Update on Budget and Deficit Reduction Initiatives

Dear Cal State East Bay community,

I am writing today with an update on where we stand with our deficit reduction initiatives. I realize that most of our faculty are off contract over the summer and may not be able to read this message. We have shared it with Academic Senate leadership. However, the events of the summer so far make it imperative that we begin this conversation as quickly as possible. This is an ongoing conversation that will continue in earnest through the fall.

As most of you should be aware, Cal State East Bay has had enrollment declines, leaving us 26% below our funded target of full-time California resident students. This also creates a reduction in tuition revenue that the tuition increase does not fully address. Cal State East Bay has a significant operating deficit, meaning our ongoing operational expenses exceed our operating revenues.

Though the recently signed state budget includes an increase to the CSU, East Bay’s portion of that increase, while sincerely appreciated, will not cover commitments for salary and benefit increases, and the increase will not close our operating deficit.

We have worked diligently over the past two or more years to reduce our deficit. For example, we have:

  • Developed guidelines for budget reductions
  • Reduced budget deficit with the elimination of vacant/open positions.
  • Continued a hiring “chill,” meaning we only fill critical vacancies.
  • Further decreased budget shortfall with surplus balances from the Divisions.
  • Eliminated a sports team.
  • Scaled our course sections to measurable student enrollment and demand.
  • Reviewed low-degree conferring programs, as directed by the CSU system, with plans to discontinue a number of programs.
  • Advocated for a reduction in the CSU reallocation plan from 5% to 3%.
  • Created administrative “hubs.”
  • Implemented strategic budget reductions in FY 2023-24 based on enrollments and the cost of instruction.
  • Implemented a Voluntary Separation Incentive Program (VSIP) with back-fill of critical positions only.
  • Implemented a Utility Conservation Program to reduce energy consumption and utility costs.
  • Increase revenue-generating activities like sponsored programs, fundraising, nonresident enrollments, and self-support programs.

Unfortunately, our VSIP program did not generate the savings anticipated. We projected salary and benefits savings of $5-7 million. Instead, we achieved savings of approximately $2.7 million. Therefore, we must continue to explore all means to further reduce our expenses.

We are hopeful we will be able to maintain a flat enrollment compared to the last two years. But based on current data, we must work very hard between now and mid-August to achieve this goal.

I am sending this message in the spirit of openness and transparency. You may see some initial changes this summer and we will continue to explore further expense reduction throughout the academic year. I will continue to keep you informed as we move through this process.

Two years ago, as part of our Future Direction strategic planning, we collectively identified operational excellence and financial sustainability as some of our key priorities. That certainly remains true today. I ask you all to join me in recommitting to this goal. Together, we can scale our operations to our resources, ensure our students make progress toward their degrees, and maintain a positive working environment so that Cal State East Bay can fulfill its important mission to the region and beyond. 

Sincerely,

Cathy Sandeen
President

 

July 11, 2024