Office of Planning and Budgeting

On Thursday morning (3/8), around 12:30 AM, yet another version of the budget (making changes to the Senate engrossed budget) was proposed by Representative Hunter (Chair, Ways & Means) on the last scheduled day of legislative session. This proposal was intended as a compromise between the Senate engrossed budget, written by Senate Republicans, and the budgets proposed by Senate and by House Democrats.

This new House budget amends the Senate engrossed budget, and does not contain new state funding cuts for the UW or the other higher education institutions. However, the budget does contain small central agency service reductions and two unfunded provisos that the UW would fund through its current appropriation. Similarly to previous iterations of the budget, these provisos specify that $3.8 million must be redirected to support engineering enrollments in FY13, and that $790,000 be directed to WWAMI/RIDE in FY12. While the Senate engrossed budget provided new funds for these provisos, the House budget does not; thus, it would require a shift of existing UW state funds and constitute a cut that University units would have to accommodate.

This budget was heard, amended, and passed off of the House floor last night but was not heard in the Senate afterward. A special session to continue the process was announced shortly after midnight, and Governor Gregoire called the Legislature back to session next Monday. We anticipate that negotiating a compromise budget between the multiple versions that have been introduced will be the Legislature’s primary focus next week.

At this stage, changes to the UW’s state funding for FY13 remain uncertain. The two current proposed approaches include a House “budget” that would require the UW to shift $5 million of its appropriation to fund the two provisos noted above, but contains no new overall funding cuts. Meanwhile, the Senate engrossed budget bill does include new funding for the engineering proviso ($3.8m), but makes other changes that result in a loss of $12 million in state funding.  When special session starts next week, entirely new versions of the budget may emerge. Stay tuned.

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.

House Higher Education committee staff published a table today comparing Senate and House bills, which would create the Council office, define its responsibilities, and set membership for its board. While Senate Bill 6232 passed unanimously on February 10, House Ways & Means is set to introduce a substitute on the House bill. Legislative staff published the table to  compare the original House bill, the engrossed second substitute Senate bill, and the proposed House second substitute bill.

This table is available on OPB’s website.

Last year, Senate Bill 5182 (introduced and signed in 2011) significantly changed the landscape of higher education policy coordination when it eliminated the Higher Education Coordinating Board (HECB) and created the Office of Student Financial Aid. This bill created a steering committee, led by the Governor, to reconsider higher education governance. After meeting through last summer and autumn, they released a final report that made a number of policy suggestions.

The 2012 Legislature has entertained a number of higher education governance bills to replace the HECB and many of its policy functions. These bills would charge a new Student Achievement Council with some coordinating and planning functions, as well as the HECB’s financial aid management function.

At this stage, SSB 6232 is progressing through the legislative process and may serve as the vehicle for creating the Student Achievement Council and defining its role and responsibility in higher education policy and governance. A summary of the second substitute bill is included below.

  • The Student Achievement Council is created
  • Within the Council, the Office of Student Financial Assistance is created to administer financial aid
  • The Council is comprised of four citizen members, one four-year college representative, one Community/Technical College member, one nonprofit independent higher education member, one K12 member, and one student (9 members total)
  • The Council’s goals are to maximize educational attainment and monitor progress towards its goals
    • Additionally, the Council would:
      • Establish short and long term attainment goals
      • Engage in strategic planning
      • Conduct financing planning, study per student funding levels, and continue to make budget recommendations
      • Recommend system design and coordination efforts
      • Set minimum admissions standards
      • Use data to make informed recommendations
      • Arbitrate disputes between the two-year and four-year sectors

 

Last year, Washington State Senate Bill 5182 abolished the Higher Education Coordinating Board and created a Higher Education Steering Committee to assess the state’s need for a redesigned statewide coordinating agency for education. The 13 person Committee met four times and was chaired by Governor Gregoire, and also included UW President Michael Young.

The Final Report, released today, determined that a statewide education coordinating agency in Washington should be singularly focused on increasing educational attainment (at all levels). The report recommends the creation of an Office of Student Achievement, overseen by a majority citizen Advisory Board. This Office would be responsible for:

  • Setting and monitoring short and long term statewide goals for educational attainment
  • Engaging in strategic planning to meet attainment goals
  • Developing performance plans and incentives
  • Engaging in education system design and coordination
  • Providing educational data, research, and analysis in partnership with the existing Education Research and Data Center (ERDC)
  • Developing budget recommendations into the future
  • Setting minimum college admission requirements
  • Administering programs that provide outreach and education to students to increase educational persistence
  • Addressing issues affecting student retention at major transition points (e.g. high school to college, and two-year to four-year)
  • Administering student financial aid programs
  • Serving as the primary point of contact for public inquiries on higher education

The report presents two options for the focus of the Office of Student Achievement. In Option A, the Office would coordinate among and between all state educational entities at every level. In Option B, the Office would focus directly on coordination between secondary and postsecondary education. Governor Gregoire announced today that she was endorsing the adoption of Option B outlined in the Committee’s Final Report and would present implementation legislation shortly.

The Governor released a preliminary list of potential budget reductions for FY13 today. The list includes a set of severe cuts across state government but demarcates which reductions she would include in her formal November budget. For higher education, the Governor would cut colleges and universities 15 percent in FY13 and suspend the State Work Study program. Last year, UW students received $2.3 million in State Work Study funds.

The Governor also included potential general fund state reductions at 10 and 20 percent (click on the chart below to enlarge it).

More information about these potential reductions are included in a Planning & Budgeting brief. Note that the reductions outlined in the Governor’s letter are preliminary and we are many months away from resolution on a 2012 Supplemental Budget.

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