Governor’s Proposed 2011-13 Budgets: Higher Education

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On Wednesday, the Governor released her proposed 2011-13 Operating Budget. The budget proposed by the Governor includes reductions and fund shifts to balance an anticipated $4.6 billion shortfall in the next biennium.

The budget proposed by the Governor is mixed with regard to its impact on higher education. The proposed budget does make an investment in financial aid by maintaining funds for the State Need Grant and provides capital funds to higher education institutions. However, the budget also includes significant reductions to higher education institutions and our employees.

 State Funding and Tuition

  • The Governor’s proposal formalizes the reduction to higher education institutions taken during last Saturday’s special session. As a result, this $777,000 reduction becomes permanent and is carried into each year of the 2011-13) biennium.

    Additional reductions for the current fiscal year are possible in January. The Governor will release her 2009-11 revised budget early next week, which will be the first opportunity higher education will have to view potential additional cuts to the current biennium to balance the remaining $400 million shortfall.

  • In addition to the cuts above, the Governor’s budget reduction proposal for the 2011-13 biennium attempts to replace most of state funding cuts (i.e. General Fund support) with tuition increases. The proposal reduced each higher education institution’s state funding at a level nearly equal to the amount of tuition revenue generated by the Governor’s suggested tuition rate increases.  The Governor established differential tuition rate increases for resident undergraduates at all higher education institutions and the community and technical colleges.
  • The Governor’s proposal would also remove higher education institutions from receiving any Education Legacy Trust Funds and replaces these funds with General Funds. Revenue from the cigarette taxes, which funded this account, would then be diverted to the General Fund and the remaining revenue in the Trust Fund would be appropriated to K-12.

Financial Aid

  • The Governor’s proposal increases funding for the State Need Grant by $91.6 million to account for proposed student tuition rate increases in 2011-2013. Despite the investment in the State Need Grant, it is anticipated that not all eligible students will be served. In the current academic year 22,000 eligible Washington students did not receive a State Need Grant because of funding limitations.
  • The Governor’s proposal maintains some support for State Work Study, but trims the program by nearly 30%, reducing the number of students that will be supported by the program to 5,000 students sector-wide compared to approximately 8,000 students that are currently benefiting from the program.
  • The Governor’s proposal further suspends several smaller state financial aid programs – Washington Scholars, Future Teachers Scholarship and Conditional Loan, Health Professions Conditional Scholarship, Passport to College Program, and WICHE Professional Student Exchange Program. No new awards will be provided in the coming biennium. However, students currently enrolled in these programs will continue to be supported.

Impacts to Employees

  • The proposal assumes that, beginning in 2012, state employees will pay 25% more of their health insurance premiums based on the agreement to permanently increase the employee share from 12% to 15%. 
  • The Governor’s proposed budget assumes a temporary reduction in classified employee salaries of 3% in 2011-13. This represents a cut to Evergreen’s budget by $1.92 million over the biennium. In return, classified employees would be allowed to take a comparable reduction in their work hours.  The reduction will expire at the end of the biennium.
  • The Governor’s proposal would cut Evergreen’s budget by $1.024 million over the biennium through a new policy that would cap the state match for employee retirement plan contributions at a maximum of 6% for those employees on the college’s retirement plan (e.g. TIAA/CREF).  Note: this would not apply to the state PERS, TRS and LEOFF plans.
  • The Governor would end the higher education “retire/re-hire” exemption.  Currently, retirees who are rehired in higher education, and their employers, are not subject to the retire/rehire limitations in place for other public employees.

Other Initiatives

  • The Governor’s proposed budget requires higher education institutions to provide coordinated, “uniform” personnel data for state planning purposes.
  • The proposal provides an additional $5 million for the Higher Education Coordinating Board to establish a Baccalaureate Incentive System to provide additional funds for institutions meeting certain degree, STEM (Science, Technology, Engineering and Math)   and retention benchmarks.

Capital

  • The Governor’s proposed 2011-13 Capital budget limits projects that are considered in either the pre-design or design phase.
  • The Governor’s proposal would appropriate funds to Evergreen for the Communications Building and Science Center Lab I Second Floor. In addition, the college would receive minor works funds.

The Governor’s budget is the first of many budgets that will be released to address the 2011-13 biennium. While the Governor’s budget is a critical first step in the budget development process, there will be many more budgets to review as the legislative session progresses. The Washington Legislature will convene on January 10 and many suspect that a final operating budget will not be sent to the Governor until the end of April.