Monthly Archives: October 2011

Governor Releases Budget Alternatives

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This morning Governor Gregoire released a list of budget reduction alternatives. The list of alternatives is designed to jump start budget conversations for the upcoming special session on November 28 which will focus on solving the state’s projected $2 billion shortfall.

The list is not the Governor’s 2012 supplemental budget, though it does provide some insight into where potential budget reductions will take place and where future reductions may occur if revenues continue to decline over the biennium.

The total budget reduction alternatives includes reductions beyond the $2 billion shortfall to provide legislators and stakeholders with a full array of potential budget reduction options.  However, the Governor does identify specific reductions from the list that may be included in her 2012 supplemental budget proposal to be released in late November (estimated date is November 28). 

The budget reduction alternatives make several reductions that will impact higher education, though not all of these are identified as potential items to be included in her 2012 supplemental budget. The items identified as tentative for inclusion in the Governor’s supplemental budget are in bold.

Financial Aid

  • $303 million – Eliminate the State Need Grant
  • $68.4 million – Alternative to Elimination: Reduce maximum State Need Grant award by 25% 
  • $30.6 million – Alternative to Elimination: Limit State Need Grant eligibility to public institutions
  • $25.5 million – Alternative to Elimination: Reduce State Need Grant eligibility to 55% of Median Family Income
  • $8 million – Suspend State Work Study program

Institutions

  • $222 million – Reduce state support to college and universities (two- and four-year) by 20%
  • $166 million- Reduce state support to colleges and universities (two- and four-year) by 15%
  • $111 million – Reduce state support to colleges and universities (two- and four-year) by 10%

 Other

  • $40 million- Eliminate National Board certification bonuses for teachers
  • $8.4 million – Alternative to Elimination: Reduce National Board certification bonuses for teachers
  • $38 million – Impose 10 furlough days
  • $37 million – Impose additional 1% salary reduction or K-12 employees (one year)
  • $32.7 million – Impose additional 1% salary reduction for state employees (one year)
  • $28 million – Impose health contributions for general government employees (one year)
  • $16 million – Alternative to Imposing health contributions: Reduce employer (state) monthly per-employee contribution from $850 to $825
  • $20 million – Reduce monthly state allocation for K-12 employee health benefits
  • $15 million – Reduce LEOFF Plan 2 employer contribution to actuarially necessary rates
  • $11.4 million – Suspend step increases (one year)
  • $9.7 million – Alternative to suspending step increases: Exclude employees who earn less than $2,500 per month
  • $4 million – Adjust contributions to Judicial Retirement System to payout rate
  • $476,000 – End sick leave cash-outs for employees who are not retiring

Responses to Governor Gregoire’s list of budget alternatives continue to emerge from legislative leadership including the House Democrats, Senate Democrats and Senate Republicans.

Further details regarding the 2012 supplemental budget will emerge over the next two months. Important dates along the way include the November 17 revenue forecast, the release of the Governor’s supplemental budget in late November, and the call by the Governor for legislators to return to Olympia at Noon on November 28 for a thirty-day special session, during which we will see additional budget proposals.  Finally conversations regarding revenues continue at the state level as the Governor and legislators engage in discussions about potential options to consider during the special session.

Obama Accelerates Relief for Student Borrowers

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On Wednesday President Obama announced new executive actions to lower student loan payments for federal student loans. These changes do not include private student loans.

The initiative accelerates an income-based repayment plan that reduces the maximum required payment on student loans to 10 percent of annual income. The measure was suppose to go into effect in 2014.

In addition the Obama Administration announced a program to allow borrowers to consolidate their loans and get a lower interest rate.

Higher Education Loses Strong Advocate

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Over the weekend it was announced that Washington State Senator Scott White passed away.  His passing is a great loss to higher education and the State of Washington.

Senator White was a strong and passionate advocate for higher education and Washington’s public baccalaureate institutions. He excelled at communicating complex policy issues on a personal and pragmatic level that was understood by multiple audiences. He was a positive and optimistic leader for higher education. His door was always open to all and he treated anyone who entered with respect, kindness, and a great sense of humor.

This is echoed in the many comments made by his colleagues over the last couple of days.

State Sen. Ed Murray, D-Seattle, said White was a young politician that many viewed as having immense potential — perhaps someone to be in Congress or Senate Majority Leader. He worked well with people across the political spectrum and had a fresh approach to politics that the public desired, Murray said.

“What stood out was that he was ambitious but he was positive,” Murray said. “He wasn’t ambitious and divisive. Scott wanted to figure out how to be progressive and how to move forward in a positive way.”

Gov. Chris Gregoire said White was never afraid to tackle difficult problems.

“I found him to be an absolute pleasure to work with, and a legislator who served his district and the entire state well,” Gregoire said. “He had a bright and promising future ahead of him.”

White served one-term in the Washington House and then was elected to the Senate in 2010.  He represented the 46th District which covers northern parts of Seattle. During his time in the House White served as a member of the House Higher Education Committee. In the Senate, White served as a member of the Senate Higher Education & Workforce Development Committee,  as the Senate Majority Whip and Vice Chair of the Senate Transportation Committee.

Though Senator White was strongly committed  to his role as a Senator, White’s priority was his family. White is survived by his wife and two small children.

“Above all, Scott’s greatest legacy and source of pride was his family,” Sen. Derek Kilmer said. “He was deeply committed to his wife and two young children, and took great joy in the life they built together.” 

A public service for Senator White is expected this week.

 

House Higher Education Committee Hearings

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This past week the House Higher Education convened the fourth of five committee hearings focused on educational attainment and regional industries.

The House Higher Education Committee met most recently at Skagit Valley Community College in Mt. Vernon. The focus of the meeting was innovation and its role in educational attainment in Washington. In addition higher education institutions, including Western Washington University, hosted regional industry panels that focused on the connections between higher education, workforce, and industry.

The day before the Committee met in Seattle to learn more about completion and its role in educational attainment as well as here from regional industry representatives. The Evergreen State College and the University of Washington, along with the Council of Presidents, participated from the public, bacclauareate sector.  Evergreen was represented on two panels. Paul Pryzbylowicz presented on higher education institutional initiatives to increase student completion and Libby Dunkin, an Evergreen alum and VP for Operations for Flux Drive, participated in the higher education and regional industry needs panel on manufacturing.

Prior to the meetings last week the Committee traveled to Spokane and Ellensburg in September to discuss two issues as they related to educational attainment: (1) outcomes for underserved populations and (2) transitions to college.  Each meeting the Committee heard from  regional higher education institutions and industry.

The next meeting of the House Higher Education Committee is scheduled for November 2 at South Puget Sound Community College.

Governor Convenes Second Meeting of Higher Education Steering Committee

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This week the Governor convened the second meeting of the Higher Education Steering Committee charged to establish the Council for Higher Education.

The Committee focused on the structure and goals of education in Washington. The Committee took time to discuss the various goals that have been charged each sector of education ranging from early learning to higher education.

The Committee then spent a considerable amount of time hearing about and discussing potential roles for the new Council of Higher Education. Committee members received a presentation by Aims McGuinness from the National Center for Higher Education Management Systems on the roles of higher education state-level entities in other states. The Committee combined there discussion of potential roles with a final conversation about potential functions of a new state level entity. 

The next meeting of the Steering Committee is scheduled for October 27.

Pell Grant: U.S. House and Senate Proposals

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The U.S. Congress is still working to finalize funding for fiscal year 2012, despite the fact that the fiscal year began on October 1.  In the meantime Congress has passed a continuing resolution to keep agencies and programs operating at fiscal year 2011 levels until a FY12 budget is passed, which is expected later this year.

Since 2009 Congress has provided new rounds of ad-hoc funding to maintain the increased maximum grant level established in the American Recovery and Reinvestment Act of 2009.  The new grant level continues to be a challenge for Congress. Since 2009 Congress has supported the increase in the grant through various efforts including:

  • Elimination of the guaranteed student loan program (2010)
  • Elimination of the “year-round” Pell Grant (2011)
  • Elimination of the interest-free benefit on subsidized federal loans for graduate students (2011)

In order for Congress to maintain the current maximum Pell Grant ($5,550 per year) it must appropriate $24.3 billion for FY12. This is an increase of $1.3 billion from FY11.

An examination of the House and Senate proposals (i.e. the release of the Labor-HHS-Education appropriation bills) shows the multiple ways each chamber is attempting to reach the fiscal target to maintain the Pell Grant. The different approaches leave room for a compromise in a final omnibus appropriations bill.

U.S. Senate

The U.S. Senate’s proposed appropration bill (S. 1599) would appropriate the full $24.3 billion to maintain the maximum grant in the 2012-13 academic year. The funding is offset by eliminating the interest-free benefit on Subsidized Stafford loans during an undergraduate borrower’s six-month grace period after leaving school. This would create savings of $1 billion which is allocated to support the 2013 Pell Grant and another $3.5 billion for the program between 2017-2021.

U.S. House

The U.S. House’s appropration bill does not add funding to the Pell grant and actually cuts funding when compared to FY11. The caveat being that the bill would still maintain the maximum grant of $5,550 in the 2012-13 academic year. The bill maintains the maximum grant by making significant changes to Pell Grant eligibility rules. These changes include:

  • Reducing he maximum number of semesters a student can receive a Pell Grant from 18 to 12
  • Eliminating eligibility for students that are attending school less than half-time
  • Reducing the amount of a student’s personal earnings that can be excluded from a Pell Grant award calculation
  • Reducing the maximum family income that would automatically qualify a student for the maximum grant from $30,000 to $15,000.
  • Eliminate eligibility for students who quality for less than 10% of the maximum grant.

These changes would lower the appropraiton needed to fund a maximum grant of $5,550 by $3.6 billion in 2012 and about $4 billion each year thereafter because fewer students would be eligible for grants and some students would receive smaller grants.