Wednesday, July 8, 2009

Budget Message from Pat Gantt

CSUEU President Pat Gantt sent a new budget message to the Board of Directors this morning:

July 8, 2009
TO: CSUEU Board of Directors

July Revise Budget update

The last couple of weeks have been a flurry of activity within the CSUEU with our Board of Directors meeting, elections and the furlough issue.  I figured it was time to give you another budget update as things have taken another twist.  We now have a July Revise.

This new tactic keeps the books open on the last fiscal year that ended June 30th for another month and applies some budget cuts retroactively.  Yes, this is another gimmick with the intent to avoid some restrictions in the federal stimulus funds.  The CSU cut does not change and still seems at $583,816,000.  A large part of the cuts in the last year they are trying to capture are in education funding.  The maintenance of effort part of the federal stimulus.  Here is what that means:

State Maintenance of Effort Requirements Under the Federal Stimulus Package Fiscal Stabilization Fund: To be eligible for the Fiscal Stabilization Funds, a state is required to assure that it will provide education funding at least at the fiscal year (FY) 2006 level in FY 2009 and FY 2010.

This helps the CSU budget from further cuts, but there is a growing concern that the Governor could ask the federal government for a waiver which would allow him to make deeper cuts as the state budget battle drags on and the revenues continue to lag.  The state bond rating was lowered due to the budget stalemate and that will make any borrowing more expensive and add to the problems.

In the CSU Trustees meeting yesterday there was Budget Presentation for the whole board and those in attendance.  The $583,816,000 cut to the CSU is equal to 20% of the state general fund funding.  The Chancellor also reported that the CSU employees will not be affected if IOUs are issued as he will authorize the use of the student fee revenue funds to meet payroll and allow the system to cash flow.  The comments lead me to believe that they can do this for a couple of months into the fall if the budget stalemate drags on.

There does not appear to be a solution close at hand with the state budget. The Governor has called net another special session to deal with the budget.  He has also ordered a emergency third furlough day for the state agencies directly under his control.  The CSU is not impacted by this order and has only planned for the equivalent of two furlough days per month for the current fiscal year to reduce costs and avoid layoffs.

I will try to update you as the budget and impacts to the CSU unfold in the coming weeks.  There is nothing currently proposed to change the size of the cut to the CSU and there is potential things could get worse.

In Union,
Pat Gantt, President


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