California State University Chancellor Charles Reed told legislators Wednesday that Gov. Arnold Schwarzenegger’s proposed budget cuts to the CSU system will have a negative impact on California’s economy.

For every $1 invested in the CSU system the state sees a $4.20 return to California’s economy, Reed said, speaking before the Assembly Budget Subcommittee on Education Finance.

The $312.9 million in proposed cuts will take $1 billion out of California’s economy over the next four years, he said.

“California is standing at a crossroads,” Reed said. “We are trying to figure out what type of California do we all want and how much of that type of California we can afford.”

Reed also noted that the proposed budget cuts could affect the quality of education provided by the CSU system.

“We could close down our seven smallest universities in the system and still not cover the cost of the cuts,” Reed said.

The CSU is still dealing with $500 million worth of cuts the system absorbed between 2002 and 2005, Reed said. To deal with those cuts, the CSU increased the workload for faculty and staff, hired more part time instructors, increased class sizes and performed less deferred maintenance on the university’s infrastructure, he said. In order to deal with the proposed budget reduction, the CSU system has capped enrollment for the 2008-2009 school year at 2007-2008 levels, reducing admissions by 10,000 for the upcoming year, Reed said.

Reducing enrollment will affect California’s workforce by reducing the number of teachers, nurses, engineers and criminal justice professionals the CSU system produces each year, he said.

“The CSU is the backbone of the workforce of California,” Reed said. “We produce the workforce.”

Committee member Sandre Swanson, D-Oakland, agreed that this is a critical time in California state politics. He argued legislators should consider other options to the proposed 10 percent cut to all of the state’s departments and agencies.

“The legislature is having a debate over the budget and numbers,” Swanson said. “We are not having a critical debate over values and what education means to the state.”

Swanson asked if the state should raise taxes and tuition fees to students to help offset the proposed budget reductions.

“In my experience, solving a budget crisis has to be a balance of reductions and revenue increases,” Reed said.

Todd Wilson can be reached at [email protected]