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A new report from California’s non-partisan Legislative Analyst’s Office (LAO), California’s Fiscal Outlook, details current California state budget projections through at least 2016. The LAO projects that CA will have to solve at least a $25.4 billion deficit for 2011-12, and will continue to face budget gaps of at least $20 billion per year through 2015-16.
While analysts are clear that doomsday scenarios threatening the collapse and/or bankruptcy of the state are not realistic, they do emphasize the importance of lawmakers and citizens making painful choices now to avoid placing a massive burden on future generations of Californians. The LAO recommends a multi-year approach to addressing the state’s structural deficits, including making difficult choices on increasing revenue while making additional spending cuts. Detailed estimates are provided for each major area of government spending– see pages 29-30 for higher education.
California is unique in many ways, but the choices facing the state and its citizens are, though perhaps grander in scale, very similar to those being faced by states across the country, including Washington.
The Seattle Times published an article yesterday that outlined the State Treasurer’s desire to pursue a state constitutional amendment that would require the Legislature, starting in 2015, to invest more money into pension plans up front to help the state avoid ever entering ‘pay-go’ status where pension obligations must be covered from the state general fund.
In the meantime, the Treasurer, Jim McIntire, has requested that the Legislature invest $1.4 billion in existing pension plans for the 2011-13 biennium, a doubling of the $770 million invested in 2009-11.
The current estimated state budget shortfall for the 2011-13 biennium is $5.7 billion, and pension policy will play an important role as the state is forced to reorganize a shrinking budget.
For more information about this issue, read the OPB Brief published earlier this month.
As we reported last month, two economists at the College of William and Mary have published a new book called Why Does College Cost So Much?. We are almost finished reading this very well written and researched book and will provide our own assessment soon.
In the meantime, the book continues to generate passionate discussion–see Stanley Fish’s column at the New York Times. If you are as intrigued by this topic as we are, and have a lot of time to spare over Thanksgiving break, I might suggest reading some of the 400+ comments left on Fish’s column. To keep the discussion going, Fish handed his column over to the book’s authors, Robert Archibald and David Feldman, to address some of the most common objections to their arguments. If you really want to punish yourself, readers have thus far left another 240+ comments to sift through!
And for a break from all of this talk about budget cuts and cost crises, here are some links to a couple of feel-good, holiday themed pieces published today:
After the November 18, 2010 release of the state’s November revenue forecast, Vice Provost of Planning and Budgeting Paul Jenny released the following information to UW leadership:
As most of you are aware, the November revenue forecastfor the state was released yesterday, and it was not good news. The forecast projects a shortfall of $385 million in the current fiscal year budget and a deficit for the upcoming 2011-13 biennium (FY12 and FY13) of $5.7 billion. There are many factors for the continuing lack of improvement in state revenues: the real estate market remains weak, expected revenue increases will not materialize due to voter rejection of the soda and candy sales tax measure, case loads continue to increase, and so forth.The most immediate concern is the reduction in revenue of $385 million for the current fiscal year. To bring the budget back into balance, there are three options available:
The governor could impose across the board reductions as she did following the September revenue forecast.
The governor could call a special session of the legislature to balance the budget.
The legislature could take up this issue in passing a final supplemental budget for FY11 that addresses this shortfall as the beginning agenda item in the normal legislative session that commences on January 10, 2011.
While we do not know what course of action will ultimately be taken, we need to anticipate another mid-year reduction as a result of any of these options. As a point of reference, the shortfall in the September revenue forecast of $520 million resulted in a cut to the UW of $17.1 million. If the response to the current shortfall of $385 million is consistent with the September actions, we may see a reduction of approximately $10 million -$13 million. Again, this is just our best guess at this point. My office will provide greater detail as it becomes known to us.
Longer term, we need to understand that the solution to a $5.7 billion deficit in the 2011-13 biennium will not be pleasant. We don’t know what our share of the cut will be. What we do know is that only 30 percent of the budget can be touched at this point – the rest considered ‘off-limits’. We can safely assume that because higher education is the biggest part of the discretionary budget, we will be hit very hard. While we had to model a 10% reduction in a response to a request by OFM, we should anticipate that our cut may be higher than 10%. Cuts of these magnitudes will inevitably place more pressure on the discussion surrounding tuition increases as a mitigating factor to these cuts.
While this is distressing news, the Offices of Planning & Budgeting, External Affairs, and State Relations will be working with our elected officials to consider different solutions that can stave off some of the impact these cuts, if not mitigated, would create.
The National Center For Education Statistics (NCES) is a part of the US Department of Education’s Institute of Education Sciences. Every US University governed by Title IV of the Higher Education Act (federal student aid programs) is required to submit annual data to NCES via nine surveys that cover topics such as pricing, admissions, enrollment, employment, financial aid, graduation/completion, institutional finance and more.
Institutions reported employing (not including medical schools or hospitals) 3.8 million employees– 2.4 million full-time and 1.4 million part-time.
Of the 2.4 million full-time employees, 1.4 million were classified as professional (see report for definition), 46% of whom had faculty status: 21% with tenure, 9% on the tenure-track, and 17% not on the tenure-track or at an institution without tenure.
Of full-time faculty with tenure, 65% were men while 35% were women.
Of full-time faculty with tenure, 81% were White, 8% were Asian, 5% were African American, and 4% were Hispanic.
While higher education policy has historically been formed at the state-level due to state funding of institutions, the report asserts that this strategy is no longer sufficient given the growth of higher education participation coupled with the increased mobility of Americans. This is especially illustrated in the 20 metropolitan areas they identify as crossing state lines. In these locations, citizens are often restricted in their access to affordable, quality higher education based on their state of residence, primarily due to:
State based financial aid
Residency based tuition pricing
Credit transfer policies between institutions
One of five Americans live in such areas, including in Portland, a metropolitan area that reaches into Washington State. The majority of the institutional capacity in the Portland metropolitan area is located in the State of Oregon, which means that your specific address has real ramifications for your access to affordable higher education, which these authors argue is suboptimal for increasing attainment.
Ultimately, they recommend that the federal government create EZ-GO areas (overseen by an EZ-GO Commission) to:
Provide technical support to develop EZ-GO-wide articulation agreements
Support capital investments to built up institutional capacity
Assist in matching postsecondary programs to local labor markets
Encourage partnerships between institutions and across sectors
Expect a lot of proposals like this one to surface as stakeholders across the nation grapple with how to, in a relatively short period of time, raise the percentage of Americans with a two-year or four-year degree from 38% to 60%.
Washington’s General Fund-State account continues to decline in tandem with stagnant job growth and faltering tax collections. Last Tuesday, Washington voters reversed the 2010 Legislature’s tax measure on certain foods and beverages; the tax will sunset on December 1, 2010. Notably, the American Beverage Association contributed $16.7 million in total to the campaign repealing these taxes, the most external contribution to any Washington initiative in our state’s history.
Governor Gregoire has released several statements indicating her understanding of current taxpayer frustration and will release an all-cuts 2011 Supplemental Budget, which will include further budget cuts to resolve any existing budget deficit for the current 2009-11 biennium. In addition, she must submit an all-cuts budget for the upcoming 2011-13 biennium by December 20. Both budgets will assume no new revenue growth and take into account past predictions of revenue, as summarized in the table below.
In the short-term, the UW already took a $17.1 million mid-term FY 2011 cut, and does not anticipate having to take another mid-term reduction before the start of the 2011-13 biennium on July 1, 2011. While we were asked to model 10 percent cuts for the upcoming biennium, UW administration anticipates that the state’s currently projected $4.7 billion revenue shortfall will necessitate further cuts to higher education institutions. Because two-thirds of the general fund budget is constitutionally protected and spent on K-12 education, corrections, and health and welfare activities, higher education is one of the major discretionary areas of spending left to cut.
Please check back regularly for more information about the budget, including an update to this table after the next revenue forecast is available on November 18. In addition, we will be providing more summary information about other mandated areas of the state’s budget, including the state pension system, K-12 education, corrections, and more.
Be sure to check out our latest OPB Brief, Looking Ahead: Washington State Public Pension Costs. This brief is the first in a series intended to provide summary information about major categories of state spending that could impact budgetary outcomes for higher education in future biennia.
Hi, my name is Anja Speckhardt, and I am a student assistant here at the Office of Planning and Budgeting, as well as a freshman at the UW. As a part of my job at OPB, I have been given the privilege to occasionally post to the blog about interesting topics I’m researching. Today, I chose to write about the current emphasis many policymakers, employers and institutions place on STEM education. This is especially exciting and relevant to me as an incoming freshman, as I explore the plethora of major options here at the UW. Thanks for reading!
For some time now, legislators at the state and national levels have been emphasizing degree production in “high demand” fields such as science, technology, engineering, and math (STEM). Spurred on by President Obama’s call to increase the number and quality of math and science teachers, and aware of the large engineering, software, and technology corporations integral to Washington State’s success and job market, Washington State’s Higher Education Coordinating Board (HECB) proposed a Fund for Innovation to increase the number of high demand degrees awarded (among other objectives). Among their reasons are that, in comparison to other fields, job prospects in STEM are still promising, student demand for these majors is high, and technology and science are important for innovation.
The University of Washington is well-known for its outstanding medical, nursing and engineering schools, as well as its strong math and science programs. Additionally, from its earliest days, the UW has had an important relationship with the firms in the area: the wind tunnel, partly sponsored by Bill Boeing in 1939, is a perfect example of this. Support for STEM programs is integral to the UW’s success, because students have come to expect access to and excellence from these departments.
However, it is important to remember that not all of the students attending the UW are technologically or scientifically inclined and seek to impact the world in other ways. Some highly intelligent and motivated students choose to major in history, music theory, or political science, or one of the many other fantastic programs in humanities, social sciences, and fine arts. The UW is home to a highly ranked International Studies school, as well as a leading Business school. We don’t only have a wind tunnel, we also display the largest book in the world—a book of photography.
The UW’s extensive General Education requirements allow students to explore many disciplines and choose to pursue those that interest them the most. The University is a venue for exploring interests and giving students the opportunity to find their passion—be it biochemistry or French.
This brings up the interesting question of the purpose of a university: Is it primarily to further education in all its multifaceted forms, or should its focus lie solely in career preparation? Presently, career preparation has taken hold as an important, if not primary, goal of a university as well as a measure of its success. However, it is critical that such focus and investment not be at the expense of the multiplicity of disciplines and inclinations that are an important part of the UW’s success and each student’s experience. In fact, new researchshows that a high GPA and a good work ethic can be a better recommendation to future employers than a degree in a certain field.