Office of Planning and Budgeting

Senator Tom Harkin, Chairman of the US Senate HELP Committee, has released another report on the practices of the for-profit higher education industry, this time focusing on whether or not such institutions are taking advantage of US veterans in an effort to capture newly increased GI Bill education benefits (read our earlier posts on this issue: Senator Tom Harkin and the HELP Committee Continue to Investigate For-Profit Colleges, and  Under Federal Fire, For-Profit College Point Finger at Publics).

The New York Times published Wednesday a detailed article on this topic, Profits and Scrutiny for Colleges Courting Veterans, that included a host of primary source documents.

Senator Harkin has moved a hearing on the topic from early December to a yet to be determined day in early 2011. Because the Senate will remain in Democratic control, Harkin will continue as Chairman of the HELP Committee and is expected to carry forward his investigation of this rapidly expanding sector of higher education, which relies almost entirely on federal student aid dollars to generate large profits for shareholders while many students drop out  and face high levels of education loan debt. Some speculate that recent Republican gains in the Senate and House may hamper the likelihood of passing strong regulatory legislation in the coming year.

Meanwhile, the US Department of Education is in the process of implementing new regulatory rules aimed at tightening oversight on the sector (see previous post: New Federal Higher Ed Regulation Published Today).

We will continue to monitor this ongoing story, as well as some calls for the federal government to extend their scrutiny to traditional institutions.

The National Conference of State Legislatures released their November 2010 State Budget Update today. While the report notes that many states are experiencing some level of stabilization in revenue collections, and beginning to be more optimistic  about the general revenue outlook, they are at the same time facing unprecedented pressures on the demand for services such as healthcare and education, and also facing the withdrawal of the federal stimulus funding that has been critical in mitigating severe budget cuts for the last two years. Referred to as an impending ‘funding cliff’, the ramifications of the loss of federal fiscal support are expected to translate into painful budget cuts in states across the country starting in fiscal year 2012.

Inside Higher Ed provides some additional links to reports that echo these same facts. Meanwhile, the Center on Budget and Policy Priorities continues to update their own report on state budget cuts.

Both the American Recovery Act (ARRA) of 2009 and the 2010 Education Jobs Fund provided federal funding for education. In exchange for accepting federal funds, both fiscal relief vehicles came with Maintenance of Effort (MOE) provisions requiring states to continue financial support for higher education institutions at certain minimum levels. However, some forms of state support, such as capital projects, financial aid, and research support are exempt from MOE calculations.

The UW received ARRA funding in the state budget in the 2010 fiscal year. As a result, MOE requirements from both federal actions helped protect higher education funding in Washington State from what may have been even deeper budget cuts. Last year, the State reduced higher education spending down to the federally-required MOE floor for fiscal year 2011. Federal MOE requirements expire after FY 2011.

Due to a state budget deficit that continues to grow, the Governor has called a special session to achieve another round of mid-year budget cuts for the current fiscal year. If the state further reduces funding for higher education, it must choose to violate the federal MOE mandate, or reduce state support for higher education activities exempt from federal MOE, primarily the State Need Grant (SNG), Washington’s need-based financial aid funding program.

In her proposed special session cuts for FY 2011, the Governor chose the latter, recommending that the state delay $76 million of SNG funding until July 1, 2011 (start of FY 2012), with institutions temporarily funding the gap to protect students. The UW’s share of this funding shortfall would be $15 million. While the Governor’s proposal assumes reimbursement on the first day of the new fiscal year, delay of this payment would require the University to cut $15 million to balance its current FY 2011 budget. In addition, given the $5.7 billion state deficit that remains for the upcoming 2011-13 biennial budget, it is not at all certain that this delayed payment would be made to institutions in 2012, when the federal maintenance of effort provision will no longer be in effect.

Any option that reduces or delays funding for higher education will impact University of Washington faculty, staff and students. The Office of State Relations and the Office of Planning and Budgeting will work hard to keep the UW community up to date on special session, and important state budget related news in the coming days.

The Seattle PI drew attention to two major UW  Initiatives that were recently highlighted in a message from Provost Mary Lidstrom. Be sure to check out the new websites detailing both of these new efforts:

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