Office of Planning and Budgeting

In a rare, surprise move (which has not occurred in the state capitol since 1987), Senate Republicans introduced a striking amendment to the Senate Ways & Means budget on the Senate floor yesterday afternoon and eight hours later, passed their version of the supplemental operating budget with only one amendment adopted. Many amendments were introduced to make changes to the Republican striker, and restore funding to specific areas of state spending, but in the end, only one amendment was carried.

Derek Kilmer (D-Gig Harbor) offered an amendment  last night to restore most of the cuts that the Senate Republicans would apply to higher education institutions, passionately declaring, “You don’t have to do this,” after asking where Senate Republicans were doing student testimony on the original Senate budget, which spared higher education institutions from additional cuts.

Despite passionate testimony and procedural action to delay a vote, the new engrossed Senate budget passed 25-24 just after midnight.

This budget is described in greater detail in an OPB brief, which compares the new Senate engrossed budget to the House engrossed budget. All told, the Senate budget would require the UW to take a $12 million cut next fiscal year.

Legislative session is scheduled to end this Thursday, March 8, but this recent shake up will no doubt complicate the last few days of scheduled action.

Debate on the Senate floor yesterday evening was highly emotional and it could take several days before legislators are ready to negotiate differences between the two now very different budget spending plans.

In FY09, the UW’s state funding appropriation was $401.7 million and while the upcoming fiscal year’s (FY13) state funding level could be $214.4 million, the Senate budget released this morning would not cut current levels further. For the first time in several years, the UW may experience a flat budget, without new reductions. While funding levels are dramatically lower than they were before the Great Recession, they may not be reduced further.

Like the House budget, finalized by House Ways & Means Saturday, February 25, the Senate budget reduces state expenditures, authorizes fund transfers, and captures fund savings to deal with the current 2011-13 biennium shortfall of $1.05 billion. Reductions are made to important state services, including mental health, foster care support and community supervision of convicted criminals. However, these cuts, in part, allow the Senate to avoid cutting higher education and K12 further in the remainder of the current biennium (FY12 and FY13).

The Senate budget, as introduced, requires that the UW devote $3.8 million of its current appropriation level to converting 425 existing FTEs to student FTEs studying engineering and appropriates new money for the Center for Aerospace Innovation and Technology.

The Senate capital budget was also released today. Under the Senate proposal, the entire construction phase ($62.6 million) of Bothell Phase 3 would be funded, but from a variety of fund sources, with almost $20 million of the total cost supported through state construction bonds. This compares favorably to the House budget, which authorized the UW to bond the entire construction cost through its own building account resources.

While the Legislature is scheduled to adjourn sine die next Thursday, March 8, each chamber has a lot of work ahead before a compromise budget can be reached.

A full briefing on the Senate budget, comparing it to the House budget, is available here. Please let us know if you have questions.

House Ways & Means Chair Ross Hunter released the House supplemental budget proposal today, reducing state expenditures, making fund transfers, delaying payments, and capturing fund savings to deal with the current 2011-13 biennium shortfall of $1.05 billion. The Governor released her budget November 21, 2011, before the February 2012 caseload and revenue forecast improved the outlook for tax collections and caseload requirements.

If this budget ultimately passes, each of the state’s six baccalaureate institutions would reconcile a 2 to 3.5 percent state funding cut over two fiscal years, which compares favorably to the Governor’s budget, which would have cut each of the public baccalaureate universities by 16 to 17 percent. Note that theUW reduction number listed below does not include an offsetting proviso for enrollment support in the College of Engineering ($3.8 million). Please review our budget brief for more information.

 

Senate Ways & Means Chair Ed Murray will release his budget next and each chamber will work toward a conference (compromise) budget. Please check back regularly for budget updates and to review capital budget proposals as they are released.

While we anticipate operating budget proposals from House and Senate Ways & Means Chairs next week, the House Republican caucus released its version of an operating budget today. Note that this proposal is not binding; it is a list of House Republican funding priorities. These priorities focus on funding K12 education, including funding for all-day kindergarten, 180-day school year, levy equalization, and reform measures. Additionally, the House Republican proposal includes increases to public safety funding and does not include a proposed early release program for Washington prisoners.

House Republicans would make a number of changes to higher education institutions that were not included in the Governor’s budget, released in November. The proposal would reduce funding for “administrative costs” by .5 percent at public baccalaureates and remedial education at the community and technical colleges. While no definition of “administrative costs” is provided, budget notes declare that “administrative activities are reduced. Reductions shall be implemented in a manner that minimizes impact on student services.” The UW would need to cut $6.6 million of administrative activities in FY13 if this policy is included in the final budget. Additionally, this proposal temporarily lays off all state employees, including employees at the state’s higher education institutions, for 24 days in FY13. Temporary layoffs would not extend to some critical personnel.

This proposal makes changes to the State Need Grant (SNG) program as well. Students at public baccalaureate institutions would be limited to 12 quarters (or 6 quarters for students at community and technical colleges) of grant funding. Interestingly, this proposal would eliminate SNG funding for students attending private, for profit institutions.

Like the Governor’s budget, the House Republican proposal would fund a $3.8 million Engineering enrollment support initiative at the University of Washington.  All told, the House Republican proposal would reduce administrative expenditures at the UW by $6.6 million and increase funding for the College of Engineering by $3.8 million (for a net reduction of $2.8 million).

Again, initial budgets out of both Senate and House Ways & Means committees will be released next week and we will provide full coverage (including budget briefings) of those proposals at that time.

See the latest OPB brief for information about today’s state revenue forecast update.

In a Town Hall Seattle meeting last night, Washington’s six public baccalaureate university presidents and business leaders from REI, Boeing, and Microsoft gathered to discuss  unprecedented cuts to Washington’s public institutions and generate energy for the Seattle Times’ Greater Good Campaign. Organized by the Seattle Times and funded in partnership with local businesses, the campaign intends to expand awareness of the importance of higher education for the vitality and economic security of our communities and advocate for increased funding for public higher education.

Last night, the public baccalaureate presidents expressed their concerns with retaining star faculty, providing access to low and particularly middle-income students who don’t benefit from state-supported financial aid programs, and maintaining affordable tuition rates. Business leaders shared their devotion to the Pacific Northwest, but their worries that our state’s inability to educate enough of its citizens may force their companies to look elsewhere for educated workers.

When moderator and Seattle Times editor Kate Riley asked President Young about his impressions of President Obama’s State of the Union address and blueprint for higher education reform, Young said, “They’ve got the guns aimed at the wrong problem.” In Washington, per student funding has remained flat for twenty years, but resources to support educational funding have completely switched. While the state used to provide 70 percent of the per student funding in the early 1990’s, the state now only provides 30 percent. The total funding remains the same but the primary shareholders of our public universities are now students and parents, not the state.

Footage from the event is available here.

In short order, the House of Representatives introduced, passed out of committee, and passed out of their chamber, an early action savings bill nearly identical to the Senate bill we covered earlier. Note that there are no material changes for higher education (including the UW) in the House version of the bill.

It is largely anticipated that the Senate will take up the House’s bill today and the Legislature will adjourn shortly thereafter.

 

At 3:30 PM today, the Senate Ways & Means Committee will hear an early action bill addressing 25% of the current $2 billion deficit in the form of $323 million in budget cuts and $106 million in fund transfers. Both chambers are expected to move legislation forward quickly in order to sine die at the end of this week.

This bill would cut $248,000 from the UW’s general fund base  to address expected workers compensation rate increases that are charged to all state agencies, based on staffing levels. Otherwise, the bill affects the University and all of higher education very little.

Agencies most affected by the reductions in this bill are Human Services, DSHS, and K12. Human Services reductions (-$127 million) include expenditure savings and reclaiming state appropriations made unnecessary due to unanticipated, higher federal funding. Budget cuts to K12 (-$75 million) include central administrative reductions, school bus depreciation payment shifts, and enrollment funding adjustments. DSHS budget cuts (-$56 million) include delaying payments for programs, capturing savings generated by lower than anticipated costs, and reducing administrative costs.

Regular session begins on January 10, 2012 and reducing expenditures in the current biennium to address the deficit will be the primary focus of session.

The Governor’s budget office released the first supplemental budget proposal today, further reducing state expenditures for the 2011-13 biennium by $1.7 billion. All told, higher education institutions would absorb about nine percent of the total cut.

Under the Governor’s proposal, each of the state’s six baccalaureate institutions  would receive 16-17 percent cuts in state funding for Fiscal Year 2013 (FY13), while community and technical colleges would receive a 13 percent cut.

Funding cuts are once again disproportionately concentrated at four-year institutions even though the Governor discussed making equal across-the-board cuts as recently as October, because, as noted by budget staff, four-year institutions have a greater ability to   generate tuition revenue than community colleges.

Note that the Governor’s budget eliminates funding for the state’s Work Study program next academic year but importantly, preserves funding for the State Need Grant program.

For more information about budget increases for the College of Engineering, aerospace innovation funding, and financial aid impacts, please review our Planning & Budgeting brief.

Released this morning, the November state revenue forecast indicates that the state is short another $122 million below needed revenue for the current biennium. Dr. Arun Raha, Executive Director of the Economic Revenue and Forecast Council, wrote that uncertainty over Southern Europe’s debt crisis and potential political gridlock in Washington, D.C., produced largely expected economic results predicted in September’s dismal forecast. In essence, we still have a $2 billion budget problem and since September, it has grown by $122 million.

The Governor will use this forecast as her benchmark for budget reductions in the 2012 Supplemental budget (first supplemental budget of the 2011-13 biennium). All told, the Governor will need to cut over $2 billion from the current biennial budget in order to produce a balanced budget, which she is required to do before proposing any revenue increases to offset reductions.

This budget will be released this Monday, November 21. We will release a budget brief and blog detailing the impact of the Governor’s budget on the UW as soon as possible. While the Governor’s budget release is a critical first step of the special and regular legislative sessions, we are months away from a final legislative budget.

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