House Releases Budgets…Nearly A Half Billion Reduction to Higher Education

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Yesterday the Washington House released its proposed biennial operating and capital budgets along with a supplemental budget for the current fiscal year.

2011-13 Operating Budget
The proposed budget (HB 1087) makes approximately $4.4 billion in total reductions. The budget reduces funding for higher education by $482 million.  The Evergreen State College is reduced by an additional $13.9 million and authorized to increase tuition by 11.5% per year for the biennium.

Reductions greater than $50 million include:

  • $1.2 billion for I-728 and I-732
  • $482 million in a general reduction to higher education institutions (in part, offset with tuition)
  • $362 million from making changes to how certain future pension benefits are calculated for Plan 1 retirees
  • $216 million from elimination of the K-4 class size enhancement
  • $176 million from a 3 percent reduction in state employee salaries
  • $141 million from hospital rates and related changes
  • $108 million from changes to the Basic Health Plan
  • $104 million from biennializing the ESHB 1086 across-the-board reduction for higher education institutions
  • $100 million in reduced Disability Lifeline cash grants
  • $97 million for reduced personal care hours for long-term care and developmentally disabled clients
  • $89 million from a change in the Federally Qualified and Rural Health Centers payment methodology
  • $61 million from changes to the K-12 National Board Bonus program
  • $57 million from limiting state contributions to certain higher education pension costs to 6 percent
  • $56 million from freezing K-12 steps
  • $53 million from a K-12 alternative learning program funding adjustment
  • $53 million in reduced nursing home rates and quality incentive payments

The budget bill also adds approximately $500 million in policy additions, some of which are expected to achieve additional savings. Policy additions include the following items:

  • $240 million (net) repayment of the K-12 apportionment delay in the 2011 supplemental budget.
  • $103 million for the higher education State Need Grant to accommodate authorization to increase tuition.
  • $72 million in K-12 related items (mostly related to converting to a new funding formula).
  • $30 million for increased debt service.
  • $23 million related to the Special Commitment Center trials/hearings.
  • $11 million for repayment to the State Efficiency and Reorganization Account.

In addition the budget also makes the following changes, transfers, and consolidations.

  • Assumes a net receipt of $300 million to the General Fund-State from the privatization (lease) of the state liquor distribution center.
  • Assumes that higher education institutions are authorized to implement tuition increases totaling $379 million for the biennium 
  • Assumes net fund transfers into the General Fund-State of $214 million, and another $124 million by permanently consolidating certain revenue sources into the state general fund.
  • Medical Purchasing Administration: The DSHS Medical Assistance Administration becomes part of the Health Care Authority.
  • Consolidates the following into the Department of Enterprise Services: The Department of General Administration, the State Printer, and parts of the Department of Information Services, the Department of Personnel, and the Office of Financial Management are merged into the new Department of Enterprise Services. Remaining portions of the Department of Personnel and the Department of Information Services are consolidated into other agencies, including the newly created Consolidated Technology Services Agency.
  • Consolidates the Department of Heritage, Arts, and Culture: The Arts Commission, the Washington State Historical Society, the Eastern Washington Historical Society, and the Department of Archaeology and Historical Preservation are merged into the new Department of Heritage, Arts, and Culture.
  • Consolidates the Indeterminate Sentence Review Board and the Sentencing Guidelines Commission are merged into the Department of Corrections.

2009-2011 Supplemental Budget

This proposal addresses the remainder of the shortfall and leaves a projected near general fund ending balance of approximately $36 million. There are two main elements to this proposal: 

  • Incorporating the latest projection of federal rates used to match Medicaid expenditure costs, $128 million; and
  • Delaying a portion of the apportionment payments that would otherwise be made to school districts in June 2011 until July 2011.  This saves a net of $240 million in the 2009-11 biennium and increases net 2011-13 costs by an equal amount.

2011-13 Capital Budget
The proposed capital budget (HB 1497) provides for approximately $1.43 billion in bond-supported capital budget capacity for the state. Of this $801 million in bond capacity is available in FY 2012 with the balance available in FY 2013.

Approximately a quarter of the capital budget is appropriated for projects that preserve the state’s public assets through renovation, preservation, and minor works projects. Higher education received $453.2 million for major renovations, preservation, and preventative facility maintenance.

In addition the capital budget creates a $10.5 million pool of emergency funds under the Office of Financial Management to address unforseen emergency repairs at state-owned facilities statewide.

The capital buget proposes $626.7 million in total funds for higher education, including $407.6 million in state bonds.  The four-year public baccalaureate institutions receive $167.3 million in state-bonds.  This includes funding for Evergreen’s Communications Building, science lab renovation, and a predesign for the Lecture Hall.

Next Steps
The House Ways & Means Committee and the House Capital Budget Committee have scheduled actions to move both budgets from committee tomorrow. The House Ways & Means Committee will convene at 3:30 tomorrow (April 6) and the House Capital Budget Committee will convene at 1:30.