Office of Planning and Budgeting

The first new budget proposal of special session was released today by the same bipartisan Senate coalition that quickly passed an engrossed supplemental budget two weeks ago. Last week, the House further revised the Senate engrossed budget before session ended without agreement on a compromise budget. Although complex and at times confusing, this year’s budget process appears to now be moving forward as today’s Senate budget release moves closer to the House engrossed budget.

The new Senate coalition budget proposal would make the following changes to the UW’s 2011-13 biennial budget:

  • Reduces state general funds for the College of the Environment and replaces these funds with State Toxics Control revenue ($5 million);
  • Requires that the UW devote a portion of its state funding base to convert existing student FTE to College of Engineering FTE ($3.8 million); and,
  • Provides new funds for a Center for Aerospace Technology Innovation ($1.5 million).

All told, the redirect of state funding for engineering enrollment funding  and College of the Environment fund swap would affect our FY13 budget base. Please review our Planning & Budgeting brief for more information about the new Senate proposal and how it compares to the current House engrossed budget.

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.

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 Washington State Senate passed its budget last night after adopting two floor amendments. The budget cuts, compensation reductions, and policy issues we outlined were not amended in any substantive way in the engrossed budget passed by the Senate last night. Readers can examine the evolution of the House and Senate versions in detail here and here.

Regular session is scheduled to end this Sunday, but legislators will not be in Olympia over the weekend due to Easter. A special session will likely be called after the holiday and reaching agreement on a conference (negotiated) budget would be at the top of the agenda. For more information, TVW’s Capital Record blog provides an excellent summary of special session details here.

Senate Ways & Means leadership released their bipartisan budget last night after a 7PM press conference. Budget reductions total $4.8 billion and the largest cuts are targeted to K12 education, higher education,  employee compensation across all sectors of state governemnt, and basic health.

The UW’s general fund appropriation is cut more in the Senate budget ($217 million) than the House engrossed budget, but the Board of Regents would be authorized to increase resident undergraduate tuition higher (16% per year). BEFORE tuition increases, the Senate budget cut would be a 34.2% reduction from our maintenance level.

The Senate budget contains two compensation related cuts, which are limited to employees paid from state general fund (GOF), the medical account, and the accident account (the latter two provide critical funds for Public Health).

  1. Like the House engrossed budget, the Senate budget includes 3% “compensation savings” reducing our appropriation by $24 million over the biennium. Individual salaries will not be affected but our general fund, medical aid, and accident approprations would be reduced.
  2. The Senate budget would require stepped furloughs for “highly paid” employees, excluding faculty and Harborview personnel. The budget bill does not contain language to this effect but rather, the budget overview indicates that the policy will be included, perhaps in SB 5860. The general fund cut for furloughs would be $10.2 million over two years.

A full OPB brief is available for review.

After considering numerous floor amendments last Friday evening, the House passed their operating budget on Saturday afternoon. The House budget appropriates $32.2 billion in general fund state operating funds and makes significant cuts to health and human services, K-12 education, and higher education.

Like the House Ways & Means chair budget, the engrossed budget cuts $204 million from the UW’s state general fund appropriation over two fiscal years. However, that reduction is somewhat mitigated by the fact that all UW units took part of these cuts in November 2010 permanently. As a result, our brief outlined the approximate cut (before tuition revenue) that would be implemented in Seattle should the House budget ultimately pass after negotiations between the chambers.

The engrossed budget contained an extremely important amendment which exempts university and college employees from individual salary reductions of 3%. However, institutions will still need to come up with requisite “savings” (read: cuts) of 3% from all appropriated funds, which for the UW, are general fund state and the medical aid and accident accounts.

The Senate is expected to release operating and capital budgets this evening. After the Senate passes its budget, leadership in each chamber will begin negotiations toward a conference budget.

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