Author Archives: garverj

House Committee Moves Legislation Forward to Create Endowment

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This morning the House Ways & Means Committee took action on legislation that would establish an endowment for students studying in high-demand fields.

HB 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 middleincome jobs with a sufficient supply of skilled workers.

The Committee amended the bill as follows:

  • Retained the name of the State Need Grant. The original bill would have changed the name to the Opportunity Award.
  • Prohibited institutions that are selected to receive an Opportunity Expansion Award – an Award to an institution that proposes programs designed to increase the number of baccalaureate degrees produced in highemployer demand and other programs of study – by the Opportunity Scholarship Board from including the award in the institution’s base budget. In the original bill institution’s were allowed to include these awards in their base budget.
  • Clarified that eligible prorams are education programs. The original bill also including training programs.
  • Expanded eligibility requirements for the Opportunity Scholarships to require that students must have received their high school diploma or GED in Washington. The original bill did not include this requirement.
  • Removed language that would provide the program administrator with the discretion to set the scholarship amount at either $1,000 or the dollar difference between tuition and fees regardless of which amount is greater. The original bill would have provided for this discretion.
  • Replaced existing reporting language with more detailed language that requires the Opportunity Scholarship Board together with the program administrator to report to the Legislature and others with respect to both the Opportunity Scholarship and Opportunity Expansion programs and further requires legislative review and consideration of the annual reports. Includes requirements that the reports include data regarding the race, ethnicity, gender, county of origin, age, and median family income of applicatns and recipients of an Opportunity Scholarship.

House Bill 2088 now goes to the floor for further consideration.

Washington Economist Provides Preview Into Revenue Forecast

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Last week, Washington’s State Economist – Dr. Arun Raha – provided revenue figures that show March actual revenues dipping below expectations.

In his report released on May 11, Dr. Raha stated that, “The job market is improving, but the unemployment rate remains stubbornly high and housing is extremely weak.” The sentiment of this statement is echoed in the observations he puts forth in the May 11 report.

  • The economy recovery has appeared to have hit a road bump. High energy prices have caused growth to moderate, and uncertainty lies ahead.
  • The Washington economic recovery slowed in February and March after fairly strong growth at the end of 2010 and the beginning of 2011.
  • Major General Fund-State (GF-S) revenue collections for the April 11 – May 10, 2011 collection period were $157.7 million (13.3%) higher than the March forecast. The healthy collections mask a weakening economy. The entire positive variance was due to higher than anticipated one-time revenues from the recently concluded amnesty program and other one-time payments. Excluding them, revenue collections are slightly below forecast. 

In othe words, while the tax amnesty windfall makes the balance sheet look better, revenues were $32.5 million less than projected.

Dollars continue to trickle in from the amnesty program for businesses that originally was banked for $24 million and has climbed to nearly $350 million. It’s one-time money, however, and was used partially to shore up the June to July apportionment shift that helps bridge the gap in the fiscal year that ends June 30.

The next revenue forecast will be on or before June 20, and the news isn’t expected to be better – and may continue the downward trend due to high gas prices and a state economy that has remained flat.

Federal Budget for Education Takes Some Shape

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Last week, the U.S. House Appropriations Committee Chairman, Hal Rogers (R-KY), announced both the FY12 allocations for each of the 12 appropriations subcommittees, also known as the 302(b) allocations, and provided a tentative timeline for completing each bill. 
The allocations released would provide $139.218 billion to the Labor, HHS, and Education Subcommittee.  The allocation for the Labor, HHS, and Education Subcommittee is over $18 billion less than the recently agreed to FY11 level and more than $40 billion below the President’s FY12 budget request. 
The reductions in funding from the prior fiscal year and also from the President’s proposed FY12 budget are raising some concerns in higher education.  Advocates are concerned that the the funding level raises significant concerns regarding the ability to adequately fund NIH and the Pell Grant Program. 
Chairman Rogers stated that completion of work on the 12 fiscal year 2012 Appropriations bills should be finished by the end of the fiscal year on September 30th. This plan includes marking up and approving each bill at both the Subcommittee and Full Committee levels in the next few months before the August recess.
 

Week Four of the First Special Session

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Next week is the fourth week of the 2011 first special session – the last full week before sine die on May 25.

The lack of movement on either the operating or the capital budget or several significant policy issues is leading many on The Hill to suggest that a second special session will be needed to finish up. The Governor has indicated she would only call a second special session when policymakers were set to pass budgets.

Negotiations and proposals continue to move back and forth between the chambers and the Governor’s Office. In addition some details are being revealed as commitees work through NTIB bills. 

Next week’s schedule appears to be similar to the schedules of prior weeks. The Senate will return to Olympia on Monday at 10 a.m., followed by a budget committee meeting at 2:30 p.m.

The House wil return on Tuesday at 1:00 p.m. Earlier in the day the House Ways & Means Committee will meet followed by the House Capital Budget Committee.

The House Ways & Means Committee is scheduled to take action on HB 2088 which would set up an endowment for students studying in the STEM fields. HB 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 middleincome jobs with a sufficient supply of skilled workers.

The House Capital Budget Committee is scheduled to take action on SJR 8215– which would send a constitutional amendment to voters asking them to reduce the debt limit from 9% to 7%.  This policy proposal has been a point of contention between the Senate and the House, with the Senate in support and the House opposed. The scheduling of the bill in committee may suggest that a compromise has been reached or is near.

House Committee Moves Forward Bill to Restructure Higher Education at the State-Level

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This afternoon the House Ways & Means Committee passed legislation that would eliminate the Higher Education Coordinating Board (HECB) and restructure higher education at the state level.

Senate Bill 5182, as amended in committee, would eliminate the HECB and establish the Council of Higher Education and the Office of Student Financial Assistance.

The Office of Student Financial Assistance will be created as of July 1, 2011. The current fnancial aid program management under the Higher Education Coordinating Board (HECB) will be transferred to the Office.

The Higher Education Council will be established on July 1, 2012. Between now and the July 2012 date the HECB will continue and bridge the one-year delay before the new Council is in place.

The membership of the Council includes the president of the UW or her/his designee, the president of WSU or her/his designee, a president from the comprehensive institutions or Evergreen, the director of the state board for community and technical colleges, the superintendent of public instruction or her/his designee, one president from a non-profit, private institution, and five representatives of the public, of which one will be a current student.

The role and scope of the Council will be determined by a Joint Legislative Task Force on Higher Education.  The Joint Legislative Task Force will include eight legislators – four from each chamber, of which two will be Democratic legislators and two will be Republican legislators.

The Task Force is charged with reviewing coordination, planning, and communication for higher education in the state and establishing the purpose and functions of the new Council. The Task Force will report its findings and recommendaitons to the governor and the appropriate legislative committees by December 1, 2011.

Among the options to be considered include:

  • Creating an effective and efficient higher education system and coordinating key sectors including K-12
  • Improving the coordination of higher education institutions and sectors with specific attention to strategic planning, system design, and transfer and articulation
  • Improving structures and functions related to administration and regulation of the state’s higher education institutions and programs, including but not limited to financial aid, the GET program, federal grant administration, new degree program approval, authorization to offer degrees in the state, reporting performance data, and minimum admission standards.

The Task Force is required to consider input from all higher education stakeholders (i.e. institutions, Governor, HECB, K-12, Workforce Board, students, faculty, business, labor organizaitons, and the public).

The bill that passed out of the House committee is very close to the bill the Senate passed last week. The differences between SB 5182 as passed by the committee and the Senate are primarily with regard to the membership of the Council, the scope of the Council’s work, and the implementation date.

The bill now goes to the House floor for further consideration.

Week Three of the Special Session

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This week marks the third week of the first special session of 2011. 

The House met in caucus this morning and then headed to the floor to consider a handful of bills. Among the bills considered and passed this afternoon was HB 1795 which will alter higher education tuition, financial aid, and accountability for the next four biennia.

The Senate convened today and moved a handful of bills forward in the process. The Senate is schedule to return to the floor tomorrow (May 10) at 10:00. No committee meetings are scheduled at this time.

The House and Senate continue to meet daily to find a compromise on the budget. Essentially the two budgets are approx. $330 million apart. However key policy issues continue to divide the two caucuses, most prominently teacher salaries and workers compensation.

Though new revenues have been received from the tax amnesty effort – approximately $270 million to the general fund- there is mixed ideas with regard how to apply these new dollars. The Governor proposes eliminating the 25th month for K-12 and others would like to buy back some programs cut in the budget.

House Passes Key Higher Education Legislation

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This afternoon the Washington House passed legislation that would alter current policies focused on tuition, accountability, and financial aid.  House Bill 1795 passed with a vote of 79-17.

The bill is a comprehensive piece of legislation that leaves little alone with regard to higher education policy. The key provision in the bill for many is the ability for four-year public baccalaureate institutions to set tuition for all students through 2014-2015 and modifies this authority based on a state funding baseline and funding for higher education institutions in the Global Challenge States through 2018-2019.

The ability for the four-year public baccalaureate institutions to set their own tuition levels is mitigated by strengthening current institutional financial aid requirements and funding the State Need Grant at the proposed increased tuition rates in the budget.  All institutions are required to remit at least 4% of operating fees back to students in the form of financial aid. This is an increase from 3.5%.

Institutions that exceed the tuition levels appropriated in the budget are required to remit 5% of operating fees back to students in the form of financial aid and provide financial assistance to students up to 125% of the Median Family Income (MFI) via a specific formula that is based on tuition price as a percentage of MFI in various income brackets up to 125% of MFI.  Finally all instititutions are required to make every effort to encourage eligible students to take advantage of federal tax credits.

The bill also requires higehr education institutions to report by December 1 on performance data that aligns with the National Governor’s Association Complete to Compete metrics with additions that include graduate and professional degrees;Science, Technology, Engineering, and Math (STEM) participation; student debt load; and disaggregation of measures based on various student demographics, including socio-economic status and income levels. In addition institutions must develop a performance plan which must include a set of expected outcomes (i.e. time to degree, baccalureate degree production).

Finally the bills makes changes to dual enrollment policies, transfer and prior credit policies, and provides regulatory relief for institutions of higher education.

The bill now goes to the Senate for further consideration.

Legislative Committees Focus on Higher Education Bills

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This morning the House Ways & Means Committee and the Senate Ways & Means Committee each focused on legislation that would impact higher education.

House Ways & Means
The House Ways & Means Committee held a public hearing on Senate Bill 5182 which would eliminate the HECB and establish the Council of Higher Education and the Office of Student Financial Assistance. 

The  Council membership would include the six four-year institution presidents, one private nonprofit president, the Executive Director of the SBCTC, and a representative from the Office of the Superintendent of Public Instruction, or their designees. The purpose of the Council would be to develop performance-based measures and goals for each four-year institution and a strategic plan for the institutions of higher education benchmarks.

In addition the Council would perform essential state governance functions previously assigned to the HECB, including approving new programs, mission changes, new colleges, recognizing accreditation, and provides the interface to meet federal requirements.

The Office of Student Financial Assistance would administer all state and federal financial aid and the advanced college tuition payment program. The Office is created as a separate agency of the state.

Senate Ways & Means Committee
The Senate Ways & Means Committee took action on HB 1981 (Higher Education Pension Legislation) passed unanimously with amendments.

The bill would:

  • The HERP Supplemental Benefit for employees that enter the plan after July 1, 2011 is eliminated
  • Employees offered participation in HERP on or after July 1, 2011, have the option of joining the TRS Plan 3 or PERS Plan 3.
  • The PERS and TRS Plan 1 provisions permitting retirees to receive benefits while employed in retirement system-covered positions for up to 1500 hours per year are limited to members who retire before September 1, 2011. (Members of PERS and TERS Plans 1 who retire on or after September 1, 2011, may continue to work up to 867 hours per year without a reduction in pension benefits.) Positions covered by the HERP are added to those included in the postretirement employment pension restrictions for the PERS, TRS, School Employees’ Retirement System (SERS), and PSERS.
  • Higher education institutions responsible for payment of HERP Supplemental Benefits are required to contract with and provide data to the Office of the State Actuary for actuarial valuations every two years beginning June 30, 2013, and experience studies of the HERPs at least once in every six-year period, with the first being due by June 30, 2013. A 0.5 percent of pay employer contribution rate is initiated for HERP-covered employees beginning January 1, 2014, to a new supplemental benefit fund. This fund is invested by the State Investment Board. Upon completion of the first actuarial valuation by the State Actuary (no later than June 30, 2013), the Pension Funding Council (PFC) may make changes to the 0.5 percent contribution rate, including the adoption of separate rates appropriate to the liabilities of each institution. The PFC is authorized to recommend legislation, upon accumulation of sufficient funding in the Supplemental Benefit Fund, to transfer responsibility for benefit payments to the new fund and adjust contribution rates to reflect the transfer of responsibility.

The bill now goes to the Senate floor for further consideration.

New Revenue Emerges

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Yesterday the Legislature received a gift. Washington’s three-month tax amnesty for businesses delivered $321 million in back taxes.

Under the proposal businesses were provided with a short amnesty period for penalties and interest on back taxes owed. From February to April the Washington Department of Revenue worked with more than 10,000 businesses to collect taxes.

The tax amnesty generated nearly $182 million more than was expected. While most of the $321 million will go to the state general fund ($263 million), some of it will be used to assist local governments ($57 local taxes).

While it is expected that these dollars will be key in reaching a solution for both the current fiscal year shortfall and the 2011-13 biennial budget shortfall, what the impact will be remains unclear.
The House Democrats had tentatively counted on getting $300 million from privatizing the system. But now they say they’ve moved away from that idea. So the new revenue may be helpful in bridging this gap.
However, policymakers in both chambers are also interested in using some of the funds to take back some of the budget cuts initially proposed.
While the Governor has suggested the funds be used to shrink the $240 million owed to public schools by June 30 that otherwise would be delayed to July 1 under House and Senate budget proposals.

Revenue staffers estimated there were 428 taxpayers flying off the taxman’s radar that now are on the state’s registry, where they can be monitored for compliance. Those non-payers averaged $50,342 in back taxes totaling $21.5 million for state and local governments.