Office of Planning and Budgeting

Earlier today, the leadership in the House Appropriations Committee released their 2016 supplemental operating budget proposal. Toward the end of this week, the leadership in the Senate Ways & Means Committee will release their budget. Following that release, we will post a brief here outlining the differences between Governor Inslee’s proposed budget and the House and Senate proposals.

As a reminder, supplemental budgets include technical corrections and minor appropriation changes to the current 2015-17 biennial budget (fiscal years 2016 and 2017). Budget proposals in the House and the Senate will be amended in their respective committees, and possibly on each chamber floor, before negotiations begin towards a compromise budget.

Overview of the House budget:

Compared to the Governor’s proposal, the UW would receive an additional $50,000 to fully fund the implementation of HB 1138. In addition, the House budget would not reduce the UW’s allocation for legal services (the Governor proposed a reduction of $151,000).

Under the House proposal, the UW’s share of the settlement in the Moore v. HCA lawsuit would increase to nearly $16.3 million, compared to $15.6 million in the Governor’s budget.

The House Capital Budget Committee will release its 2016 supplemental capital budget proposal on Wednesday. Stay tuned to the OPBlog for updates on proposed budgets as they move through the process.

On Wednesday, the Economic and Revenue Forecast Council (ERFC) released its February revenue forecast, which reduced projected General Fund-State (GF-S) collections compared to the November revenue forecast (see our blog post here). The GF-S revenue forecast decreased by $67 million for the current 2015-17 biennium and by $442 million for the 2017-19 biennium. While the revision to the 2017-19 outlook is not inconsequential, there will be at least four more revenue forecasts between now and when the legislature will set a 2017-19 biennial budget – plenty of time for the outlook to change.

  • Total projected GF-S revenue for the 2015-17 biennium is now $37.137 billion, 10.3 percent more than the 2013-15 biennium.
  • Total projected GF-S revenue for the 2017-19 biennium is now $40.125 billion, 8 percent more than the 2015-17 biennium.
  • The forecast included an initial forecast of GF-S revenue for the 2019-21 biennium of $43.441 billion, 8.3 percent more than the 2017-19 biennium.

Behind the numbers:

  • The forecast attributes decreases in projected revenues to slower than expected growth in the U.S. and Washington state economies.
  • Washington exports declined for the first time since 2009.
  • Other negative factors cited in the forecast include lower forecasted personal income growth, reductions in housing permits and property tax growth, and lower tax receipts due to low oil and gas prices.
  • Some positives include slightly higher than expected tax receipts since the November forecast, increases in hourly wages, and the fact that lower oil and gasoline prices are a positive for consumers.

The Governor’s Council of Economic Advisors, which advises the Governor on the state of financial matters, offered a slightly more pessimistic revenue prediction based on the ERFC February Forecast, predicting additional decreases in forecasted GF-S revenue of $55 million in 2015-17 and $202 million in 2017-19.

Budget writers in the House of Representatives and the Senate will use the February Revenue Forecast to set expenditure levels for their 2016 supplemental budget proposals. House and Senate budget proposals are expected to be released the week of February 22. The last day of the regular session is March 10.

Stay tuned to the OPBlog for updates on budget proposals from the House and Senate when those are released.

New York state has recently instituted the “Get on Your Feet” loan forgiveness program in an effort to keep young college graduates living and working in the state. The program, originally introduced as a part of Governor Cuomo’s 2015 Opportunity Agenda, is designed to help struggling recent graduates in the state pay back their student loan debt. Get on Your Feet is the most recent extension of NY state’s financial aid to its college graduates, which includes loan forgiveness for several public service professions and need-based state grant programs with awards of up to $5,165.

There are a number of eligibility stipulations for the program, including that the graduate be enrolled in the federal Income-Based Repayment plan or the Pay As You Earn plan, that they are making less than $50,000 per year, that they work and have graduated in-state, and that they have received their degree during or after the 2014-15 academic year. Get on Your Feet also only applies to federal loans; private loans are ineligible for relief through the program.

The plan, which has been covered by CNN Money, the Huffington Post, Forbes, and the Washington Post, is not without controversy – recent graduates who do not qualify for Get on Your Feet are upset because they feel they are paying for others’ college costs while reaping none of the benefits of the loan forgiveness. The program is financed through the state’s General Fund, for which the primary sources of revenue are in-state taxes.

The Washington Post article above (linked again here) lists some of the other states that have forms of student loan forgiveness. Forty-five states and the District of Columbia offer some form of loan forgiveness for its residents, according to the article, but New York is the only state that specifically targets lower-income graduates. Most programs in other states are concentrated in public-service industries; health, social work, teaching, and public law.

Washington state provides health-care professionals with loan forgiveness of up to $70,000 over two years (details here) and also gives financial assistance in the form of the State Need Grant (SNG), which distributes financial aid awards up to the price of in-state undergraduate tuition—$10,344 at UW—for Washington residents whose families meet the minimum income requirements.

Unfortunately, more than 33,500 students across Washington, 3,500 of whom attend the UW, are eligible to benefit from the SNG but do not because the program has not received sufficient funding from the state.

 

 

Governor Jay Inslee released his supplemental operating and capital budget proposals on Thursday, both of which include technical corrections and minor appropriation changes to the current 2015-17 biennial budgets (fiscal years 2016 and 2017). This budget release marks the first step of the 2016 legislative session – set to begin on Monday, January 11, 2016. As a reminder, the House and the Senate will propose their own supplemental budgets throughout this short 60-day session as they work toward a compromise budget.

As predicted, Governor Inslee’s proposal offers very few changes to ongoing appropriations. In response to the UW’s request, the proposal provides increased expenditure authority for ongoing shellfish biotoxin monitoring work by the UW’s Olympia Regional Harmful Algal Bloom Program, beginning in FY17. If this budget prevailed, the University would also receive $250,000 in additional ongoing funding for the Mathematics, Engineering, and Science Achievement program beginning in FY17. The proposal does not make changes to the compensation and benefits assumptions of the 2015-17 operating budget.

For more information, please see our brief on Governor Inslee’s 2016 Supplemental Operating and Capital Budgets.

On Wednesday, the Economic and Revenue Forecast Council released its November revenue forecast, which projected a slight increase to General Fund-State (GF-S) collections over the September revenue forecast. The GF-S revenue forecast increased by $113 million for the current 2015-17 biennium and $30 million for the 2017-19 biennium.

  • Final GF-S revenue collections for the 2013-15 biennium were $33.666 billion.
  • Total projected GF-S revenue for the 2015-17 biennium is now $37.204 billion, 10.5 percent more than the 2013-15 biennium.
  • Total projected GF-S revenue for the 2017-19 biennium is now $40.567 billion, 9 percent more than the 2015-17 biennium.

Behind the numbers:

  • The forecast attributes the higher projections to strong performance in auto sales and service-providing industries.
  • Cannabis revenue from Clark County fell after Oregon legalized marijuana, but statewide revenues have continued to grow.
  • Concerns cited in the forecast include weaker-than-expected job growth, a dip in exports, and a manufacturing decline in the United States and Washington state.
  • The forecast assumes that the Federal Reserve will gradually increase interest rates starting in December.

According to a Spokesman Review article, expenditures in the 2015-17 biennium are expected to exceed the $37.204 billion in expected revenue. Further complications include a costly wildfire season, the $100,000 per-day fine that the state Supreme Court levied on the Legislature for failing to come up with a plan to boost public school funding, and voter approval of Initiative 1366, which will reduce state sales tax by 1 percent if the Legislature doesn’t approve a constitutional amendment to require a two-thirds vote for tax increases.  David Schumacher, director of the Office of Financial Management (OFM) is quoted in the Spokesman Review article as saying, “What this means, of course, is that there will be very little room for new spending in this year’s supplemental budget.”

Governor Jay Inslee will use the November revenue forecast to craft his 2015-17 supplemental budget proposal, which is expected to be released in December. Stay tuned to the OPBlog for updates on the Governor’s budget proposal when it is released.

A recent story in the LA Times, “UC seeks to boost Californians’ enrollment by 10,000 by 2018,” outlined the University of California’s plan to expand resident undergraduate enrollment at their nine undergraduate campuses. Like many U.S. public universities that have faced significant state divestment during the recession, the UC system has enrolled more nonresident students in recent years to help cover funding cuts and keep resident tuition increases to a minimum. To adjust this trend, the California Legislature recently increased its investment in the UC system by $25 million to partially fund the enrollment of 5,000 additional resident undergraduate students by no later than 2016-17.  To pay for an additional 5,000 enrollments proposed by UC, system President Janet Napolitano plans to phase out aid for low-income non-resident students and request additional funding from the California Legislature. Napolitano was quoted as assuming the legislature would “continue to support access for California students.”

According to the article, UC officials are now “working through the logistics of housing, laboratory availability, and classroom sizes.” The increase in undergraduate students will also necessitate enrolling 600 more graduate students for instruction and lab support.

The University of Washington has faced similar financial pressures as a result of the recession, but remains committed to providing Washington students with affordable, quality higher education.

  • The UW continues to fully fund Husky Promise, which covers, at minimum, tuition and fees for resident undergraduate students who qualify for the Pell Grant or State Need Grant.
  • Since 2009-10, the UW has increased incoming enrollment of resident undergraduates by more than 1000 students at its three campuses.
  • During the recession, the UW increased its contribution to institutional financial aid in order to maintain access for students with the most financial need.
  • The percentage of Pell-eligible students at the UW rose from less than 20 percent in 2007-08 to 29 percent in 2014-15.

With over 188,000 undergraduate students in the UC system, the plan would increase their undergraduate enrollment by over 5 percent. To achieve a similar overall increase, the UW would need to add approximately 2000 students and would face significant barriers in doing so. Unlike the UC system, UW does not provide need-based aid for non-resident undergraduate students, and thus would not be able to cut that non-resident aid funding to pay for additional resident enrollment. Additionally, all three campuses are nearly at capacity without significant capital investment.

Undergraduates who graduated with student loan debt from four-year colleges in 2014 owed an average of $28,950, according to a recently released report by The Institute for College Access and Success (TICAS).[1][2] 69 percent of graduates have loan debt, the same figure as last year and slightly higher than it was in 2004 (65 percent). The average amount of debt per borrower is up 56 percent from 2004 – more than double the inflation rate over the same period – but only up 2 percent from 2013.

A number of factors have contributed to the rising student debt load over the past decade. States have decreased their investment in public higher education over the last ten years, causing students at public institutions to bear a higher percentage of the funding burden. Since 2004, the share of public higher education funding provided by states has dropped (from 62 percent to 51 percent) and the share paid by students and their families (in the form of tuition) has increased (from 32 percent to 43 percent).

In addition, the growth of Pell Grants has not kept up with rising costs. The TICAS report shows that between 2004 and 2012—the last year in which data is available—recipients of Pell Grants at public four-year colleges saw average cost of attendance rise by $7,400 and grant aid rise by just $2,900. At private, non-profit colleges the gap is even wider; costs rose by $14,400 and grants increased by $8,700.

Washington state is performing well with regard to student loans: only 58 percent of Washington bachelor’s degree recipients who graduated in 2014 had loans, and those who did had an average of $24,804, more than $4,000 below the national average. The University of Washington also looks good by these metrics: thanks in large part to the University’s commitment to institutional aid through programs such as Husky Promise, less than half of all UW undergraduates who graduated in 2014 had student debt and the average debt burden was $21,558, well below the state and national averages.

While Washington’s performance relative to its peers is laudable, student debt is still a major issue for many students. The TICAS report offers a series of proposals to mitigate the student debt load, among them doubling the size of Pell Grants, simplifying income-driven repayment plans, and improving student loan servicing to make it easier for students to pay back their loans. It is important that policymakers remain focused on reducing the student debt burden and continue working with institutions to make higher education accessible and affordable for all students during and after graduation.

 

 

 

[1] It’s important to note that borrowing rates and debt levels vary widely by state, college and sector.

[2] Because the federal government does not require colleges to report debt levels for their graduates, data in the TICAS report is based on voluntary reporting by institutions. Hardly any for-profit colleges voluntarily report their graduates’ average debt, so this year’s debt figures are for public and nonprofit colleges only.

Leadership in both House and Senate passed a compromise operating budget in the form of  Engrossed Substitute Senate Bill 6052.

All of higher education including financial aid would receive $3.5 billion of Near General Fund (NGF) for the biennium which is 9.2 percent of the overall NGF appropriation of $38.2 billion.

The compromise budget adopts the provisions in Second Engrossed Substitute Senate Bill 5954, which reduces the operating fee portion of resident undergrad tuition at all public higher education institutions. In 2015-16, resident undergraduate operating fees at all public institutions are to be 5 percent below the 2014-15 rates. In 2016-17, resident undergraduate operating fees at the state universities (the UW and WSU) are to be 15 percent below the 2014-15 rates; at the regional universities, they are to be 20 percent below the 2014-15 rates; and at the community and technical colleges, they are to be held at 5 percent of the 2014-15 rates.

This budget provides $27 million to partially fund compensation increases of 3% in FY16 and 1.8% in FY17. This budget also partially funds collective bargaining agreements with WFSE and SEIU.

Listed below are some of the Key funding’s provided by this budget:

Computer Science – $6 million over the biennium to increase bachelor’s degrees awarded in Computer Science.

WWAMI – $9 million over the biennium to continue operations in Spokane.

Family Practice Medicine Residency Network – $8 million over the biennium to fund additional medical residencies.

O&M Funding – $1.76 million over the biennium to cover maintenance costs for UW Bothell’s Discovery Hall.

The legislature also passed the final capital budget. For more details on the operating and capital budgets, please refer our OPB Brief.

Leadership in the House Appropriations Committee released a third operating budget proposal today in the form of 2P2SHB 1106 and PSHB 2269. This proposal still differs from the Senate budget proposal SB 6050 and varies from the previous House operating budget P2SHB 1106.

All of higher education (including financial aid) would receive nearly $3.348 billion (8.8 percent of near general fund appropriations). Under this proposal, the UW receives a total appropriation of $650.5 million, of which $598.19 million is from Near General Fund account.

Here are some of the key points from the House Budget (2P2SHB 1106) released today :

  • Tuition – This budget assumes tuition rates remain at the levels charged in 2012-2013. Funding is provided to freeze resident undergrad tuition in the first year; however, funding in the second year is provided in HB 2269 (see below).
  • Compensation Increase – This budget proposal is similar to prior proposals, authorizing a 3% and 1.8% for FY16 and 17 respectively; in addition, this budget provides limited funds for the UW’s contracts with SEIU and WFSE.
  • WWAMI – This budget contains a proviso to transfer $4.68 million a year from WSU to the UW to maintain WWAMI and support expansion of this program to 60 students.
  • O&M Funding – $1.762 million over the biennium to cover the Operating and maintenance cost of UW Bothell Discovery Hall which is the same as the House budget, but slightly higher than the Governors funding.

HB 2269 was introduced alongside the primary appropriations bill and would fund the following activities:

  • Medical Residencies – HB 2269 appropriates $8 million over the biennium for medical residencies.
  • Computer Science – This budget provides $8 million over the biennium to increase bachelor’s degrees awarded in computer science.
  • Computer Science Building – This budget appropriates $32 million over the biennium from State building construction account.

We anticipate significant activity this week and will post additional updates to the blog.

Leadership in the House Committee released a new Operating budget proposal in the form of P2SHB 1106 as a counter offer to the Senate budget released last week. This proposal still differs from the Senate budget and varies slightly from the engrossed House operating budget, ESHB 1106.

All of higher education (including financial aid) would receive nearly $3.49 billion or 9 percent. UW receives a total appropriation of $612.3 million of which $591.39 million is from Near General Fund account.

Here are some of the key points from the House “Offer “Budget proposal:

  • Tuition – This budget freezes tuition to all higher education institutions at the levels charged in 2012-2013. Funding is provided to freeze resident undergrad tuition.
  • Compensation Increase – This budget proposal is similar to prior proposals in authorizing a 3% and 1.8% for FY16 and 17, however this budget would only partially fund the cost of increase. This budget provides limited funds for the UW’s contracts with SEIU and WFSE.
  • WWAMI – This budget contains a proviso to transfer $4.68 million a year from WSU to the UW to maintain WWAMI and also a contains a requirement to support 60 first year medical students and 60 second medical students through WWAMI program in Spokane.
  • O&M Funding – $1.762 million over the biennium to cover the Operating and maintenance cost of UW Bothell Discovery Hall which is the same as the House budget, but slightly higher than the Governors funding.
  • Computer Science – This budget provides $4.25 million over the biennium to increase bachelor’s degrees awarded in computer science.

Please refer to our OPB Brief for more information about the special session House “Offer” budget.

← Previous PageNext Page →