Monthly Archives: June 2011

Governor Signs Biennial Budget

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Earlier this week Governor Gregoire signed into law the 2011-13 biennial operating and capital budgets.

Gregoire vetoed several sections of the operating budget passed by the Legislature at the end of May because of concerns with policy or technical issues. In addition she vetoed a handful of items in the capital budget, none of which impact Evergreen.

Included among the vetoes to the operating budget were:

  • A feasibility study on the implications of mandating direct payroll deposit for state employees based on prior research by the Office of Financial Management that raised concerns among stakeholders and limited cost savings given that the majority of state employees voluntarily use direct deposit.
  • The requirement that all state agencies, including institutions of higher education, complete a Washington State Quality Award or Baldridge full assessment with a schedule for completion of this assessment every three years and incorporation of this assessment into agency’s strategic plans. A veto was issued based on the unprecedented level of 2011-13 budget reductions and the existence of the the Government Management and Accountability Performance (GMAP) program which is more-cost effective.
  • The creation of the Agency Reallocation and Realignment Commission (ARROW) with responsibilities for examining current state operations and organization and making proposals to reduce expenditures and eliminate duplication and overlapping services. A veto was issued based on the existence of current mechanisms to perform many of the same responsibilities without the additional cost.
  • A proviso that directs Evergreen’s Washington State Institute for Public Policy to study the costs and benefits to state and local governments and the citizens of Washington from implementation of the state’s policies on “controlled substances”. A veto was issued based on the policy that controlled substances are under federal law and it would not be in the best interest of the state to spend funds on a study that cannot address the fundamental issues in this policy area.

The Governor also signed into law legislation requiring reductions in compensation related expenditures (SB 5860) and legislation that makes several changes to higher education retirement plans (HB 1981).

June Forecast Down

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Yesterday the Governor signed the 2011-13 biennial budget which left $730 million in total reserves for the upcoming biennium. As a result of today’s revenue forecast, the total reserves have been reduced to $163.3 million for the next two years.

The June economic and revenue forecast shows a decline of approximately $570 million in revenue for the 2011-13 biennium. In addition the forecast showed a drop of $84 million in revenue for the current biennium.

State Economist, Dr. Arun Raha, echoed the comments he made earlier this month when the economic review was released, suggesting that while the economy is improving it is doing so at a slower pace.

Raha cited sustained high gas prices and disruptions to the manufacturing supply chain  due to power shortages in Japan as the culprits.  Despite these hiccups the recovery is continuing and may even pick up momentum in the second half of the year as oil prices stabilize and Japan starts to rebuild.

No Third Term for Governor Gregoire

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Earlier this week Governor Gregoire announced that she would not seek re-election to a third term as the Governor of Washington.

In a press release, Gregoire highlighted her decades in public service and gave no set plans after leaving office in 2012.  In the meantime she plans on focusing on the economy in the next 18 months.

Who will become the next governor of Washington remains to be determined. Last week Washington’s Attorney General Rob McKenna announced that he will seek the Governorship. Though he has not declared, it is expected that current. U.S. Representative for Washington Jay Inslee will also put his hat in the ring to run.

Other names that are floating around but have not declared include Bill Bryant, Seattle Port Commissioner; Aaron Reardon, Snohomish County Executive; Dow Constantine, King County Executive; and Brian Sonntag, Washington State Auditor.

Governor to Sign Budget Bills into Law Next Week

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A bill signing ceremony has been scheduled – Wednesday, June 15- to act on the operating and capital budget bills and all remaining policy bills that have not been signed to date.

Among the bills to be signed by the Governor is the 2011-13 operating budget (HB 1087), and the two bills that comprised the capital budget (HB 1497- capital budget and HB 2020 – bond authorization bill).  In addition the Governor will consider action on the compensation reduction bill (SB 5860), legislation to create the Department of Enterprise Services (SB 5931), and a  bill that makes several changes to Higher Education Retirement Plans and retire-rehire practices at higher education institutions (HB 1981).

Boeing and Microsoft Make Endowment Real

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Yesterday two of Washington’s major private employers – Microsoft and Boeing – each gave $25 million to start the Washinton Opportunity Scholarship program.

The program was established under legislation signed by Governor Gregoire on Monday.

House Bill 2088 creates an endowment for students pursuing a baccalaureate degree in a high demand field.

The Opportunity Scholarship Program and the Opportunity Expansion Program to mitigate the impact of tuition increases, increase the number of baccalaureate degrees in high employer demand and other programs, and invest in programs and students to meet market demand fields of study while filling middle-income jobs with a sufficient supply of skilled workers.

The Opportunity Scholarship Board is established to identify eligible education and training programs for purposes of the opportunity scholarship, select institutions of higher education to receive opportunity expansion awards, set fundraising goals, and solicit funds. 

The Opportunity Scholarship Program will be funded by a combination of private and state moneys. The state match, which must be appropriated by the Legislature, is earned for private contributions made after the effective date and must be paid beginning the later of January 1, 2014, or the first year with state revenues 10 percent higher than those received in fiscal year 2008. The state match payments are capped at $50 million annually.

The Opportunity Expansion Program will be funded with voluntary contributions of high technology research and development tax credits.

 

Governor Signs Multiple Higher Education Bills

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Yesterday the Governor signed a suite of higher education related bills that will alter higher education in Washington over the next biennium.

The most dramatic changes to higher education come from House Bill 1795 signed into law by the Governor.  In broad strokes the bill: (1) Provides tuition setting authority to the public, baccalaureate institutions in Washington for eight years and provides increased institutional financial aid to offset tuition increases; (2) Creates a consistent, uniform, and transparent performance measurement system; and (3) Tightens existing transfer policies and expands prior learning opportunities.

The bill, as passed by the Legislature, also provided regulatory relief for the institutions ranging from changes to procurement thresholds to the elimination of restrictions on equipment, travel, and meeting spaces. However, the Governor vetoed most of this section.

Another major change will come from the passage and signing into law of Senate Bill 5182.  This bill eliminates the Higher Education Coordinating Board and creates the Council for Higher Education and the Office of Student Financial Assistance as of July 1, 2012.

To guide this restructuring effort a steering committee on higher education is created to establish the purpose, functions, and membership of the Council. The Steering Committee is chaired by the Governor or the Governor’s designee and includes four legislators and equal representation from higher education sectors in the state.

The Governor did veto a portion of Senate Bill 5182 that reflected a technical error. As the bill was drafted the effective date of the transfer of powers would occur prior to the creation of the new office of student financial assistance on July 1, 2012. The Governor vetoed this section of the bill with the acknowledgement that the new higher education steering committee will make recommendations concerning higher education governance prior to the 2012 legislative session and the expectation is that the transfers of authority will be considered as part of these recommendations.

Over the next year the Higher Education Coordinating Board will remain in place and focus on a narrower portfolio of work to reflect the reduction in funding for the agency.

The Governor also signed legislation that will alter the Committee which oversees Washington’s Guaranteed Education Tuition (GET) program. Senate Bill 5749 makes the following changes:

  • The existing two members of the Committee on Advanced Tuition Payment are appointed by the Governor for four-year terms instead of an unspecified period of time.
  • Two additional representatives from private business are added and will be appointed by the Governor for four-year terms.
  • The Committee must use the State Actuary in reviewing the GET program rather than a nationally recognized actuary, though the Committee may consult with a nationally recognized actuary.
  • A legislative advisory committee to the Committee on Advanced Tuition Payment is established to provide advice regarding the administration of the program including but not limited to pricing guidelines, the tuition unit price, and the unit payout value.

Finally the Governor signed into law legislation that will create an endowment for students pursuing a baccalaureate degree in a high demand field.

House Bill 2088 creates the Opportunity Scholarship Program and the Opportunity Expansion Program to mitigate the impact of tuition increases, increase the number of baccalaureate degrees in high employer demand and other programs, and invest in programs and students to meet market demand fields of study while filling middle-income jobs with a sufficient supply of skilled workers.

The Opportunity Scholarship Board is established to identify eligible education and training programs for purposes of the opportunity scholarship, select institutions of higher education to receive opportunity expansion awards, set fundraising goals, and solicit funds. 

Economic Review Mixed

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A slowed economic recovery is on the horizon for Washington.

Last Friday, State Economist, Dr. Arun Raha, provided policymakers and others with an economic review that suggests while the economy is improving it is doing so at a slower pace.

Raha cites sustained high gas prices and disruptions to the manufacturing supply chain  due to power shortages in Japan as the culprits.  Despite these hiccups the recovery is continuing and may even pick up momentum in the second half of the year.

Policymakers in Olympia expect that revenues will be lower than projected when the revenue forcast is released on June 16, but believe the state has sufficient budget reserves to handle this.