Chico State expects a $32 million deficit for the 2025-26 academic year, but the university has reserves to manage the deficit, said President Steve Perez during the university address on Monday.
The following contributed to the deficit:
- an ongoing deficit from 2024-25, with a loss of around $8 million
- a state $12 million budget cut
- system enrollment reduction of 3%, with a loss of around $4.4 million
- unfunded compensation increases and benefit increases, with a loss of around $10.8 million
- financial aid and cost of utilities, with a loss of around $4.1 million
Though tuition revenue will increase, it would only generate around $7 million.
The meeting was held at 3 p.m. in the Harlen Adams Theatre. The following topics were also addressed:
Enrollment and budget challenges
Perez presented an enrollment overview throughout the years. The university had 16,281 full time students in the 2017-18 academic year. Enrollment kept dropping in the following years and hit 12,456 full-time students in the 2022-23 academic year.
In the 2023-24 academic school year, over 12,000 full-time students were enrolled at Chico State. For the following academic year, around 13,200 students would be enrolled. The goal would be to have 13,621 students enrolled in the 2025-26 academic year, having a projected 3.2% student growth.
However, the chart also displayed the drops in the state’s funding targets, or the maximum number of students the state will provide money for. While the state funded 10% more than the target students in the 2023-24 academic year, it will drop to 5% over the target by the 2025-26 academic year, meaning that though enrollment is expected to increase, funding might not be able to keep up.
According to a summary of CSU, Chico Operating Fund Sources and Uses, the university may face lasting effects. Because the university is spending more than it brings in, it is projected that the 2027-28 academic year may fall short by over $29 million.
Reserves and financial strategies
However, Perez emphasized that Chico was in a different place regarding budget cuts and that the university has available reserves.
“Here’s where we’re different than a lot of other places that we see,” Perez said. “We have reserves; we have reserves because of good budgeting and good work long before I got here.”
As of June 30, 2024, the university has had a total of $203 million in reserves. But, the majority of the funds are restricted and “tied up in things [we] really can’t touch,” Perez said. That includes CSU special initiative grants, short-term obligations, restricted by state statute/budget, student fee-funded programs and capital infrastructure.
The funds flexible to use include catastrophic events, around $9.2 million, divisional programs/obligations, around $19.8 million and unrestricted reserves, around $45.2 million.
With around $75 million left in reserves to use, Perez said this amounts to around two years worth of reserves if the university is unable to increase enrollment or spend less money.
“That’s a luxury that we have, that others do not have, and we need to utilize that time and that luxury wisely as we have been doing, and we need to continue doing that,” Perez said.
Expense analysis and measures
According to a Chico State expense graph from 2019-2024, the university spent more money on students in the 2023-24 academic year than in 2019-20.
However, Perez reassured that this was due to increased spending on Title IX, tribal relations, student recruiting, information recruiting and more.
But what has already been done to achieve savings over the years included merging departments, not replacing deans or associate deans, reduction in student hiring, reduction of workforce, with 70 fewer people working for the university, reducing over 250 class sections, increasing classes by over 12% over the last two years and more.
Response
To help with the deficit, Perez suggested cutting further costs in addition to those that have already been made while also increasing enrollment. Perez said having another 2,500 students would help.
To achieve this, Perez said putting a focus on marketing, personal contact with prospective students, a direct admit campaign with Riverside County and hosting Choose Chico would help.
This year, Choose Chico will be on Saturday, March 1. As of Feb. 4, over 950 students and 3,139 people have registered for the event. Check-ins will begin at 8:30 a.m. and the event will be from 9 a.m.-1 p.m.
Perez also announced the creation of the community agreements, employee engagement and Chico State playbook.
Over the last year, the university created them to outline its priorities and values in order to create a more efficient campus while aiding decision-making protocols.
Budget committee
The 2024-25 operating budget for Chico was $256,772,000 in comparison to the 2023-24 budget which was $245,788,000. For 2024-25, the CSU system’s total budget was $8,503,359,000.
For the 2025-26 campus budget, Perez included a timeline of how Chico has and will decide to budget for the upcoming school year.
The University Budget Committee trained in the 2024 fall semester. In January, Gov. Gavin Newsom released a proposed budget, which included an 8% reduction in state funding for CSU.
Perez said this reduction would be negatively impactful and that he would do everything in his power to advocate against it.
“We will be consistently advocating to not have the CSU reduced by 8%; we are growing,” Perez said. “The CSU is growing.”
The UBC will then review and make projections for the financial needs in February and March.
In March and April, the UBC will make budget recommendations to Perez and he will consider and decide whether to make any adjustments.
In April, Perez will inform departments on budget allocations. In the following month, Gov. Newsom may revise the budget which may impact CSU fundings.
After the state and CSU system budget allocations, Chico State will finalize campus budgets in July.
“We’re going to do this as transparent and collaboratively and jointly as I think is possible,” Perez said.
Milca Elvira Chacon can be reached at orionmanagingeditor@gmail.com
