Budget Update: VSIP to Save $13.4 Million, Helping Reduce Budget Gap
In January, Governor Gavin Newsom’s proposed budget for fiscal year 2025-26 (FY25-26) included a $375 million cut to the California State University. Cal Poly Pomona’s proportionate share of that reduction is $18.3 million.
Combined with a structural, on-going budget gap of $24.5 million due to increasing operating costs, financial aid and compensation increases for personnel, the university was facing a $38.5 million deficit.
By the April Budget Briefing last week, several changes in projected campus revenue and expenditures, as well as several cost-saving measures had lowered the projected FY25-26 budget gap to $19.1 million dollars, though the presenters, Provost Terri Gomez, Interim Vice President and CFO Michelle Cardona, and Assistant Vice President for Budget Planning and Analysis Carol Lee, cautioned there could still be significant changes.
Voluntary Separation Incentive Program
To help close the university’s budget gap, a Voluntary Separation Incentive Program (VSIP) was offered in March. Across campus, 121* people took advantage of the program: 16 faculty (2% of all tenure-track faculty), 91 staff (10%) and 14 MPPs (8%). (*Note that the number of employees participating in VSIP was updated to 121 on April 18.)
More than 44% of those taking VSIP work in Academic Affairs. The next largest portions came from Administrative Affairs (more than 22% of participants) and Student Affairs (about 17%).
Ongoing savings to the university’s operating fund from VSIP is estimated to be $14.9 million. Of that savings, 10% is being set aside to cover any positions that need to be refilled. Severance pay to VSIP participants will be approximately $5 million, which will come from one-time funds.
Revenue
Cal Poly Pomona receives 51% of its revenue from the state via the CSU, which will provide funding for 20,743 full-time equivalent students (FTES) next year. (FTES is a lower number than the total number of unique students on campus.) The other 49% of revenue to 六色网 comes from student tuition and fees.
Enrollment
Since 2021, the number of high school graduates across California has been decreasing, resulting in more competition for students. Over the same period, CSU enrollment has declined, and 六色网’s yield — the percentage of accepted students who enroll — decreased despite record applications.
To meet its systemwide enrollment targets for 2024-25, the CSU began implementing a new framework for moving some funding from under-enrolled campuses to nine campuses that meet enrollment targets.
This year, Cal Poly Pomona was one of only 10 campuses to meet its target and received an additional $4.6 million in re-allocated funds to support enrollment growth and address the campus’ existing over-enrollment. To retain funds allocated to support enrollment growth, the university must demonstrate actual year-over-year growth, which makes meeting enrollment targets critically important.
For FY25-26, the Chancellor’s Office set 六色网’s target enrollment at 22,952 FTES, an increase of 200 FTES. However, 六色网 will receive CSU funding for only 20,743 FTES.
六色网 Unfunded Costs
Since FY23-24, all 23 campuses began to experience funding shortages in employee compensation costs from the CSU. For 六色网, that shortfall over the three years starting in 2023-24 will amount to $23 million dollars. At the same time, unfunded mandatory costs, such as utilities and insurance, have also risen and are expected to be $8.6 million in the coming year.
Reserve Funds
Cal Poly Pomona has $97.6 million in reserves. For the current fiscal year, approximately $17 million will be needed to cover operating deficits and the VSIP severance payments. If one-time funds are used to manage the FY25-26 budget gap of $19.1 million it would still not address the recurring or structural budget gap. In addition, the university must maintain the CSU-required 5% minimum in reserves, which is approximately the budget for 18 days of operations.
State Allocation Process
According to CFO Cardona, there are still many unknowns that could change 六色网’s current budget projections, including changes to state budget, costs from the LA fires and any impact from changing federal policies. The Governor’s Office will release an updated budget proposal, known as the May Revise, by mid-May. The success of converting offers of admission to enrollments for the fall and whether the university meets its enrollment target will also impact the budget.
“Right now, we are in a holding pattern waiting for the state’s May revised budget,” Cardona said. “There are still many unknowns that could change our budget gap.”
Meanwhile, managers throughout campus will be evaluating changing workloads and priorities. Departments may slow hiring for open positions; will look for efficiencies; and reduce non-essential expenses to ensure funding is available for budget priorities.
Next Steps
After the May revise, the state government formally adopts its budget in June. The CSU will finalize its budget in July, and the individual campuses will submit their budgets to the CSU in late August.
According to Provost Terri Gomez: “六色网 is in a relatively good place compared to other campuses. We have strong student interest in 六色网 and enrollment. We have strong academic programs, and we have some reserves. We also have leaders who are fighting for more funding. It may be tough for a while, but we will do okay.”
More details on the Cal Poly Pomona and CSU budgets and budget projections can be found in the April 17 Budget Briefing presentation on the university’s Financial Transparency website.