Futures Summit

Council of Library Directors

Richard P. WestJune 7, 2007

Sonoma

2

Discussion Overview

Trends in Higher Education State Higher Education Compact 2007-08 Budget Picture The Need for Change The Role of Advancement Summary Questions to Ponder

3

Trends in Higher Education

4

Demographic Projections for the US

Source: US Census Bureau, 2004

2000 2010 2020 2030 2040 2050

Year

White Black Asian All Other Hispanic

100%

0%

5

Demographic Projections for California

0%

20%

40%

60%

80%

100%

2000 2010 2020 2030 2040 2050

Year

White Black Asian All Other Hispanic

Source: State of California, Dept. of Finance, May 2004

6

Underrepresented Student Populations

Applications from Underrepresented

Populations

Fall 200712.5% increase in

applications for African American students

5% increase in applications for Asian students

15% increase in applications for Latino students

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

AmericanIndian

PacificIslander

Filipino AfricanAmerican

otherLatino

AsianAmerican

MexicanAmerican

2000 2006

-8% +53%

+18%

+17% +38%

+11%

+26%Enrollment Growth

7

Resource Constraints

All 50 states face a gap between projected revenue growth and projected cost of public services

Growth in demand for other services (K-12, Medicaid, corrections) will be greater than growth in demand for higher education

Total state spending will grow more rapidly than higher ed spending due to escalating costs of Medicaid

Source: NCHEMS, 2005

8

Revenue Roller Coaster:California’s Unstable Tax Base

---- General Fund Revenues

— California Personal Income

General Fund Tax Revenueand Personal Income Growth

-20

-15

-10

-5

0

5

10

15

20

25

1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

An

nu

al P

erce

nt

Ch

ang

e

9

Narrow Opportunities For Spending in California

General Fund Expenditures

39.9%

32.3%

8.9%

7.5%

11.4%

0%

20%

40%

60%

80%

100%

Pe

rce

nt

of

To

tal

All Other-Tax Relief, FTB, BOE,BTH,Resources,Leg.,Exec, etc.

Universities and Other Higher Ed.

Corrections Protected by Courts

Health & Human Services, Protected by Fed. Matching & Maintenance of Effort

Prop. 98 K-12 Education, Constitutionally Protected

Note: Debt service distributed throughout Budget

10

State Higher Education Compact

11

Compact for Higher Education

Covers six years – 2005/06 through 2010/11 Adjustments to the base budget:

– 3% annual increase for 2005/06 – 2006/07 ($73M)

– 4% annual increase for 2007/08 – 2010/11 An additional 1% annual increase to the base budget for

2008/09 – 2010/11 for core academic needs State will cover annuitant dental benefits, retirement

contributions and debt service Identifies importance of restoring more competitive salaries

for faculty and staff

12

Compact Enrollment Assumptions

Recognizes projection of 2.5% growth per year through 2010

Growth rate of 8,000 FTES/10,000 headcount per year for CSU

New growth funding paid at marginal cost of instruction, adjusted annually

Implementation of CSU Graduation Initiative

13

Compact Fee Assumptions

SUF will increase an average of 10% a year from 2004/05 through 2006/07 for undergraduates

SUF will increase no less than 10% a year from 2004/05 through 2006/07 for graduate students

20% – 33% of SUF revenue increase directed to financial aid

State will maintain its funding commitment Fee revenue stays with the CSU

14

2007-08 Budget Picture

15

CSU BudgetTotal Funds $4.4 Billion– Base Budget Support (4%) $109.0 Million– Enrollment Growth (2.5%) 65.5 Million– Fee Revenue $123.0 Million

Undergraduate Fee Increase ($252 -10%)

– Mathematics and Science Teachers $2.0 Million– Expand BSN Nursing Programs $3.6 Million

May Revise

– Outreach Programs ($7.0 Million)

Total Proposed Increase $296.1 Million

16

Unfunded Above Compact Requests

One Percent Compensation $27.6 Million Student Services Initiative $24.6 Million Applied Research $12.0 Million Clinical Nursing Support $ 4.3 Million Special Education Teachers $ 1.2 Million

Total Ongoing Funding $69.7 Million

17

Summary of Budget Adjustments 2002 – 2005

2002/03 2003/04 2004/05 3 Year Total

General FundsBudget Reduction

(102.60) (373.70) (175.60) (651.90)

Unfunded Mandatory Cost (22.80) (78.60) (57.50) (158.90)

Fee Revenue Offset 20.00 167.00 101.50 288.50

Total Net Budget Reduction (105.40) (285.30) (131.60) (522.30)

In Millions

18

Enrollment Constraints

2003 budget (AB 1756) capped CSU and UC enrollment

2004 budget act – restrictive budget bill language on enrollment growth

– CSU must revert state General Fund for every FTES short of overall enrollment target

2006 budget act – slightly less restrictive BBL– CSU given 425 FTES leeway on enrollment

target

19

General Fund Operating Revenue Changes and Fee Revenue Support

($394,421,000)

($201,261,000)

$72,494,000

$144,217,000

($59,634,000)

($23,800,000)

$20,050,000

$158,391,000$56,930,000

$79,198,000

($77,500,000)

$94,257,000$10,025,000

$14,805,000

$18,977,000

2002/03 2003/04 2004/05 2005/06 2006/07

Financial Aid Set-AsideFee Increase

Mid Year Cut

General Fund Increase/Decrease

No Fee Increase

*These figures do not include any adjustments for enrollmentgrowth or retirement.

20

Compact Support

$2,475,792

$1,098,122

$2,596,000

$1,230,748

$2,812,194

$1,236,947

$2,976,335

$1,359,912

$2,919,735

$1,285,712

2004-05 Actuals 2005-06 Actuals 2006-07 Budget 2007-08 Budget LAORecommendation

General Fund Revenue

21

Restoring Student Access

331,353 331,704 321,339 334,378 340,554 342,712

0

100,000

200,000

300,000

400,000

02-03 03-04 04-05 05-06 06-07 07-08

Actual Target

FTE Students

22

2007-08 State University Fee

Undergraduate (10% - $252) $2,722

Credential (10% - $294) $3,216

Graduate (10% - $312) $3,414

23

Comparison Institutions

Rutgers

UConn, Storrs

U of Maryland, Baltimore

Illinois State U

Cleveland State U

Wayne State U

SUNY at Albany

U of Wisconsin at Milwaukee

Comparison Average

George Mason

U of Texas at Arlington

U of Colorado at Denver

Georgia State U at Atlanta

NC State

ASU at Tempe

U of Nevada at Reno

CSU (Average) 2005/06 Fee Level

2006/07 Increase

2007/08 Increase

Data is not yet available for 2007-08 at comparison institutions. 2006-07 CSU increase reflects increases in average campus mandatory fees. Comparison average does not include CSU

24

Comparison Institution –Cost of Attendance

$27,199

$25,254

$21,208

$20,380

$20,009

$19,998

$19,900

$19,752

$19,307

$18,544

$18,404

$18,050

$16,778

$16,361

$16,361

$15,548

Rutgers, Newark

U of Maryland, Baltimore

U of W, Milwaukee

Cleveland State

U of Colorado, Denver

UConn, Storrs

U of Nevada, Reno

Comparison Average

Illinois State

Georgia State, Atlanta

George Mason

SUNY, Albany

CSU LA Region

U of T, Arlington

ASU, Tempe

NC State

*No Data was available for Wayne State University

For resident students living off-campus

25

$1.2 Billion Myth

Unrestricted Funds – GAAP Accounting Term All Funds Designated for Non-Operating Budget

Debt Service Reserves Debt Service Payments Student Housing Parking Fees Health Facilities Student Unions Capital Facility Projects

26

Compensation Agreement

2006-07 costs over budget $10.6 M

2007-08 costs over budget $40.9 M

2008-09 costs over budget $30.1 M

2009-10 costs over budget $35.3 M

2010-11 costs over budget $36.6 M

27

Total Budget $292.5 Million

Expenditures

New Space & Energy 3%

Special Initiatives1%

Enrollment Growth25%

Compensation55%

Financial Aid13%

Libraries, Technology and Deferred Maintenance

3%

Revenue

General Fund Enrollment

Growth22%

SUF Fee Revenue

42%

General Fund Operating

36%

Governor’s Budget Summary

28

The Need for Change

29

Pressures on Higher Ed

Control costs Conduct business more efficiently Produce students for the labor force needs of

California

30

65%52% 52% 51%

45% 44%

Busines

s

Agricul

tura

l Bus

...

Comm

unica

tions

Other

Eng

inee

ring

Comput

er &

Ele

c...

Life S

cien

ces

Source: California Post-Secondary Education Commission

CSU Bachelor’s Degrees as a Percent of All Public and Private University Bachelor’s Degrees Awarded in California, Critical Fields

2001-2002

31

87%89%

87%

82%

Educa

tion

Crimin

al J

ustic

e

Socia

l Wor

k

Public

Adm

inis

tratio

n

CSU Bachelor’s Degrees as a Percent of All Public and Private University Bachelor’s Degrees Awarded in California, Service Fields

2001-2002

Source: California Post-Secondary Education Commission

32

Differential Preparation

8th graders proficient in

math

8th graders proficient in

language arts

#/1,000 seniors w/ high entrance

exam scores

Asian 40% 50% 341

White 35% 51% 243

Hispanic 14% 18% 72

Black 11% 19% 85

Source: California Department of Education, 2004

33

Partnering Strategies – Early Intervention

What/When

Preparing/taking the right courses

6th – High School

How Parent Institute for Quality

Education (PIQE) “How to get to College”

posters A-G coursework Super Sundays Learn about financial aid,

“you, too, can afford college”

34

Partnering Strategies – Pre-college

What/When

Are you ready for college?

11th – 12th grade

How Early Assessment

Program (EAP)– Math website, language,

alecs Use the senior year

effectively Address remedial issues

in math and English

35

Partnering Strategies – College entry

What/When

Making your way through college successfully and efficiently

College years

How Increased emphasis on

student services Graduation Initiative

– Minimize units to degree Effectively use

administrative technology Financial aid

36

The Role of Advancement

37

Gift Commitments2005/2006

New Gifts $184 million

New Pledges $55 million

Testamentary Commitments $43 million

Native American and Local Government Contributions

$4 million

TOTAL $286 million

38

Group I – Develop– Fewer than 10 full time fundraisers– Less than 5 thousand donors– Endowments of less than $10 million

Group II – Expand– 10-25 full time fundraisers– 5-10 thousand donors– $10-50 million endowment

Group III – Mature– Over 25 full time fundraisers– Over 10 thousand donors– Over $50 million endowment

39

Peer Group Benchmarks

Gift Commitments as a Percentage of State General Fund Allocation

Average

Group I 11 campuses 8 percent

Group II 8 campuses 11 percent

Group III 4 campuses 19 percent

System 12 percent

40

Gift Commitments

0

100

200

300

Millions

2003-04 2004-05 2005-06

Group I Group II Group III

25 36 53

11111386

120135114

41

Gifts by Purpose2005-06

58%

10%

20%

3% 9%

Operations Campus Improvement Endowment Unrestricted Other

42

Gifts by Source2005-06

13%

37%

20%

24%

6%

Alumni Other Individuals Foundations Corporations Other Organizations

43

Cost to Raise a Dollar

0.140.18

0.140.17 0.16

0.14

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

2003-04 2004-05 2005-06

CSU Campus Median

44

Net Return on Investment

606%

452%

617%

501%548%

600%

0%

200%

400%

600%

800%

2003-04 2004-05 2005-06

CSU Campus Median

45

Percent of State General Fund Invested in Fundraising and Advancement 2005-06

1.29

2.70

1.13

2.76

1.31

2.55

1.57

3.04

0.00%

1.00%

2.00%

3.00%

4.00%

CSU Group 1 Group 2 Group 3Fundraising Total Advancement

46

Total Investments in Fundraising and Advancement Compared to Campus State General Fund Allocation 2005-06

1.38

3.20

1.40

2.84

1.40

3.102.48

4.75

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

CSU Group 1 Group 2 Group 3

Fundraising Total Advancement

47

Percent of State General Fund Earned in Gift Commitments, Three Year Average

128

11

22

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

CSU Group 1 Group 2 Group 3

Gift Commitments

48

Dollars Invested Related to Dollars Raised

$0

$10

$20

$30

$40

$50

$60

$70

$0 $2 $4 $6 $8 $10

Millio

ns

MillionsFundraising Investment

Gif

t C

om

mit

men

ts

3 Year Average

49

Group 1 Gift Commitments

$- $5 $10 $15 $20

Bakersfield

Channel Islands

Dominguez Hills

East Bay

Humboldt

Los Angeles

Maritime

Monterey Bay

San Bernardino

San Marcos

Stanislaus

Millions

2005 Actual2006 Goal2006 Actual2007 Goal

50

Group 2 Gift Commitments

$- $5 $10 $15 $20 $25 $30 $35

Chico

Fullerton

Northridge

Pomona

Sacramento

San Francisco

San Jose

Sonoma

Millions

2005 Actual

2006 Goal

2006 Actual

2007 Goal

51

Group 3 Commitments

$- $10 $20 $30 $40 $50 $60 $70

Fresno

Long Beach

San Diego

San Luis Obispo

Millions

2005 Actual2006 Goal2006 Actual2007 Goal

52

Endowment Market Value

2003/ 04 2004/ 05 2005/ 06

2005/06 Investment Return

New Gifts to Endowment

Corpus and Prior Yr Investment Returns

$600 (m)

$300 (m)

$582 (m)$660 (m)

2004/05 first year investment return data collected

$746 (m)

53

Endowment PerformanceAverage Investment Return

Endowment Assets NACUBO CSU CSU #

> $100 m to <= $500 m 11.9% 10.86% 2

> $50 m to <= $100 m 10.0% 11.55% 2

> $25 m to <= $50 m 9.3% 8.60% 6

Less than or = $25 m 7.8% 7.11% 14

Market Blended Benchmark: Russell 3000 Index 65% and Lehman Aggregate Bond Index 35% = 5.93%

CSU Median Return = 8.38%

54

In Summary

Trends in Higher Education– Demographic changes in student population

– Resource constraints Compact 07-08 Budget

– Enrollment constraints

– Student fee levels

– Compensation agreement impact

55

Summary (con’t)

Need for Change– Producing students for the work force needs

– Partnering strategies Role of Advancement

– Gift commitments

– Investment in fundraising

– Endowment performance

56

Questions to Ponder

How can CSU Library Deans make a difference?

What criteria should be used to choose print collections?

What will be the future delivery methods for information content?

Institutional repositories—what impact should they have on the library?