ABA Management CouncilSeptember 15, 2008

UBAC Considerations

– Strategic Goal #1• Meet Enrollment Targets

– Recruit New Students– Class Schedule Supports

Enrollment Targets• Student Retention• Graduation Rates

– Cross Division Collaboration– Division Priorities– Multi-Year Financial Planning

• Position campus for recovery

ProcessProcess

• Extensive Review of Campus Financial Information– Carry-forward Funds– Reserves– Baseline Allocations– All University Expenses/Central

Costs– Long Term Obligations - Loans

• Conversations with the Provost and Vice Presidents

• Questions/Conversation with President and Cabinet

January Financial Assumptions

- $4.4 M Campus Carry Forward Gap $1.9 M Net New fees – Assuming 4% - $6.3 M Net Reduction - Governor’s Budget

Funding to meet CSU “enrollment growth” and 4% cost increases

10% General Fund reduction ($16.6M)

- $2.0 M Unfunded Costs - $ .5 M Reduction in Retirement Costs-$10.3M Projected Structural Deficit

Recommendations

1. Eliminate Structural Gap in 08/09– Concern for 2009/10 and beyond

2. Use One Time Funds– Reduce Structural Gap– Large One-Time Costs

3. Reserves

Recommendations – Step 1

1. Eliminate Structural Gap in 08/09

– Concern for 2009/10 and beyond

2. Use One Time Funds– Reduce Structural Gap– Large One-Time Costs

3. Reserves

1a. Reduce Gap from $10.3M to 1a. Reduce Gap from $10.3M to $7.1M$7.1M

- $4.4 M Campus Carry Forward Gap $4.8 M Net New fees 10% (+ $2.9 M)- $6.3 M Net Reduction - Governor’s Budget

Funding to meet CSU “enrollment growth” and 4% cost increases

10% General Fund reduction ($16.6M) $1.3 M Interest Earnings (+ $1.3 M)- $3.0 M Unfunded Costs ( - $1.0 M)- $ .5 M Reduction in Retirement Costs- $7.1 M Projected Structural Deficit (+ $3.2M)

1b. Eliminate Remaining $7.1M Gap

• All University Expense $2.2M– Pay Off Loans

• $1.445M Baseline Savings

– Various All University Cost Decreases - $.7M• Research Admin Space• Sac State Magazine• Risk Pool Premium

1b. Eliminate Remaining Gap (cont’d)

•Baseline Reductions to Divisions - $4.9 Million

–Academic Affairs -3.5% -$3.566 M–Admin and Business Affairs -3.5% -$.561 M–Athletics -1.0% -$.032 M–Govt & Civic Affairs -0.0% -$.000 M–Info Resources & Tech -5.0% -$.287 M–Student Affairs -2.0% -$.182 M–Human Resources -3.0% -$.055 M–Office of the President -3.5% -$.035 M–University Advancement -3.5% -$.144 M

Recommendations – Step 2

1. Eliminate Structural Gap in 08/09– Concern for 2009/10 and beyond

• Use One Time Funds– Reduce Structural Gap– Large One-Time Costs

1. Reserves

Sources of One-Time Funds - Sources of One-Time Funds - $8.61 M$8.61 M

• 2006/07 Central Carry Forward– $3.1M AUE/Mandatory Costs– $1.8M Interest Earnings

• 2007/08 Central Projected Surpluses– $1.9M Benefits Pool– $1.8M All University Expenses

• Insurance, Utilities, Space Rental, etc.

Use Central One Time Funds - $8.34M

• Pay Off Loans – $4.3 Million• 2 CMS Loans $3.356 Million• Benicia Hall$ .350 Million• Energy Bond $ .515 Million• Electrical Sub $ .120 Million

– Baseline Savings $1.445 Million

• Old Bookstore Remodel - $3.5 Million• One-Time Funding Requests - $.5

Million

Recommendations

1. Eliminate Structural Gap in 08/09– Concern for 2009/10 and beyond

2. Use One Time Funds– Reduce Structural Gap– Large One-Time Costs

3. Reserves

Reserves

• Reserves – $3.75M - Emergency/Disaster Reserve

• This is NOT an operating reserve!

– $0.25M - Liability Claim Reserve (1 claim)• Should be at least $.5M (2 claims)

– $1.80M - Operating Reserve (< 1%)

• Cushions– $0.75M – Revenue offset (enrollment)– $0.46M – Held for Final Adjustments

Addressed….Addressed….

• If the State Budget is passed at the January 2008 level (additional $97.6M reduction at CSU level)– Sac State’s reduction will be ~ -$5.7M

• Our campus has one-time funds to absorb reductions

• Structural deficit will be carry forward into next fiscal year

Not Addressed….

• Surprises in 08/9 State Budget• Future State or CSU Cuts – 2009/10 and

beyond– State Structural Gap – expect multi-year– Unfunded Mandates

• Divisions’ Structural gap• Ongoing renewal costs

– Equipment, computing, telecom, voice mail, vehicles, furniture, etc.

– 60 year old campus – Deferred Maintenance• mechanical/ electrical • heating/cooling, • water/sewer, • painting, carpet, flooring, etc.

Questions?