Monthly Archives: June 2010

State Releases Six-Year Budget Outlook

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The combined released today of the Governor’s plans to transform the state budget and the Office of Financial Management’s six-year budget outlook make it clear that the state economy will slowly recover. The Governor in her letter to Washingtonians stated, “…we expect budget challenges to be in place for at least the next four years.”

This is evident in the documents provided by the Governor’s Office and the Office of Financial Management. Both show projected budget shortfalls for the 2011-13 biennium ($3.053 billion) and 2013-15 biennium ($8.761 billion).

Both shortfalls are directly related to expected new costs over the next four-years, including replacement of federal funds, medical inflation, pension obligations, K-12 basic education obligations, and funding for voter initiatives I-728 (class size) and  I-732 (teacher salaries).

In its release of the six-year budget forecast, the Office of Financial Management notes that the shortfall estimates for 2011-13 and 2013-15 are based on budget obligations in current law and the latest official revenue and caseload forecasts. In addition, they recognize that any solution to the 2011-13 budget gap would reduce the projected gap in later years.

Governor Announces New State Budget Process

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Governor Gregoire announced a new state budget process for the 2011-13 biennium. Her intention is to develop a new biennial budget with more transparency, community involvement, and expert outside advice.

The new budget process will assume zero-based budgeting from the beginning. Zero-based budgeting focuses on reviewing the current and alternative funding levels for each agency activity (including zero).

In addition, each agency will be asked eight critical questions before their budgets are increased or shuffled. These eight questions are:

  • Is the activity an essential service?
  • Does state government have to perform the activity or can it be provided by others?
  • Can the activity be eliminated or delayed in recessionary times?
  • Does the activity need to be paid for with state general funds? Should users pay a portion of the costs?
  • Are there federal funds or other fund sources available to support this activity?
  • Are there more cost-effective, efficient ways to do the activity?
  • Can the activity be the subject of a performance contract?
  • Can the activity be the subject of a performance incentive?

The process will include a public component involving the opportunity for citizens to submit suggestions and a statewide tour to share the new budgeting process.

Finally, the Governor has asked leaders from across the state in a variety of fields to serve on the Governor’s Committee on Transforming Washington’s Budget. This panel will serve in an advisory capacity to the Governor during the budget development process. The charge of the committee is to quest budget assumptions, serve as a sounding board, and lend guidance.

The Governor also issued a time-line for the development of the 2011-13 budget. It is expected that as other dates and locations for budget hearings across the state are confirmed they will be announced.

  • Spring 2010                        Committee on Transforming the Budget formed
  • July 19, 2010                     First Budget hearing (Tacoma)
  • Early September 2010   Agency budget requests due
  • September 16, 2010        Updated revenue forecast adopted
  • November 18, 2010        Update revenue forecast adopted
  • Mid-December 2010      Governor’s proposed 2011-13 budget released
  • January 10, 2011             2011 Legislative Session begins

Quality Education Council Work Plan for 2010

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Yesterday, State Superintendent of Public Instruction Randy Dorn presented the Washington House Committee on Ways & Means with the Quality Education Council’s 2010 Work Plan.

The work plan is a product of the recent passage of state reform legislation for basic education and education funding. The legislation passed (H.B. 2661 and H.B. 2776) includes the following:

  • Requirements to identify funding and programs that close the achievement gap and improve graduation rates
  • All-Day Kindergarten included in basic education
  • Funding allocations and reporting on expenditures using a prototypical school model. Translates all major funding formulas to this new transparent structure by September 2011
  • Better transportation funding formula
  • Requirement to identify adequate levels for classified staff
  • Increased instructional hours once funded
  • Enhanced high school diploma requirements

With this in mind, the Quality Education Council has set forth the following work plan.

  • Identify measurable goals and priorities for the educational system utilizing the state reform plan and current performance data as a baseline
  • Recommend programs and funding to Close the Achievement Gap, Increase Graduation Rates, and Decrease the Dropout rate, including: recommend an improved Learning Assistance Program, including funding methodology; recommend an improved Transitional Bilingual Program, including funding methodology; review recommendations made by the Achievement Gap Oversight and Accountability Committee; and review recommendations made by the Building Bridges Workgroup
  • Implementation schedule for revised graduation requirements and increased hours of instruction
  • Making necessary reports to the Legislature regarding classified staffing adequacy and capacity of school districts to implement new funding including for class size reductions.

Finally, Superintendent Dorn spoke to the framework provided by the adoption of S.B. 6696 – Race to the Top legislation.

The legislation provides a framework for important changes that are required for the development of a comprehensive state reform plan.  The framework for this education reform plan is set out in three categories: (1) Goals, (2) Capacities, and (3) Outcome measures.

The framework identifies four goals for all Washington students,

  • Enter kindergarten prepared for success,
  • Compete in mathematics and science nationally and internationally,
  • Attain high academic standards regardless of race, ethnicity, income or gender, and
  • Graduate able to succeed in college, training, and careers.

In addition, in the area of outcomes, goals are set that highlight the link between pre- K12 and higher education. These include increasing graduation rates; increasing teacher and leader effectiveness; increase college readiness, attendance, persistence & completion; increase post-secondary degree and certificates; and increase work placements.

Washington House Ways and Means Committee Meets to Discuss Current Budget Issues and Potential Reform Ideas

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Yesterday afternoon the Washington House Committee on Ways & Means met to receive several updates on the current budget and discuss potential areas of reform as the 2011 legislative session approaches.

The Committee began the hearing with an update on the June Revenue Forecast released last week.  The forecast showed an economy that is recovering at a slow and uneven rate. This was perhaps best exemplified in the news that the June forecast was down over $200 million from the February forecast.

The Committee then received an update with regard to the anticipated federal Medicaid funds that have been up in the air.  At this time, the U.S. Senate is considering H.R. 4213 which includes the six-month extension for Medicaid funds to states. The Senate has voted twice to close debate and move the legislation, but both votes have failed.

The latest information shared with the committee suggests that policymakers in Congress may consider an extension with a phase out. What this means for Washington is that instead of receiving the full $480 million anticipated in the 2010 supplemental budget, the amount provided to the state would be tapered over the six months resulting in fewer dollars.

Though many things remain up in the air, for example policymakers may extend the Medicaid funding in other legislation or provide for another option for distribution of these funds to states, it was shared that the tapering of funds could provide as much as $410 million to Washington or it could be much less.

Finally, though the Committee agenda publicized a discussion of possible budget reform ideas, including the fiscal note process, standard approaches to reviewing the budget and agency budget requests, and adding performance measures to the budget, the committee chose to continue to discuss these issues among themselves via email and continue this discussion at the next meeting of the Committee.

U.S. Senate Rejects Certification on Private Education Loans

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Yesterday, the U.S. Senate rejected a House-sponsored amendment in a bicameral conference committee on the Restoring American Financial Stability Act of 2010 (S.3217) that would have mandated institutional certification on all private student loans.

This is a blow to many stakeholders in the private education loan world, of which most supported full school certification.

As shared in this blog in mid-May, the House-sponsored amendment would require providers of non-federal student loans to get colleges’ approval before they make such loans to students. The intention being to assure that borrowers turn to more-expensive private loans only after they have exhausted federal, state, and institutional grants or at least less costly federal student loans.

The Chairman, Senator Chris Dodd (D-CT), of the U.S. Senate Banking Committee stated, “the Senate cannot accept this provision..the Senate cannot agree to mandatory certification. I authored self-certification with Senator (Richard) Shelby (R-AL)…and it’s far too early in our view to make a judgment if we need something more.”

Dodd did note that the bill includes other “strong protections” for private student loan borrowers, including new Consumer Financial Protection Bureau (CFPB) oversight of private education loans and a new private student loan ombudsman to assist students who need help with their private loans.

Conferees are expected to continue to meet this week in hopes of finalizing negotiations so that the bill can be passed by Congress prior to the July 4 recess.

On This Date Over Six Decades Ago the G.I. Bill Became Law

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Sixty-six years ago, on June 22, 1944 President Franklin D. Roosevelt singed into law the Servicemen’s Readjustment Act (a.k.a. G.I. Bill of Rights).

The impact of this single piece of legislation has been monumental over the years.

  • Before WWII fewer than 15 percent of high school graduates earned college degrees. By 1950 nearly 500,000 Americans had graduated from college compared to 160,000 in 1939 as a result of the educational benefits provided under this legislation.
  • Under this program, approximately 2.4 million ex-service personnel took out home loans provided by the Department of Veterans Affairs, which were low-interest and zero-down- payment loans.
  • Under the 52-20 clause, all former service personnel were entitled to receive $20 a week for 52 weeks a year, while they looked for work.

U.S. House Committee Holds Hearing on Credit Hours

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Yesterday, the U.S. House of Representatives’ Education and Labor Committee held a hearing to examine how regional accrediting agencies assess the quality of higher education programs.

At issue was the definition of a credit hour and the perception that agencies are setting too lax a standard on the amount of time students spend on course work to earn academic credit. The Committee discussed whether requiring a minimum definition of a credit hour and/or program length would help prevent institutions from inflating credit hours to reap more tuition and state aid dollars.

The issue of “credit hour” definition initially emerged in audits conducted by the U.S. Department of Education’s Office of Inspector General of three accrediting agencies. In a May report, the Inspector General argued that a regional accrediting agency was not being strict enough when assessing the amount of credit awarded in a course offered by one institution.

The Chairman of the Committee, Rep. George Miller (D-CA) stated, “I am particularly concerned about institutions inflating credit hours in order to garner more student aid than is justified.”

The ranking Republican on the Committee, Rep. Brett Guthrie (R-KY), agreed with Miller with regard to the need to ensure institutions are fulfilling their missions, but expressed concerns about the federal government dictating what constitutes a quality institution of higher education.

The proposed rules being considered by the U.S. Department of Education would define a credit hour as “one hour of classroom or direct faculty instruction and a minimum of two hours of out of class student work each week for approximately 15 weeks for one semester or trimester hour of credit”.

The proposed rules also includes an exception to the definition of a credit hour. The exception defines credit hour as “institutionally established reasonable equivalencies for the amount of work required in [the previous definition] for the credit hours awarded, including as represented in intended learning outcomes and verified by evidence of student achievement.”

If the proposed rules regarding credit hour are put in place,  the U.S. Department of Education publicly stated it would closely watch the implementation of the rule and evaluate whether the definition of a credit hour is effective in protecting students and taxpayers.

State Revenue Forecast Shows Fewer State Dollars

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This morning the Washington Economic and Revenue Forecast Council released the June state revenue and economic forecast. The forecast estimates that Washington will receive $203 million less through June 11 than was forecasted in February.

Washington State Economist Arun Raha stated that the decline in expected state revenue is a result of disappointing employment reports in May and housing data that shows a significant pullback in activity following the expiration of the home buyer’s tax credit.  In the end it appears that the recovery for the state will be slow and uneven.

U.S. House Committee Schedules Hearing on Accreditation Related Issue

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Next week (June 17) the U.S. House of Representatives’ Education and Labor Committee will hold a hearing to examine how regional accrediting agencies define the “credit hour” as the agencies judge the academic quality and rigor of the institutions they accredit.

The issue of “credit hour” definition emerged in audits conducted by the U.S. Department of Education’s Office of Inspector General of three accrediting agencies. The concern focused on the perception that agencies are setting too lax a standard on the amount of time students spend on course work to earn academic credit.