Budget priorities hit home at Sac State

2009-09-03T04:44:45Z

As California’s deep budget cuts smash Sacramento State professors and students with furlough days, fee increases and terminated classes, money woes are also slamming a non-profit firm on campus.

University Enterprises, Inc. reported an estimated $8.79 million shortfall in its projected and actual revenue for the fiscal year which ended June 30. This is UEI’s account of last year’s reductions: lease revenue, $3 million; investments, $4.1 million; retail sales, $1 million; copy and graphic, $.12 million and contracts, $.57 million. UEI operates the campus bookstore, copy and food services, administers contracts, provides grants and acquires and renovates properties.

According to executive director Jim Reinhart, the taxpayer-supported state general fund is not allowed to provide the auxiliary services that UEI does.

In 2004, UEI established "Destination 2010," a business and development agenda for on and off campus. One of these projects was the American River Courtyard, student housing near the J Street entry, which opened Aug. 28. UEI also leases off-campus apartments at a student housing complex, the Upper EastSide Lofts, near the light rail station on Folsom Boulevard and 65th Street.

Additionally, UEI buys commercial property off campus. The non-profit spent $35 million to buy the former California State Teachers’ Retirement System (CalSTRS) building on 7667 Folsom Blvd. by Hornet Drive in the summer of 2007. UEI’s plan was straightforward, to lease office space and use the rent to help pay for the loan to buy the building. Half of the rent would come from Sac State academic divisions such as nursing and speech pathology -- part of a “mini campus” plan in motion for next fall, Reinhart said -- and the other half from the rent that non-campus tenants paid.

The housing market crash struck in the summer of 2007, just as UEI bought the CalSTRS building. UEI partly dodged that residential crash market which spread to commercial real estate activity. CalSTRS leased back its former building from UEI for $3.5 million annually, until CalSTRS moved into its new West Sacramento headquarters in July.

Currently, there is one tenant in the CalSTRS building, the University Transportation & Parking Services. A prospective non-campus tenant, which Reinhart would not name, is negotiating with UEI to lease space in this off-campus site.

Meanwhile, the 23-campus California State University system faces a $564 million shortfall as a result of the Legislature’s actions in the face of $24 billion budget deficit, the gap between spending and sales and tax revenue. In response to the state Legislature’s spending cuts for the CSU campuses, the California State University Board of Trustees has increased student fees twice for a total of 32 percent this year.

Patricia Mata is a senior and sociology major from Watsonville, slated to graduate from Sac State next May. She is paying $2,400 for classes this semester, double the price since arriving three years ago. Mata is part of Students for Quality Education, a statewide organization. She wants CSU chancellor Charles Reed, and Sac State president Alexander Gonzalez, to improve their support of CSU students in the current budget climate of fee hikes and fewer classes.

“They are not doing much for us,” Mata said. “Students are not getting back what we paid for.”

In terms of financial support for UEI, however, Sac State is stepping up its support of the non-profit. In fact, $5.12 million is flowing from the school to UEI in the 2009-2010 fiscal year, according to an Aug. 10 report by the University Budget Advisory Committee. It makes budget recommendations (the sources and uses of funds) to Gonzalez.

The UBAC budget report details how Sac State is providing $4.8 million to UEI for its CalSTRS building. That figure is 91 percent of the $5.12 million streaming from the school to the non-profit for the current fiscal year. Further, Reed’s office is providing $1.5 million to UEI for the CalSTRS building for the same year.

Additionally, the UBAC report outlines Sac State’s $9.5 million budget hole in 2009-2010, a reduction of 6.31 percent in spending campus-wide. More such cuts are on tap for the 2010-2011 fiscal year. Much hangs in the balance for many Sac State students, given current budget priorities.

Source: University Budget Advisory Committee

Seth Sandronsky lives and writes in Sacramento. He can be reached at ssandronsky@yahoo.com.

Video by Adam Christy