Monthly Archives: February 2010

Revenue Forecast Released – State Deficit Ticks Up to $2.8 billion

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Today the Washington Economic & Revenue Forecast Council released the February economic and revenue forecast.

The forecast for state funds for the 2009-11 biennium is $118.2 milion less than expected in the last forecast in November.  The reduction in state revenue is down because of a $149.7 milllion reduction associated with the DOT Foods Supreme Court decision. The increase in caseloads, the DOT Court decision, and other factors resulted in the net loss of $118 million.

If only economic factors were considered the forecast would be up by $31.5 million.

The forecast shows that economic events and revenue collections continue to unfold as was anticipated in November. However, Washington’s economy is still in the early stages of recovery so risks reported in the preview released February 5 remain serious.

Details

  • Continued tight credit for small businesses poses a significant challenge for recovery and will slow down the recovery in jobs.
  • Though consumer confidence is improving, this is tentative. Confidence is expected to continue to improve as the job situation improves.
  • House marketing indicators are signaling a potential turnaround. Single family housing starts, sales and prices have begun to firm-up, despite the overhang of excess housing which has yet to be absorbed.
  • The state’s economy continues to lose jobs but the rate has slowed to a trickle in recent months and growth in some sectors has already turned positive.
  • Construction employment continues to decline. It is estimated there is a one-year lag between turning points in permits and turning points in housing related construction employment.
  • Washington’s manufacturing sector is poised for a rebound
  • Washington’s personal income is now growing moderately.

Though things seem to be improving it is important to note that downside risks remain significant.

House and Senate Floor – The New Hot Spot on The Hill

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Since yesterday the House and Senate have  for all intense purposes been sequestered to their respective floor chambers.

As the deadline to move bills from their chamber of origin looms (February 16) both the House and Senate are focused on moving bills forward to the opposite chamber for further consideration.

The long hours spent by policymakers, often requiring 10 or more hours on the floor, has resulted in the movement of several large pieces of legislation. Here are some highlights.

Senate Bill 6696 moved from the Senate floor to the House for consideration today. The Senate passed the bill with a vote of 41-5.

Senate Bill 6696 comprises several policy changes to K-12 to make Washington more competitive for Race to the Top dollars.  Senate Bill 6696 seeks policy and structural changes in the areas of school and teacher evaluation, assessment, and preparation. 

In a close vote (26-22), the Senate passed Senate Bill 6843. Senate Bill 6843  temporarily suspends tax-limiting Initiative 960 in its entirety. The passage of the bill publicly indicates the Senate’s intent to raise revenue in the 2009-2011 fiscal biennium.  From the effective date through July 1, 2011, any action or combination of actions by the Legislature that raises taxes may be taken with the approval of a majority of members elected to each house of the Legislature.

Senate Bill 6843 is scheduled for a public hearing on Saturday February 13 before the House Finance Committee along with other revenue related bills.

House Bill 2858, intitiated by the four-year, public institutions, passed the House 97-0.  HB 2858 provides institutions of higher education the authority to participate in group purchasing agreements.

House Bill 2973 passed this the House this evening (97-0). HB 2973 includes, in the definition of “resident student,” a student who resides in Washington and is on active military duty stationed in one of nine Oregon border counties. In addition, the bill adds a student who resides in Washington and is the spouse or dependent of a person who resides in Washington and is on active military duty stationed in an Oregon border county to the definition of “resident student.”

Finally, three bills that are intended to provide costs savings passed both the House and Senate and are headed to the Governor’s desk. 

House Bill 2998, House Bill 2921, and Senate Bill 6382 all passed the Legislature by end of day Wednesday. The bills, part of an agreed upon package by both the House and Senate, seek additional state savings by suspending state employee monetary performance-based awards through June 30, 2011; modifying appropriations for 2009-11 (does not impact Evergreen) by reducing approprations by $45.4 million; and continuing the freeze on salary and wage increases for exempt and Washington Management Service (WMS) employees of state agencies and institutions of higher learning is extended through June 30, 2011.

Caseload Forecast Up; Results in Increase in State Budget Deficit

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Today the Washington State Caseload Forecast Council released the latest report on public program and service caseloads.  It is not surprising the demand on public services (i.e. health and human services, public education, and corrections) continues to rise.

According to the Council, the rise in caseloads has resulted in an additional $96 million reduction to the state budget. The change pushes the state’s budget deficit to about $2.7 billion.

Though the state budget hole seems to have increased today the true size of the budget deficit will not be known until this Friday (February 12). On Friday, the Washington Economic Forecast Council will release the February economic and revenue forecast for Washington.

A preview of what might be expected was provided earlier this month. According to the preview of the forecast state revenues have increased slighlty by $45-50 million.

If the preview proves to be on the money, then the hit to the state budget ($96 million) would be reduced by nearly half .

$96 million decline – $45-50 million in revenue= $51-46 million additional budget reduction

So stay tuned…

Long Hours for Fiscal Committees

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The House and Senate Ways & Means Committees held marathon public hearing and executive sessions yesterday.  Midnight, February 9, marked the deadline for bills with a fiscal impact to move out of their respective appropriation committees.

The exception being any bills which are NTIB (Necessary To Implement the Budget). The bill cut-offs throughout session do not apply to NTIB bills and determing exactly whether or not a bill is NTIB can be subjective.

The House and Senate now move their attention to their respective floors in an effort to keep bills alive in the process. The next bill cut-off is Tuesday, February 16. Bills must have moved out of their chamber of origin to be considered active.

Senate Ways and Means Marathon – Tuition Policy and Teacher Preparation

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This afternoon the Senate Ways & Means Committee held public hearings on twenty-seven different bills with plans to move out of committee nearly nineteen bills.

The stars of this afternoon’s hearing were two education related bills. 

Senate Bill 6562 a.k.a. the tuition policy bill. SB 6562 authorizes the University of Washington, Washington State University, and the Western Washington University governing boards to set tuition rates. The average annual compounded rate of change of undergraduate tuition fees may not exceed 9 percent based on the previous 15 years, or 14 percent in any one year.

The Committee on Higher Education Performance is created and authorized to approve performance agreements. The performance agreement must be six years in duration. Annual adequate performance as determined by the committee is required to maintain tuition setting authority. The committee is composed of the chairs and ranking members of the Senate Higher Education and Workforce Development Committee, Senate Ways and Means Committee, House Higher Education Committee, and House Education Appropriations.

The UW, WSU, and WWU must waive full-time tuition fees for resident undergraduate students based on family and state median family incomes. Waivers of full time tuition fees for resident undergraduate students are provided on a graduated scale in 4.5 percent increments based on state median family income and the institution’s tuition fee rate. The waivers must be reduced by the amount of any state need grant, federal, state, and institutional scholarships, grants, and waivers. Such waivers are exempt from tuition waiver limitations.

Tuition fee setting authority remains the same as current law for Central Washington University, Eastern Washington University, the Evergreen State College, and the community and technical colleges.

The State Actuary presented to the committee the potential impact on the Guaranteed Education Tuition (GET) Program.  The State Actuary, given the assumptions in the bill, concluded there is virtually no risk of the GET Program running out of assets over the next 50 years if the program remains open and all other current policies and provisions remain unchanged. The one cautionary note shared by the State Actuary was that the impact may differ if purchaser behavior changes.

President Emmert (UW), President Floyd (WSU), and Trustee Phil Sharpe (WWU) testified in support of the bill. Each one stated that the bill provided the balance needed between a quality education and an accessible education for Washingtonians. 

Members of the Senate Ways & Means Committee asked several questions, including the current percentage of state funds that make up the budget of those institutions in the bill and how under these policy changes policymakers can be assured that  student-debt load would not rise and economic and ethnic diversity would not decline. In addition members asked whether or not the tuition setting authority in the bill allows the state to back away from future state support.  Additional questions posed included the impact on retention and the middle-income student population.

Charlie Earl, Executive Director, Washington State Board for Community and Technical Colleges and the League of Education Voters also testified in support of the bill.  The Washington Student Association and students from WSU, UW, and WWU testified in opposition to the bill. Students raised concerns regarding the increases in tuition identified in the bill and the fiscal pressure that will be placed on funding for state financial aid.

Senate Bill 6696 comprises several policy changes to K-12 to make Washington more competitive for Race to the Top dollars. The House proposed similar legislation, but disaggregated the policy changes among three bills – HB 3059, 3068, 3035.

Senate Bill 6696 seeks policy and structural changes in the areas of school and teacher evaluation, assessment, and preparation.  Of importance to Evergreen are the policy changes to teacher preparation programs. In particular the bill would require Evergreen’s teacher preparation programs to offer an alternate route program, which may negatively impact the College.  If grants and Race to the Top dollars are not received, Evergreen would be left to shoulder the costs of developing and implementing this program with no additional funds. Evergreen proposed a change to the language that would make offering alternate route programs permissive. The change in language was not included in the final bill approved by the committee and passed to the floor.

Evergreen also kept an eye on several other bills.

  • SSB 6702 makes available educational programs for juveniles confined in adult jails. Each school district, within which there exists an adult jail, must provide a program of education for juveniles confined therein. Districts may contract with educational service districts, community and technical colleges, four-year institutions or other qualified entities to provide all or part of these services.
  • SSB 6761 implements the recommendations put forward by the Quality Education Council during the interim.
  • SSB 6362 requires the Legislature to identify ten government priorities to verify that state agencies and activities are performing at their highest efficiency. The ten priorities include improving: student achievement in K-12; quality and respect for the public workforce; value of state college or university education; health of state citizens; security of the state’s vulnerable children and adults; the economic vitality of businesses and individuals; statewide mobility of people, goods, information, and energy; safety of people and property; quality of the state’s natural resources; and cultural and recreational opportunities throughout the state. The State Auditor is required to select the highest priorities to audit and the lowest priorities to assess. In addition, the State Auditor is required to present its work plan at an open public meeting for evaluation and recommendations prior to commencing audits.
  • SB 6374 requires the Office of Financial Management (OFM) to include economic modeling or other procedures that take into account increased economic activity which may result from economic development contemplated in legislation  in fiscal note instructions.
  • SSB 5543 requires producers of mercury-containing lights (lamps, bulbs, tubes, or other devices containing mercury and providing illumination) sold in or into Washington to participate in product stewardship programs that are fully implemented by 2013.
  • SB 6843  temporarily suspends the two-thirds vote requirement for tax increases and permanently modifying provisions of Initiative Measure No. 960 for improved efficiency and consistency with state budgeting.
  • SB 6833 allows the Office of the State Treasurer to enter agreements with state agencies for investment by the Treasurer of funds not currently deposited with the Treasurer.  At this time higher education is exempt from the bill. Evergreen supports the bill in its current form.
  •  SB 6845 requires the collection and use of additional information regarding information technology projects, including  the requirement that OFM obtain specific information about IT projects, including current and future costs by category, estimated operating savings and other benefits, and estimated start and end dates.

House Ways and Means Works through Weekend

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The House Ways & Means Committee held public hearings and executive sessions on a slew of bills this weekend. The Committee is focused on moving bills forward as the fiscal committee deadline, February 9, looms.

The Committee held public hearings on twenty-two bills ranging from teacher preparation to public disclosure laws.

Evergreen is watching a handful of the bills that were before the Committee.

House Bill 3174 allows the Office of the State Treasurer to enter agreements with state agencies for investment by the Treasurer of funds not currently deposited with the Treasurer.  At this time higher education is exempt from the bill. Evergreen supports the bill in its current form.

House Bill 2914 establishes a producer-designed product stewardship program for the collection, recycle, and disposal of mercury-containing lights.  Evergreen supports this effort.

Finally, two teacher preparation related bills were also heard this weekend. House Bill 3035 and House Bill 3038.  Both bills focus on accountability and evaluations for schools, teachers, and principles. Evergreen has expressed support for both bills throughout the legislative process.

 
 

 

February State Economic Review: Recovery in Economic Activity Continues

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On Friday, the Washington Economic & Revenue Forecast Council released a preview of the upcoming revenue forecast.

Overall, things may be looking up.

The report states that recovery in economic activity continues in the fourth quarter of 2009, but recovery in jobs continues to lag.

Though concerns remain regarding credit to small business, the recovery of the construction sector, and the tentative nature of consumer confidence, there are reasons for positive thinking. Washington’s economy will outperform the nation, benefitting from higher overall exports and relative stability in aerospace and softwar publishing. In addition, cumulative revenue collections are on track to come in at $45-50 million above the November forecast.

Details

  • Continued tight credit for small businesses poses a significant challenge for recovery and will slow down the recovery in jobs.
  • Though consumer confidence is improving, this is tentative. Holiday shopping figures showed some evidence of a modest release of pent-up demand, but were mostly positive in growth because of the very poor results a year ago.
  • House marketing indicators are signaling a potential turnaround. Single family housing starts, sales and prices have begun to firm-up, despite the overhang of excess housing which has yet to be absorbed.
  • The state’s economy continues to lose jobs but the rate has slowed to a trickle in recent months and growth in some sectors has already turned positive. In addition, initial state unemployment claims seem to be indicating an imminent turnaround in the state’s labor market.
  • New housing construction in the state continues to improve according to housing permit data.
  • Construction employment continues to decline. It is estimated there is a one-year lag between turning points in permits and turning points in housing related construction employment.
  • Washington’s manufacturing sector is poised for a rebound
  • Washington’s personal income is now growing moderately.

Though things seem to be improving it is important to note that downside risks remain significant and at the same level as in November. There is a risk of a double-dip  or “W-shaped” recovery where economic activity lags in the fourth quarter of 2010. This is likely to happen if by the middle of next year consumer spending and confidence fails to recover as is expected.

The official February revenue forecast is scheduled for February 12.

Obama Unveils Higher Education Agenda

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Along with his 2011 budget proposal, President Obama revealed his agenda for higher education.

Many of the objectives laid out in his agenda are not new. Most have been key components of his budget proposals since his inauguration in 2008. The focus continues to remain on efforts to assist college students and their families in meeting the costs of higher education.

Highlights

Make permanent the $2,500 American Opportunity Tax Credit. This tax credit applies to 100% of the first $2,000 of tuition and related college expenses, plus 25% of the next $2,000.

Require college students and higher education institutions to use the federal direct loan program to apply for student loans starting with the fall term.

Monthly payments made by college graduates to repay their student loans would be capped at 10% of their income. And any remaining loan balances would be forgiven after 20 years.

Pell Grants would be come a new federal entitlement program not subject to annual budget deliberations by Congress.

Increase the maximum Pell Grant from $5,350 in the current year to $5,710 in 2011.

In addition, the Administration continues to play an active leadership role through the Middle Class Task Force.

In January President Obama and Vice President Biden hosted a meeting of the Task Force. President Obama and Vice President Biden identified key investments for middle income families. Among these investments includes limiting students federal laon payments to 10% of their discretionary income.

Congress created the Income-Based Repayment (IBR) program in 2007. The Administration’s plan would improve the program by lowering the cap on federal student loan payments from 15% to 10% of discretionary income and forgiving any remaining debt after 20 years of payments, rather than the current 25 years.

Legislature Week 5: What is Happening

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As the Washington State Legislature gears up for the fifth week of the 2010 supplemental session all eyes will be on the fiscal committees in each chamber.

All fiscal committees must move bills with fiscal impacts to the floor of their respective chambers by end of day Feburary 9.

The appropriations committees (i.e. Senate Ways & Means and House Ways & Means) will meet Monday and Tuesday to continue their work on budget related matters and meet the legislative deadline.

The remainder of the week will be focused on the floors of the House and Senate. Both chambers will have until February 16 to move House bills to the Senate and vice versa.

After February 16 the process will re-start in a way as House bills go through the committee and floor process in the Senate and vice versa.

House Education Appropriations Wraps Up Work for the Week

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Today the House Education Appropriations Committee took up many of the bills passed yesterday by the House Education Committee.

House Bill 3068 passed out of committee with no amendments. HB 3068 provides that, if scholarship funds are available after qualified paraeducators have been accepted, individuals who participated in one of the Recruiting Washington Teachers programs for high school students can participate in the Pipeline for Pareducators conditional scholarship program.

House Bill 2852 passed out of committee with no amendments. HB 2852 excludes public and accredited institutions of higher education from laws that regulate providers of online learning in K-12 schools and authorizes school districts to claim basic education funding for students enrolled in college credit-bearing courses offered by these types of higher education institutions. Evergreen did not weigh in on the bill.

A second substitute bill for House Bill 3059 was passed out of committee. Evergreen was successful in amending the bill in response to the College’s concern about the lack of funding to accompany the requirement to provide a teacher preparation alternative route program and the impact on institutional mission.