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The following is a letter by President John Welty regarding the recent fiscal crisis, delivered on Dec. 18.

Dear Faculty, Staff, Alumni and Friends:

Like you, I have been following with concern the disturbing international, national and state economic news of recent months. As the state of California faces an unprecedented fiscal crisis, you may have questions and concerns about the impact on our university.

I want to reassure you that we have been making plans to meet these challenges for the past two years, when signs of a financial downturn appeared on our radar. When the California State University directed budget reductions at all 23 campuses this fall, we were well-prepared to act.

Let me offer you some information about our response to the challenges.

Prudent fiscal planning

Over the last five years, the campus fiscal strategy has involved planning for reductions by designating permanent funding on a one-time basis to campus initiatives. In fiscal year 2007-08 this flexible strategy allowed the campus to advance deferred maintenance, central technology initiatives and graduate program augmentations; however, because of its one-time designated funding strategy it̢۪s possible to suspend these initiatives in order to mitigate budget reductions to the campus community. Coming into Fiscal Year 2008-09, campus reserves from each Vice President, along with other central campus resources were applied to the initial $4.61 million base budget reductions in order to lessen the impact to the campus community.

On October 23, the CSU system was required to make a mid-year budget reduction totaling $31.1 million. At Fresno State, we were required to reduce spending by $1.7 million.

Our planning efforts allowed us to take immediate action: freezing all faculty and staff vacancies and an across-the-board three percent operating budget reduction. We made additional one-time cuts in deferred maintenance, Plan for Excellence projects, graduate education projects and technology to reach the $1.7M target.

While the steps we took were difficult, they were enacted with one goal: shielding students from any impact of budget reductions so that they could continue their progress toward completing their degrees.

Just two weeks later, on November 6, the governor proposed further budget reductions of $66.3 million to the CSU for the current budget. The proposed mid-year target would be added to the previous reduction to the final 2008-09 budget that was $215 million below CSU̢۪s operational needs.

That mid-year reduction has not yet been enacted. Anticipating further reductions, however, CSU Chancellor Reed declared systemwide impaction for 2009-10 because the system is serving 10,000 students for whom the state provides no funding. Therefore, the CSU must limit new admissions in 2009-10 to an enrollment supported by the state.

At Fresno State, we have been carefully managing our enrollment over the years and we are over-enrolled by only 2.8 percent. Our enrollment this fall is 22,622. Our target for 2009-10 is 22,100 – about 500 fewer new students.

Because we expect a further reduction in our state budget, we have developed a plan that includes across-the-board reductions in operating expenditures, reducing our reserves, student employment and equipment expenditures and continuing the position freeze. This will allow us to meet our commitments to students for spring semester classes.

Economic impact on our Endowment

In addition to state general fund budget reductions, the turmoil in the world financial markets has impacted our endowment, managed by the Fresno State Foundation. Endowment funds are used for scholarships for our students and also for funding certain chairs, professorships and programs. Our endowment, one of the largest in the CSU, was over $100 million in the first half of 2008 but has lost approximately 26 percent of its market value because of the stock market downturn.

Our Foundation̢۪s Board of Governors has been reviewing the impact on our endowment and will meet in early February to determine action for the coming year.

Legislative action needed

The California budget shortfall is the most serious in the state̢۪s history and worsens with each passing day. It is imperative that our Legislature take action quickly to address the situation. You may wish to contact your state Senator and Assemblymember and urge them to move swiftly on resolving the California fiscal crises.

Looking to the 2009-10 academic year

Our vice-presidents and I have been engaged in significant discussion and financial modeling as we consider next year̢۪s budget. We are working in the collaborative spirit that is a hallmark of our campus.

The governor will release his proposed budget in mid-January, and it will provide guidance for what we can expect in the next academic year. At our Spring Assembly on January 20, I will report on the proposed budget and its impact upon our campus. At that time, I will outline a planning process for 2009-10.

As in the past, our community will be invited to participate and we will rely upon our governance system to seek your ideas and to help review proposed actions. I also will put forth principles to help guide us as we develop these plans.

Year-end thanks

As our semester comes to a close, I̢۪d like to express my heartfelt holiday greetings and my appreciation for all of your efforts.

While I don̢۪t have many answers to questions about what̢۪s ahead, I do know that we as a campus community have the commitment and strength to deal with whatever circumstances unfold.

Today, as perhaps never before, we need to work collaboratively and confidently to develop a plan and innovative solutions that will allow the entire University community to maintain and enhance our marvelous work.

The people at great universities, like Fresno State, work together in all times – difficult or not – to protect the academic mission and ensure that students continue to receive the excellent education to which they are entitled. I know that will always be our goal, because our students are our future.

I wish each of you a safe, restful holiday season.

John D. Welty
President