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Story: CSU campuses expected to dip into reserves because of COVID-19
I'm graduating this year, and so are a lot of the editors who have been sending me stories for the Cal State Student Wire. To make sure this project continues, we are recruiting the next corps of journalists across the 12 participating CSU papers to carry it on.
Being an editor means checking other CSU news sites, communicating with that paper to get permission to wire the story, and scheduling the posts on SubStack. It's a very intuitive platform, but I can get on a call with you to make sure you figure it out.
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Today’s story is our first from Cal State Fullerton’s the Daily Titan. We’re glad to have you join this project. Originally here.
CSU campuses expected to dip into reserves because of COVID-19
Portions of a $1.5 billion Cal State University cash reserve, which had Chancellor Timothy White and state auditors in disagreement over its purpose last year, will most likely be spent to address the economic fallout of the coronavirus pandemic.
“To give you a better idea of what we’re looking at in terms of lost revenue due to COVID: They’re calculating as of right now about $100 million — this is across the system — about $100 million in foregone revenue every month,” said Mike Uhlenkamp, senior director of public affairs for the CSU.
Uhlenkamp said the loss in revenue is from refunds for dining, housing and parking. Though the revenue is gone, there are still expenses campuses must fulfill such as the paychecks of the employees who work in those departments.
“The campuses are likely dipping into their reserves to pay the salary and benefits for those employees,” Uhlenkamp said. “There are also many costs that we are still accounting for.”
The money is primarily made up of student tuition and has grown by 400% in 10 years. It has been characterized by state auditors as a surplus that was not disclosed to students and legislators and could have been used for any purpose the CSU sees fit — including offsetting tuition.
White disagreed with the characterization during a joint legislative committee hearing about the audit’s findings last year and said it was misleading to say that the funds were not disclosed.
He said that the money is not a surplus, but a reserve used for three specific purposes: to fulfill short-term financial aid obligations, fund capital projects and to lessen the gravity of an economic downturn.
Currently, that amount is closer to $1.7 billion as last measured in November. The money is an aggregated amount from the 23 CSU campuses, and each campus has their own funds invested outside the state treasury to use for these specific purposes, Uhlenkamp said.
Cal State Fullerton’s share of the aggregated money is $91 million with $25 million designated as reserve, said Danny Kim, CSUF’s chief financial officer, in an email to the Daily Titan.
He said the university has not dipped into the reserve just yet, but has incurred unanticipated costs because of the pandemic and will likely spend some of the money.
“We will find ourselves to be in a deficit situation that will require us to draw down on those reserves. We don’t know how deep we will have to go, but we know that reserves will most likely have to be utilized,” Kim said.
Aaron Aguilar, the Associated Students president, said some of the money will cover the additional computers and technology purchased to help students transition to virtual learning.
“Other unanticipated costs are in facilities and the bulk of the costs will occur in the near future as we prepare the campus for opening where we will incur significant costs to prepare classrooms, offices and other areas in terms of deep cleaning and sanitizing,” Kim said.
He added that because of the stay-at-home order landscaping and facilities that have not been kept up with will need to be restored.
“We expect to incur costs for these as well. We do not have a cost estimate yet,” Kim said. “We estimate thus far roughly $17M in lost revenues in self supporting units such as in housing and (Auxiliary Services Corporation) closing down retail operations. These losses are permanent and can’t be recovered.”
In a town hall on April 20, CSUF President Fram Virjee told faculty that the university has estimated a loss of $20 million and that the state and the chancellor’s office have warned of a reduction in state aid.
“Higher education is one of the discretionary areas in the budget. So if there are budget cuts, it does typically happen in higher education,” Uhlenkamp said.
Currently CSUF receives the lowest funding per full-time equivalent student out of the CSUs, despite being one of the CSUs with the most enrolled students. This is something university presidents have tried to change for years.
California Gov. Gavin Newsom had proposed an almost $200 million increase in funding for the CSU in January, according to EdSource, a news outlet and organization that provides information on education initiatives.
Uhlenkamp said it is unlikely that the CSU will receive that full increase at this time as the budget gets closer to getting finalized.
He also said that it is too early to tell if the loss in funding and unanticipated costs would mean an increase in tuition, but that the future of the CSUs is very secure. He added that the reserves will be helpful to alleviate the financial loss caused by the pandemic.
“The idea of having these reserves was extremely prudent,” Uhlenkamp said. “Unfortunately, I don’t have a crystal ball. But I think, again, the reserves is going to be helpful for this, but we really don’t know what the situation is going to be in the fall.”