The House released operating and capital budgets yesterday for the upcoming biennium (FY12 & FY13). This budget is an important next step in the budget development process in Olympia but we are far from having a final compromise budget.
The House operating budget proposal:
- Cuts state funding for the UW by $204 million over two years (32% reduction)
- Authorizes resident undergraduate tuition rate increases of 13% for both years
- Eliminates the State Work Study Program
- Increases the State Need Grant to adjust for increased tuition rates
- Mandates reductions equivalent to a 3% salary reduction
The House capital budget:
- Authorizes state funds for the Odegaard Undergraduate Learning Center renovation
- Provides some state funds for some minor capital repairs, the House of Knowledge, UW Seattle’s High Voltage Infrastructure Improvement project, and design-phase funding for Anderson Hall
Please read our comprehensive brief about the budgets and please post any questions or comments to the blog.
This is the first in a series of blog posts that presents a Washington State Legislative bill that we are tracking and provides more information about what the bill does and why it is relevant to the UW.
As the demand for higher education increases, especially among students who are place-bound or have outside commitments that prohibit them from pursuing a traditional college education, online learning has become more and more popular. While some universities use limited online classes to ease overfilled classrooms or offer introductory classes more cheaply, some students study exclusively online.
House Bill 1822, “Establishing the first nonprofit online university,” seeks to partner the state with Western Governor’s University (WGU), a non-profit, online university, creating WGU-Washington. The bill has passed out of the House, was passed by the Higher Education and Workforce Development committee in the Senate, and has been passed to the Rules committee for second reading.
The new WGU-Washington would not receive any state funds, nor would its students be eligible for state financial aid like the State Need Grant; however, supporters of the bill purport that projected increases in the demand for postsecondary education combined with future labor force requirements are such that increased degree production in the state is crucial. Proponents see a partnership with WGU as a resource for Washington citizens and employers that does not require a large investment of state funds. The bill also seeks to make it easier for students to transfer credits between WGU and the “traditional” state institutions of higher education.
While some questioned the necessity of the bill at the Senate hearing, pointing to the fact that Washington students can already enroll at WGU independently, and that the state’s community colleges may be better options for such students, others maintained that Washington’s existing institutions are overenrolled and that WGU offered a low-cost alternative to private for-profit online universities. Other critics pointed to the lack of data available on WGU programs, processes and outcomes as an indication that a WGU education may not meet the standards of the other institutions in the state.
WGU was chartered in 1996, and endorsed by the 19 Governors of the “Member States,” including former Governor Locke. It offers bachelor’s and master’s programs in the fields of education, information technology, health professions, and business. Basic tuition for a six-month terms is $2,890, though some program fees lead to a higher total cost. The institution currently enrolls 23,000 students all over the United States. Instead of a traditional classroom where a faculty member who is a subject matter expert teaches the material, WGU students are led through a competency-based curriculum that is developed by faculty mentors (who generally hold terminal degrees) and facilitated by student mentors and course mentors, most of whom have earned a graduate degree (although WGU does not provide an exhaustive list of faculty mentors or of student and/or course mentors). WGU asserts that the vast majority of alumni and their subsequent employers are pleased with their university experience, and feel they are competitive in the workforce.
When the revenue forecast was released on March 17, House fiscal leadership indicated that their operating budget would be delayed. We hoped to see a budget on March 21st and then on March 29th. Tomorrow is April 1 and your analysts at OPBlog anticipate having neither budget drafts to write about nor fantastic prank ideas to implement.
Some news outlets indicate that we may see the House Ways and Means Operating Budget next week. Meanwhile, Senate Ways and Means chair Ed Murray, D-Seattle, is on record saying that the Senate will not release its budget until the House releases theirs.
We’ll offer full analysis of the budgets as they are released. Stay tuned!
The SHEEO State Higher Education Finance report for FY 2010 was released last week. Unsurprisingly, it confirms that the same general pattern in Washington of deep state cuts to higher education funding coupled with steep tuition increases is being replicated in states across the US.
Report Highlights: National Trends
Nationally, on average, state support for public high education per full-time-equivalent (FTE) student declined by about 7 percent between 2009 and 2010, and, at $6,454 per student, is at its lowest level in 25 years. The reports notes that average increases in net tuition revenue of 3.4 percent per student partially offset these budget cuts.
These cuts comes at a time when enrollment continues to grow partly due to more citizens seeking out higher education during the economic crisis. Nationally, enrollment grew by 15 percent between 2005 and 2010. Even when state and federal and increased tuition support manage to stay whole or increase, the report notes that increasing enrollments continue to erode per student funding levels over time.
The report highlights the importance that state support continues to play in education related spending by public institutions even as tuition revenue rises. They acknowledge that this importance is sometimes obscured by the complex finances of large institutions that have many other (non-fungible) funding sources.
Ultimately, SHEEO purports that public and policymaker values are consistent with continued public support for higher education, and they are hopeful that investment will rise again once state budgets stabilize and improve.
Report Highlights: Washington State
SHEEO presents the following averages for Washington State higher education for the 2005-2010 period:
- 12th in increased enrollment in public higher education (19.2%).
- 30th in appropriations per FTE.
- 40th in percent of net tuition revenue as percent of total education revenue.
- 40th in total educational revenue per FTE.
These numbers are a testament to the comparatively low tuition rates enjoyed by WA residents combined with lower than average state appropriations.
Read the full report for more data, analysis, and methodological details.
You might notice links for a new website, UW Budget Watch, popping up on UW homepages (including OPB and right here on the blog).
OPB worked with Web Communications staff to develop one website that would consolidate many sources of information relating to the state budget and how it has and is expected to continue affecting the University. You will find links to blogs (the absolute best way to get the most up to the date and timely notices) and other UW and non-UW websites, as well as many educational documents, messages about the budget from UW leadership, videos about the current funding situation, and information about related UW initiatives.
We have found sites such as this very helpful in keeping up to date with our peer institutions, and we hope that our page will be as useful for anyone interested in keeping up on the latest developments.
So, visit the page often and we will work hard to keep it updated!
State Economic Forecast Council Director Dr. Arun Raha released the March revenue forecast today. This forecast serves as the revenue basis for the Legislature’s general fund budget in the 2011-13 biennium (FY12 and FY13).
2009-11 Biennium (FY10 & FY11)
While many economic indicators used in his analysis show tentative growth in 2011, revenue collections through March 10, 2011 were $85 million below expectations and growth through the next quarter will continue to lag expectations, contributing to an additional $80 million deficit in the 2009-11 biennium. Legislative leadership confirmed that an additional (fourth) supplemental budget will be needed to reconcile the new FY11 shortfall. The timing of that budget is unknown.
2011-13 (FY12 & FY13)
Weaker growth in several key sectors over the last three months prompted Dr. Raha to increase the projected deficit for the 2011-13 biennium by $698 million. The Legislature will use a $31.9 billion revenue base for the General Fund State. For comparison, the Governor’s December budget was based on a $32.1 billion general fund state budget.
While we anticipate the House will release their operating budget proposal next week, House leadership did not commit to a date.
The March forecast includes new data about the downside risks to our economy including the earthquake, tsunami, and risk of nuclear meltdown in Japan. Further, Dr. Raha states that the most significant threat to economic growth is the energy market. He fears escalating gas prices will continue to erode consumer confidence, regardless of job growth. These downside risk factors overwhelm any upside risks (employment growth, consumer confidence, and commodity prices) by 10 percent.
Please check this blog regularly for state budget updates as they become available.
US Secretary of Education Arne Duncan joined Governor Chris Gregoire and legislative leadership today for an education roundtable. Duncan congratulated state lawmakers on discussing the issue of education reform, even through tough budget times. He further drew attention to the grave problems troubling education in the United States—a 25% national dropout rate, poor STEM education, the large number of students taking remedial courses, and gaping budget gaps, which challenge the adequate funding of education.
Of particular interest, Duncan commented on the current system of education governance in Washington, claiming: “Washington has eight different agencies with different strategic plans working in Washington and it’s very difficult for me to understand how having different agencies handling education…will transform education.”
Governor Gregoire has bills in both chambers to consolidate education governance into one Department of Education headed by the Governor. The plan would also consolidate many existing state education agencies into four primary education divisions: Early Years Division, K-12 Division, Community College and Technical Education Division, and the University Programs Division. All units would report to a new Department of Education Secretary.
Secretary Duncan reiterated President Obama’s commitment to investing in education despite the economic downturn, and gave examples of strategic programs and innovations the administration is working towards:
-Investing in Early Learning programs like Head Start, which studies have shown to improve achievement especially for disadvantaged students who do not have many educational opportunities at home
-Continuing the Race to the Top program which rewards schools for outstanding innovation and improvement in education (if approved by Congress)
Lastly, Governor Gregoire distributed a document describing how much it costs taxpayers when students “fall through the cracks” of the education system– by dropping out, taking remedial courses, or repeating grades–a number her advisers estimate at around $ 100 million a year. Though the problems facing education in Washington state and in the nation are indeed grave, it was encouraging to see lawmakers pause during a critical week to discuss education. As Secretary Duncan asserted, “our children cannot wait for the economy to bounce back”—education must remain a priority, despite the dire budget situation.
OPB published a new brief yesterday discussing expectations for the upcoming Washington State revenue and caseload/entitlement forecasts, and how both are likely to affect UW state funding levels.
**EDITED TO ADD: Note that after we released this information, the new caseload forecast was released and lowered the expected growth of caseloads for K-12, Medicaid, and Corrections. In particular, the anticipated impacts of federal healthcare reform lowered the predicted caseload for state-supported medical programs by $117 million in the long-term and $70 million in the short-term.**
Nationally, the Center on Budget and Policy Priorities (CBPP) updated their analysis of state budget shortfalls this week. They summarize the challenges faced by states via their blog:
- For fiscal year 2012, one of the most difficult budget years on record. Some 44 states are projecting shortfalls totaling $112 billion for the year, which begins July 1 in most states. (See chart below.) This figure is somewhat lower than in our previous version of this analysis, largely because of actions that Illinois took in its last legislative session that reduced the size of its 2012 shortfall.
- The loss of emergency federal assistance. Assistance through the 2009 Recovery Act and the August 2010 jobs bill has been a huge help to states, allowing them to balance their budgets with smaller budget cuts and tax increases than they would otherwise need to make. But that aid will largely be gone by the end of fiscal year 2011.
- A long road to recovery. Already, 26 states are projecting shortfalls totaling $75 billion for fiscal year 2013, which begins in 16 months. This number will likely grow once all states have prepared estimates.
Last week, Senate and House Fiscal and Higher Education Committee leadership asked all public baccalaureate institutions and the community and technical colleges to identify specific budget reductions at three levels for 2011-13. For the UW, those cut intervals were: The Governor’s proposed $189.8 million cut, a $218 million cut (Governor’s cut + 15%), and a $246 million cut (Governor’s cut + 30%). For scale, the UW received $627 million in state funds for the 2009-11 biennium (Fiscal Years 2010 and 2011).
Potential reductions identified by the UW and submitted by President Wise to the Legislature yesterday were sobering, although President Wise pointed out in correspondence to campus leadership that some of the examples in the letter, ”…may come to pass, but only as a result of the strategic budget process currently underway, not because of reference in the letter.”
Neither the House nor the Senate Fiscal Committee has submitted their budget proposal for the 2011-13 biennium yet and we do not know how each committee will ultimately handle the UW’s state appropriation. While we have the Governor’s proposed budget in hand, the appropriations process is far from being over. We will continue to post state budget updates to this blog as they develop.
Media coverage of our submission to the Legislature is available here, here, and here.
Leadership in both fiscal committees of the House of Representatives and Senate signed a compromise budget to closing the remaining FY 2011 budget deficit. Both new cuts and fund transfers are included in the compromise.
While the budget is not final and both chambers must take a floor vote, the conference budget is in near final form. Higher education institutions would not receive direct state funding cuts, but would be asked to backfill a new cut to the State Need Grant (SNG) with institution resources. The UW would be directed to use $5,658,000 of internal funds to cover the general fund reduction to the SNG.
Also note that higher education institutions were exempt from a salary reduction (furlough) requirement.
Lastly, the compromise budget did not close the Basic Health Plan but it did make significant cuts to K12 and other social services.
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