A Message from the Chancellor on the 2010 – 2011 Enacted State Budget

August 5, 2010 | The University

On August 3, the State of New York finalized and enacted its budget for Fiscal Year 2010-2011. I want to provide a summary of the impact on The City University of New York, as well as some insight as to the broader implications of this agreement.

Senior Colleges

For the senior colleges, the FY2010-2011 budget provides the same funding levels called for in the governor’s executive budget. Included in the FY2011 budget are $84.4 million in operating budget reductions, which is comprised of a cut of $63.6 million in state support along with a $20.8 million decrease to be achieved from workforce actions. Combined with the reductions of the past two fiscal years, the University has now sustained over $205 million in state cuts since FY2009.

As a result of these actions, the recently issued FY2011 allocations reduce college base budgets by 2.5%, and revenue targets are being increased. In addition, colleges are being required to establish a 1.25% encumbrance against base budgets as protection against the remaining uncertainty in the state’s economic condition, including possible mid-year reductions.

The cumulative effect of these reductions, combined with growing enrollments, will create an acute strain on our senior college resources. Since 1999, these colleges have together welcomed almost 38,000 additional students to their campuses—nearly an entire NYU. Our colleges remain uncompromising in their commitment to academic quality. We will continue to work carefully and collaboratively with our campuses to manage these reductions in order to most effectively protect our core mission, but there should be no mistaking the fact that the state is shortchanging public higher education, to the detriment of New Yorkers.

Community Colleges and Financial Aid

Earlier this week, the state legislature formally approved the revenue portion of the FY2011 budget. The senate and assembly had come to an agreement on expenditures in late June; the governor subsequently vetoed all of the legislative additions, including restorations to the Tuition Assistance Program (TAP) and community college base aid.

It is important to note that the formal budget approval does not override the governor’s expenditure vetoes. The community college base aid per FTE has been lowered by $285, resulting in an operating budget loss to the community colleges of approximately $20 million. In addition, all TAP awards are slated to be reduced by $75, as per the governor’s vetoes.

We are greatly concerned about the effect these actions will have on our community colleges and TAP-eligible students. Community colleges are the largest and fastest-growing sector of higher education and enroll almost half of our country’s undergraduates. They are essential to our nation’s recovery effort, a pipeline to jobs. CUNY’s community colleges are bursting at the seams, in serious need of faculty and classrooms to meet unprecedented demand. The Tuition Assistance Program makes it possible for many of our students to pursue and earn a college degree. The University’s priority will always be to assist the neediest students. Financial aid is most equitable when it is aimed at students with the greatest need and those in the hard-pressed middle class.

Public Higher Education Empowerment and Innovation Act

The state budget agreement also does not include any of the provisions of the Public Higher Education Empowerment and Innovation Act (PHEEIA). This proposal, included in the governor’s executive budget, recommended a number of adjustments related to tuition and regulatory provisions. The act would have allowed CUNY and SUNY to receive and disburse revenues from tuition and self-supporting program activities without an appropriation. It would also have authorized the CUNY Board of Trustees to raise tuition incrementally up to an annual cap of two-and-one-half times the five-year rolling average of the Higher Education Price Index. PHEEIA also would have permitted differential tuition rates by campus and program. CUNY has long supported differential tuition by program, informed by market competition and price elasticity. The act would also have allowed for greater flexibility in procurement procedures.

No action was taken on PHEEIA as part of the FY2010-2011 enacted budget. In addition, the budget does not recognize any additional revenue associated with the modest two percent tuition increase authorized by our board of trustees for fall 2010. Therefore, tuition rates will remain the same for this coming semester.

Through the CUNY Compact, our University has been the leader in consistently calling for a business plan that would create a predictable funding stream. As you know, the Compact delineates shared responsibility among the state and city, the University, our alumni, and students. The plan calls for the implementation of a rational tuition policy, one that mandates small, annual increases that will avoid the need for large tuition spikes in difficult economic times, and that also maintains full student financial aid. The Compact includes a maintenance of effort provision through full state and city coverage of mandatory costs. This is a key component of the Compact initiative, as students and their families should not assume the burden of future costs.

The Compact leverages public monies, encourages private sector partnerships, and provides a predictable means of increasing and employing revenues. In 2007, the Commission on Public Higher Education embraced the CUNY Compact strategy, and recommended a state-wide compact be adopted as the financing mechanism for both CUNY and SUNY. In this difficult fiscal environment, it is even more critical that we maintain a laser-like focus in calling for this innovative financing strategy.

Capital Budget

CUNY’s unprecedented enrollment has also created a pressing demand for space and a pronounced strain on our facilities. Our campuses are open seven days a week and classes are scheduled throughout the day, increasing the wear and tear on classrooms and common areas. The FY2010-2011 state budget includes $284 million in critical maintenance funds for our senior colleges and almost $35 million for community colleges. These dollars are vitally needed. In addition to the aforementioned enrollment pressure, over two-thirds of CUNY’s buildings are more than 30 years old, and some buildings are more than 100 years old.

Unfortunately, there is not much to report on new funding for capital projects in the state budget. I must point out that, in this economy, spending on construction makes sense. Costs are now lower, and much-needed jobs can be created. For every $10 million spent in construction, it is estimated that 60 jobs are created at the job site and 30 jobs are created offsite in materials fabrication on an annual basis.

Although the state budget for Fiscal Year 2010-2011 has been enacted, the agenda for public higher education is significantly unfinished. The lack of a prudent, long-term investment policy—including a rational tuition policy and budget flexibility—is harmful to New York State’s competitiveness in the higher education marketplace, to maintaining academic quality, and to hundreds of thousands of students and their families who are attempting to plan for their higher education needs in an unforgiving economy. We must continue to work with state officials to pursue the fundamental principles of the Compact so that all stakeholders will participate in support for adequately funded public higher education.

There is no question that these are challenging times that will require difficult and sometimes painful decisions. We must remain fully committed, now more than ever, to our historic mission of serving New Yorkers and helping them advance themselves personally and professionally.

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Matthew Goldstein
Chancellor