2021-22 Budget Update

Monday, February 15, 2021
Dear campus community,
While we continue to wrestle with the pandemic and its consequences, our eyes are also on next year. I know that many of you have questions about what fall 2021 will look like and what our budget will be. We are working now to identify questions and concerns about fall 2021. Faculty and students have been surveyed about fall instructional preferences, staff and faculty have been invited to Listening Sessions with members of the pandemic planning group, and we are working with Associated Students to identify additional means of hearing from students. Our goal remains to have as many students back on campus in the fall as health, safety, and the SF Department of Public Health allow. I promise to share more information as it becomes available.
This year’s budget was very hard for our campus. The combination of a reduction in the state allocation and enrollment revenue left us with a $37.9 million budget gap. As all know, despite a hiring chill, a variety of cost saving measures and the planned use of $7.7 million in campus reserves, we were unable to bridge that gap and were forced to reduce our workforce last fall. For a variety of reasons, including a desire to do everything we could to minimize the number of employees impacted, the savings from the workforce reductions fell short of our financial goal. We realized only $4.7 million in salary savings for this year and will have to increase the use of campus reserves to $12.1 million to balance our budget.
Statewide, the budget news for next year has improved. Governor Newsom released his January Budget Proposal which included an increase of $145 million in recurring funding for the CSU and $225 million in one-time funding for deferred maintenance, emergency student financial aid, and faculty professional development. This was welcome news as it didn’t include the additional reduction in state funding we had been warned was coming. But the additional recurring funding restores only a third of the budget reduction we took in 2020-21 and much of that is designated for mandatory costs such as increased benefits costs, implementation costs for AB 1460, the increase in the minimum wage and an additional $15 million for Basic Needs initiatives. While this is all good news, it does not provide the funding we need to address the ongoing structural deficit SF State has.
Many of the reductions we took for this year were one-time solutions, and almost every unit on campus has had to rely on carry forward funds to meet their budgets.  The 2020-21 budget cuts laid bare our ongoing problematic use of one-time funds to fund core activities including the schedule of classes, student affairs programming and equipment and operational needs.  We must continue the hard work of addressing our structural deficit and remain agile as the impacts of the pandemic and vaccines on the state’s economy and enrollments become clearer. This year’s ultimate need to use $12.1 million in reserves has nearly depleted the University’s reserve and leaves us vulnerable if we were to experience a campus emergency such as an earthquake or fire. In addition, our enrollment remains highly volatile due to lower enrollments this past fall and the ongoing pandemic. We must be prepared for further declines in enrollment and revenues. Based on the Governor’s January Budget Proposal and the revenue forecasts for tuition and fees, the campus’ recurring deficit for the general operating fund in 2021-22 is likely to be $12 million or higher--a sizable improvement over last year’s deficit but a figure that demonstrates that there is work to be done.
There is a lot of confusion about the different uses of one-time funds and recurring general fund. One-time funding is not a solution to our budget deficits but may provide a short-term reprieve from additional severe reductions and temporarily stabilize the campus’ reserve while we enact changes that will stabilize our budget for the longer term.   We should soon receive over $46 million from the federal Higher Education Emergency Relief Fund (HEERF). This will provide over $14 million in direct student aid and another $32 million in institutional support. The use of the funds for institutional support is heavily regulated. These one-time funds are intended to alleviate some of the financial pressure caused by the pandemic including additional costs for health and safety measures (e.g. personal protective equipment, cleaning supplies/equipment), remote instruction and operations costs (e.g. technology and faculty professional development), costs associated with student refunds for programs such as student housing, fixed costs such as debt service, and for targeted programming directly related to the pandemic. They must be expended by 2022.
We will use these funds, in compliance with the rules governing their use, to provide the campus with a temporary reprieve from another round of severe budget reductions during 2021-2022. But, again, they are not a permanent solution. We must engage, as a campus, in the hard work of making permanent cost-saving measures to close our currently projected $12 million structural deficit. Our divisions are already at work to do this. Academic Affairs began the hard work of addressing its unsustainable use of one-time funds this past summer. The work of the Academic Affairs Council and Academic Senate Executive Committee to jointly identify a “portfolio of imperfect options,” which underlies the Provost’s recent Directive Memo on Budget Realignment, demonstrates that we can work together to reduce our costs while remaining committed to student success. The Provost’s Directive empowers departments and colleges to make incremental changes that will not diminish our ability to serve our students and which add up to substantial savings. Its goals are to ensure a class schedule that allows students to make timely progress toward their degrees while preserving the campus’s normative 3-3 teaching load that fosters faculty excellence. Student Affairs and Enrollment Management and Administration & Finance are also looking at ways to reduce their costs while preserving services to students and the campus.
The CSU budget and SF State’s budget are complicated, and the pandemic has introduced a volatility that few have ever experienced. I urge all to attend the meetings of the University Budget Committee (UBC) or check their website for detailed presentations and information. The University will continue to refine its scenario planning for 2021-2022 and develop budget iterations over the next few months as more information becomes available, as the state legislature shares its budget plans, as enrollment trends become clearer and as the availability of one-time, federal funds is clarified.
I have been invited to attend the Academic Senate sponsored open forum with Provost Jennifer Summit on February 19 from 10:30-11:30 a.m. to answer questions about this and other pressing issues. To receive a password-protected Zoom link, please register via Qualtrics by 4 p.m. on Thursday, February 18. Additional campus forums with the president will be scheduled in the coming weeks.
I end on a positive note. Every day thousands more get access to one of the available vaccines. Educators will be eligible for the vaccine later this month or in early March paving the way for our return to campus in 2021-22. The CSU is working hard to advocate for more recurring funding to allow us to restore what we lost and hire more faculty and staff and for more one-time dollars for deferred maintenance to improve our infrastructure. In many ways, we survived the worst in 2020. We will work together again to address our remaining budget issues in 2021-22. And, while it may seem unimaginable today, we will once again be together on a thriving campus.
With continued wishes for good health.

Lynn's Signature

Lynn Mahoney, Ph.D.