose major budget cuts to State services although it would have have trimmed $270 million from prison reform and moved public transit fund to pay for home-to-school bus transportation. In addition, this budget proposal borrows $10 billion from future lottery earnings beginning next fiscal year and recommends a constitutional amendment in November to double the “rainy day” fund to 10% of the general fund revenues. It does not contemplate any borrowing for the present fiscal year. As expected, this budget did not have any Republican or gubernatorial support and fell short of the required 2/3 vote needed for approval.

On the other hand the Republican legislators have signed a pledge against new taxes. They blame the budget deficit on the Democratic Legislature’s appetite for “spending on new social programs and bigger government.” They argue that given the weak California economy and the increase in the unemployment rate to 7.3%, greater taxes would have major negative impacts. The Republicans strongly support the Governor’s call for budget reform including a hard spending cap that limits the budget to rise at the combined rate of the cost of living and the growth of the population. They also support a “rainy day” fund for up to 10% and revenues more than that would be used only for one-time expenditures and tax cuts. They are committed to deeper cuts to all government expenditures and have been lukewarm about borrowing from the lottery or other funds.

Somewhere in the middle is Governor Schwarzenegger’s most recent proposal which calls for greater cuts to government spending, about $10 billion, temporarily suspending businesses’ ability to deduct their net operating losses against future earnings, and borrowing substantially from future lottery earnings and other funds such as transportation. The funds would be paid back from the receipts of a temporary 1-cent increase in the sales tax over a 3 year period. At that time the sales tax rate would not only be back to the present rate but would decrease by 1 ¼ cents. This allows it to be called a temporary tax increase which results in a permanent tax cut. The governor is insistent in getting voter approval in November for a number of fiscal reforms, including the ability of the Governor to reduce expenditures at mid-year for up to 7% and suspend cost-of-living adjustments, a “rainy day” fund, and an economic stimulus package which expedites bond-funded building programs.

The solution probably resides in a compromise between these three positions but meantime the State is running out of cash and in a few weeks it would have to borrow money to simply operate. Without a budget in place this borrowing would be very costly.

Where does the CSU stand in this budget confusion? Obviously we do not have a budget for our universities and we are spending money for salaries and operations without knowing what that budget will be. We are using the cash generated by student fees to operate. We are working on the assumption that the final budget would contain $97.6 million which the Governor added in the May revise to reduce the $312.3 million reduction from the Compact. Both houses of the Legislature and the Conference Committee have also agreed to this addition. This was the result of the enormous and coordinated efforts of the Alliance for the CSU, but this would leave the General Fund support basically flat from last year.

Unfortunately, there is more than $124 million in unfunded mandatory costs. The Trustees in May increased the State University Fee by 10% which reduces the unfunded mandatory costs by $73 million after providing for additional financial aid to our students. But this still leaves a gap of $51.3 million to cover required increases in the cost of health benefits, energy, the operation and maintenance of new space, and the full-year costs of the compensation increases to faculty on the last day of the last fiscal year. SSU’s share of this unfunded mandatory costs results in a budget gap of about $1.2 million.

In addition, even under the best circumstances of receiving the $97.6 million, there is no money to support the negotiated salary increases for all employees and other increases expected if the Compact would have been funded. Of particular concern is that there is no funding for new enrollment despite the fact that the system carried more than 10,000 FTES than the enrollment funded last year. Despite the efforts to reduce enrollment to the amount funded, it is expected that the CSU would have an over-enrollment this year of approximately 5,000 FTES. This represents an unfunded cost of approximately $42 million.

I have given you what I see at this time to be the best scenario for the CSU—and it is not pretty. But there is great concern that on the last minutes leading to a budget compromise there could be further reductions to our budget. If this were to happen, those cuts would have to come from the Spring semester since we are already committed to the expenditures associated with the Fall semester. Those additional cuts would be devastating since they would have to be met in only half of the year.

The present financial difficulties for the CSU and for this campus come on top of major budget reductions in recent years. Since 2002 the CSU has been subjected to net losses of more than $522 million. Locally this translates for us in losses of $13 million. Imagine what we could do in terms of quality with that amount of money.

In real human terms this means less access to deserving and qualified students, a decrease in the workforce preparation, the teachers, engineers, criminal justice specialists, technologists, nurses, businesspersons and others that California so urgently needs. It means a decrease in the diversity of our student population, greater workload for all employees, and increasing salary gaps. But fundamentally it means a compromise in the academic quality that we offer. This is a situation that must be reversed if we are going to meet the challenges of a complex, globally competitive economy. The future of California is in the hands of its institutions of education and those hands are getting tired, weak and callous for the lack of adequate resources.

In a recent op-ed piece in The San Francisco Chronicle ( June 23, 2008), the former Mayor of San Francisco and Speaker of the Assembly, Willie Brown, a graduate of San Francisco State University, pointed out that, “In our haste to seize on solutions to the budget crisis we could jeopardize our long-term economic future.”

He pointed out that by 2025, California manufacturing base will shrink to only 8% of the economy. Some 83% of the fastest growing occupations will require a post-secondary degree. And, 41% of California jobs would require a bachelor’s degree. Currently only 32% of our State population obtains that degree. Speaker Brown concluded that, “We need our higher education systems to get out of this mess.”

I fully recognize the heroic efforts of our faculty, staff and administration in meeting the mission and achieving the vision of this University under very difficult conditions. You need and deserve more resources. Our work with the students continues to be superb and it is rewarding. We are committed to the academic mission of Sonoma State University, with our student’s academic achievement and success at the very center of that mission. The three goals of student retention, graduation and satisfaction are the operationalization of the mission.

To this effect we have adopted three initiatives:

  1. Full instructional funding of enrollment growth at 19:1 SFR and 75% full-time faculty;
  2. $1 million permanent funding for faculty development to be achieved incrementally over 5 years (the fist permanent $200,000 increment was achieved this past fiscal year); and
  3. A commitment to address the deficiencies identified in the Repairing the Base review. I want to create a permanent academic funding increase of $1 million incrementally over the next 4 years.  More details about this initiative will be forthcoming once the budget for the CSU is established, hopefully soon.

We need to enhance our commitment to a more comprehensive action to promote diversity at this campus at all levels. I am replacing the Campus Climate Committee with broadly representative President’s Diversity Council and an expanded charge with high level administrative and Senate leadership participation. The charge will include review and oversight of outreach, recruitment and retention of diverse students, faculty and staff, diversity in the curriculum, and promoting civility and multicultural competence in all aspects of the campus community.

I urge the curriculum committees of each of our schools as well as the General Education subcommittee and the Senate to adopt curriculum reform that makes all of our courses 4 units, or subsets. At present, there are a number of schools and departments that already have achieved this change without major disruptions but with increased efficiency. There are departments where upper-division courses are four units while lower division courses are three units. I know that there are other departments considering this change but it is not evenly distributed. I believe that this change will be helpful in creating greater uniformity, better utilization of the academic spaces, increase the depth of the knowledge experience for the students, and reduce the workload to the faculty within the prescribed 12 units of teaching called for in the faculty contract.

In terms of identity, WASC has asked that we engage in the “collaborative development and articulation of a simple, coherent self-definition that reflects the full extent and complexity” of our mission. We are unique in the CSU as having “two worthy identities, one as a regional comprehensive university, and the other as the state’s public liberal arts university.” I do not find that this is an impossible task, but one that “should be more explicitly and deliberately acknowledged and communicated”. This is our identity and we need to be more determined about it.

While uncertainty is all around us, what is certain is our commitment to the success of our students in an environment of high academic quality. I wish you a good semester. Thank you.