On August 24, at 1:30 p.m. Eastern Time, Secretary Duncan will participate in the first-ever #AskArne Twitter Town Hall.
Veteran education journalist John Merrow will moderate the event, which will also be broadcast live on the Department’s USTREAM channel at http://www.ustream.tv/channel/education-department.
Twitter users can submit questions to the Secretary using the hashtag #AskArne.
Last week the Washington Economic and Revenue Forecast Council released the August revenue report – a monthly report.
The report shows that new state tax-collections for Washington are $9.4 million less in the past month than was forecasted. This brings the total shortfall since June to $30.8 million or 1.3 percent for the state’s general fund.
The state currently has a reserve of approximately $162 million through June 2013 without taking into account the September 15 forecast.
It is unclear whether or not Governor Gregoire will call the Legislature back to Olympia prior to the January supplemental session. If the Legislature is called back, budget writers have commented that if called back they would like to come up with a plan before returning to Olympia.
Today the Washington House Education Appropriations & Oversight Committee held a work session that focused on the impacts of the biennial budget and tuition policy changes to higher education.
Representatives from each of the public, baccalureate institutions and the community and technical colleges testified to the impact of the 2011-13 biennial budget on their students and institutions and the policy changes each institution adopted with regard to tuition.
Members of the Committee asked several questions with regard to the impact on financial aid with the passage of the budget and House Bill 1795. In addition, some members noted the sea change that has taken place as a result of HB 1795 and asked the institutions to provide feedback to policymakers as the various policies are implemented on campus.
The Committee also heard from experts regarding the impact of budget reductions on K-12, the latest high school graduate rate metrics, and efforts with regard to the transition between high school and college.
Yesterday, U.S. Senate Majority Leader Harry Reid announced that Washington’s Senator Patty Murray will co-chair the new Joint Select Committee on Deficit Reduction.
The Joint Select Committee on Deficit Reduction is a bipartisan, 12-member panel created by the deal struck by President Obama and Congressional leaders in late July 2011 to allow the government to raise the federal debt ceiling.
Reid also appointed two other Democratic senators, Max Baucus of Montana and John Kerry of Massachusetts, to the panel.
Baucus is chairman of the Finance Committee, which has authority over Medicare, Medicaid and taxes and Kerry is chairman of the Foreign Relations Committee.
The U.S. Senate Republicans and the U.S. House Democrats and Republicans have yet to name their representatives to the Committee.
Last week President Obama signed into law legislation that will increase the federal debt limit and reduce long-term budget deficits.
The Budget Control Act (BCA) of 2011 consists of both known and unknown impacts to higher education.
What is Known
The BCA impacts student aid in three major ways. First the legislation amends the Higher Education Act of 1965 to directly appropriate $10 billion in additional funds for Pell Grants in FY 2012 and $7 billion in FY 2013. These funds will supplement the portion of Pell Grants funded through annual discretionary appropriations. In addition, the bill eliminates the in-school loan interest subsidy for graduate and professional students and the Direct Loan repayment incentives.
What is Unknown
What remains unclear is the impact to higher education with regard to the near-term and long-term reductions to discretionary spending.
In the near-term the Act implements approximately $1 trillion in deficit reduction through the establishment of 10 year spending caps. The caps are established on discretionary spending through 2021. For Fiscal Years 12 and 13 the Act specifies spending limits for security and non-security spending, however in the following years the law only specifies the total.
The FY12 discretionary total is slightly less than FY11 spending levels (-$7 billion overall) but significantly more than provided in the House budget resolution. For non-security programs the FY12 spending level is -$2 billion compared to FY11 spending levels.
In the longer-term the Act creates a joint, bipartisan committee made up of 12 members of Congress to develop legislation to acheive at least $1.5 trillion in future deficit reduction by the end of November. The Committee’s legislation, which can include entitlements and revenues, must be voted on by the end of December.
Enactment of the Committee’s recommendations would permit President Obama to request an increase in the debt limit up to the amount of deficit reduction up to $1.5 trillion. The request would be subject to a congressional disapproval vote.
If the Committee’s efforts fail to achieve at least $1.2 trillion in deficit reductions by January 15, 2012 automatic across-the-board spending cuts would be applied to discretionary and certain mandatory federal programs, including Medicare. The automatic reductions would be equally split between defense and non-defense spending. If the reductions total less than $1.2 trillion over 10 years are implemented in alignment with the Committee’s efforts then across-the-board cuts would be used to cover the difference.
At this time it remans unknown what the composition of the Committee’s recommendations will be, but they will likely include some combination of program eliminations, consolidations and reductions. For higher education, discretionary reductions could impact several key programs, including Perkins Loans, the Supplemental Educational Opportunity Grant and TRIO programs.
Last week the Secretary of State’s office reported that three proposals qualified for the ballot.
The initiatives include measures to privatize the sale of liquor, restrict highway tolls, and reinstate a training program for home health care workers.
Initiative 1183 would close state liquor stores and sell their assets, including the liquor-distribution center. The initiative would allow private stores to sell liquor and create licensing fees for sale and distribution of liquor based on sales and revenues.
Initiative 1125 would require the Legislature, not the state Transportation Commission, to set tolls, and mandate that a toll on a particular road or bridge be used only for construction, operation or maintenance of that project.
Initiative 1163 would require background checks and training for long-term care workers and providers.
In July Governor Gregoire passed on the National Governors Assocation (NGA) Chair to Nebrasaka Governor Dave Heineman.
As the incoming chair, Governor Heineman unveiled his chair’s initiative for the year Growing State Economies-A Guide for State Policy Makers in Fostering Economic Growth. The initiative will include an individualized state profile for each governor, action-oriented reports on policy choices to generate job growth and four regional summits for governors and their senior economic advisors.
In July the National Governors Association (NGA) met to dialogue on a variety of issues facing states, including the role of higher education in global competitiveness.
A key part of the conversation with regard to higher education focused on a report introduced by Governor Gregoire, as part of her NGA Chair’s initiative Complete to Compete, that focuses on restructuring state higher education accountability systems. The report, From Information to Action: Revamping Higher Education Accountability Systems, makes the case that states should include efficiency and effectiveness metrics in their accountability systems to help answer for key policy questions.
The report goes on to suggest that several policy options are available to make better use of accountability measures, including bugeting, funding, and regulation.
If state revenues continue to decline, as witnessed in June and July and expected in September, Governor Gregoire will ask agencies to trim their budgets further.
This afternoon Marty Brown, Director of the Office of Financial Management, sent a memo to all state agencies asking each agency to prepare for possible cutbacks by submitting 5% first-priority reductions and a second 5% for a total of 10% in state funding reduction options as part of the agency’s 2012 supplemental budget request. The request does make exceptions for basic education, pensions, and debt service.
The impact to Evergreen of a 5% reduction of state funds would be a reduction of $1.545 million (a 1.5% reduction to total funds) and a 10% reduction of state funds would be a reduction of $3.89 million (a 3% reduction to total funds).
Recognizing the difficulty of this task given the limited amount of time that has passed since the passage of the 2011-13 budget, the memo encouraged agencies to revisit essential service assessments compiled last year and budget reductions included in the Governor’s 2011-13 biennial budget but were not enacted by the Legislature. In addition, the memo suggests additional consideration be given to new or additional policy choices and structural or business process changes that allow improved efficiencies and reduce state funding expenditures. Finally capital-budget proposals should be limited to technical corrections, emergency issues, or return of project savings.
Late Sunday congressional leaders appeared to have reached a deal to increase the nation’s debt ceiling. Though the impacts to higher education may not be the worst-case scenarios feared among advocates, as details come clear it is apparent that the plan leaves much long-term uncertainty for higher education.
Impacts to Financial Aid
In a fact sheet provided by the White House, funding for Pell Grants was protected. The plan “provides specific protection in the discretionary budget to ensure that there will be sufficient funding for the President’s historic investment in Pell Grants without undermining other critical investments.” Prior plans from both the Senate and the House would have directly appropriated funding for the Pell Grants in FY 12 and 13.
Despite the preservation of the Pell Grant, the deal does reduce some higher education benefits. Among the changes is the elimination of the interest subsidy for graduate student loans and the elimination of repayment incentives for federal student loans.
The Plan- Impact to Higher Education
The plan gives President Obama the authority to increase the debt limit by at least $2.1 trillion. The plan immediately enacts discretionary spending caps for 10-years for nearly $1 trillion in deficit reduction to be balanced between defense and non-defense spending.
In addition a bipartisan committee is established to identify an additional $1.5 trillion in deficit reduction. The Committee is required to put their recommendations into legislation by November 23, 2011 and Congress is required to vote on the recommendations by December 23, 2011. If the Committee fails an enforcement mechanism will trigger spending reductions beginning in 2013 to be a fifty-fifty split between domestic (i.e. discretionary spending and some entitlement programs) and defense spending. Social security, medicare beneficiaries, and low-income programs are protected from further reductions.
It still remains unclear exactly what discretionary spending would fall under the reductions if the enforcement mechanism is used. Further discretionary reductions could impact several key higher education programs, including Perkins Loans, the Supplemental Educational Opportunity Grant and TRIO programs. As the details come to light, what is known is that higher education will be competing for a slice of an increasingly smaller federal pie.