Meeting Goals of the Strategic Plan

As a direct result of the extended economic recession, the CSU system began a new method of budgeting in fiscal year 1990/91. The new process established a baseline budget for each campus and allocated reductions or increases each year to that baseline. To enable each campus to allocate funds in the ways it deems most beneficial, the CSU abandoned the formula-based distribution system and set out to make its budget policy as flexible as laws would allow.

In six of the seven years since 1990, CSUSB has had to reduce expenditures in order to meet CSU system budget reductions or to fund higher costs for which no new monies were available. During this period of declining budget support, the University focused its efforts on maintaining its existing programs, accepting all qualified students, avoiding layoffs, and aggressively pursuing capital expansion. From 1990 to 1997, to complicate matters, demands on the campus grew as student enrollment expanded from 11,927 to 13,287 and building space doubled from 650,000 GSF to 1.3 million GSF.

Following the budget shortfalls of recent years, the University now faces many challenges which require financial support. While the California economy has improved dramatically, the amount of future support from State funds is unknown. However, assuming that at least some measure of increased State support will be appropriated, CSUSB will need an internal system of budgeting which will simultaneously help to meet Strategic Planning goals and provide sufficient flexibility in managing the institution's finances.

To facilitate flexibility in the budget process, personnel and position control funds will be delegated to each of the Vice Presidents, who are responsible for monitoring expenses and taking appropriate action in the current year should shortages be projected. This is a significant change in budget policy since approximately 80 percent of the budget is composed of personnel expenses.

1. Allow the Vice Presidents and their staffs the flexibility needed to effectively and efficiently manage personnel and other resources.

2. Create incentives to flexibly use funds and carry-over monies not expended in a given year.

3. Establish a system which encourages alternative and innovative methods to achieve the goals of the University.

1. In order to establish the distribution of personnel funds, divisions will verify position costs as of June 30, 1997. A salary report will be provided by the Budget Office to assist in this verification.

2. Dollars associated with the funded positions and the FY 1997-98 compensation increase will be distributed to the divisions and serve as the salary and wage baseline budget.

3. Each Vice President will have the flexibility to determine how to utilize funds whenever a position becomes vacant. With regard to major positions, search processes and position descriptions will be discussed initially with the President.

4. Employee benefits will be managed centrally by the Budget Office. Any annual savings in benefit costs will be deposited into the Contingency Reserve Account and, depending on the amount in the reserve, may be made available for distribution as one-time funds. (See discussion of the "Contingency Reserve Account" below.)

5. If a position is not filled, the funds will be retained by the division in which the vacancy exists. During the period in which a position is held vacant, the benefits funds associated with that position will be allocated to the Contingency Reserve Account.

If a position is filled after being vacant for a period of time, benefit funds will be made available up to the monetary level of the prior benefits. As a parallel, if a division wishes to create one or more new positions, it will provide benefits funding, in accord with the attached Benefits Table, if the benefits are greater than previously provided. There will be regular reviews to assure that the benefits pool is adequately funded.

6. Divisions will retain all salary savings from vacancies and from funds secured from new hires at lower salaries. In addition, the divisions will assume responsibility for salary increases (other than annual compensation increases noted below); promotions; hiring new employees; individual reclassifications; overtime; shift differentials; stipends; and separation allowances.

7. The Budget Office will update the funded position list annually and provide copies to the Vice Presidents for reconciliation. The office will also conduct training sessions on the Financial Reporting System.

8. Management positions: New management positions will be approved by the President.

9. The President may, in consultation with the University Budget Committee and the Vice Presidents, shift resources, including personnel funds, between divisions.

10. Each Vice President will submit an annual report indicating how funds were used to advance the University's Strategic Plan.

1. The compensation pool will be divided into two parts --- salaries and benefits. The percentage for each will be based on information from the Chancellor's Office.

2. Salary increase monies will be used to fund General Salary Increases, Service Salary Increases, and Performance Salary Increases, according to the bargaining unit language of each union contract.

3. A percentage of salary increase funds for Management Personnel Plan (MPP) and Confidential employees will be allocated to the President to address considerations of internal equity, external equity, and/or exceptional merit.

The Budget Office will oversee the expenditures and targets for accounts identified below. Any shortages in these accounts, as well as with regard to system-mandated reclassifications and system-underfunded salary increases, will be handled as funding deficits which may require broad University action. Overages will be transferred to the campus Contingency Reserve Account. The centrally-managed accounts are:

5. Major, Multi-Year Capital Contracts, i.e., the computer mainframe and other items costing more than $100,000 annually

The Contingency Reserve Account will be a permanent fund equal to approximately one percent of the total General Fund budget. The reserve will be composed of carry-forwards from the prior year and new unallocated funds. (See Attachment 1 for a four-year plan on funding the reserve.) The Contingency Reserve Account shall be available to meet emergency needs of the University, e.g., damage caused by wind, fire, etc., or to pay unanticipated and unavoidable mandatory costs. Funds beyond the Reserve Account targets for a given year, which are generated from unexpended benefits or other savings, may be used on one-time bases. The President will distribute one-time funds from the Contingency Reserve after considering recommendations made by the Budget Committee.

1. The first priority will be to fund mandatory and unavoidable new or increased expenses to the University.

2. In order to provide resources to help meet the goals of the Strategic Plan, 80 percent of remaining new funds will be distributed to the five University divisions in accord with their proportionate shares of the University personnel, supplies/services, and library materials budgets. The initial "Distribution Formula" is found below, along with a comparison of the shares associated with all budgeted funds (which include centrally-managed accounts and student financial aid).

* The "Distribution Formula" includes Salaries and Benefits, Supplies and Services, and Library Materials.

** All "Budgeted Funds" include above costs, plus all operating expense accounts such as financial aid, utilities, contracts, risk management, etc.

3. The remaining 20 percent of these funds will be available to supplement existing programs or fund new programs. Distribution of these funds will be made by the President, after considering recommendations made by the Campus Budget Committee.

4. In the event of budget reductions and/or University deficits, initial funding targets will be allocated to divisions using the same formula used for the distribution of funds.

Divisions will be authorized to carry-over any unspent funds at the end of the fiscal year. No formal requests will be necessary. Year-end funds will be consolidated into single division accounts.

	SALARY RANGE	AVERAGE BENEFIT PERCENTAGE
MANAGEMENT	$ 80,000 - $ 100,000	25
	$ 60,000 - $ 79,000	28
	$ 40,000 - $ 59,000	29


STAFF	$ 50,000 - $ 80,000	27
	$ 30,000 - $ 49,000	30
	$ 20,000 - $ 29,000	33


FACULTY	$ 60,000 - $ 80,000	25
	$ 50,000 - $ 59,000	26
	$ 38,000 - $ 49,000	30

CALIFORNIA STATE UNIVERSITY, SAN BERNARDINO

MEETING GOALS OF THE STRATEGIC PLAN: POLICY FOR BUDGET DECENTRALIZATION, CREATION OF A CONTINGENCY RESERVE, AND ALLOCATION OF NEW GENERAL FUNDS

Introduction