Author Archives: garverj

New Financial Reform Law Affects Higher Education

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At the end of July the Wall Street Reform and Consumer Protection Act was signed into law. The law impacts higher education in many ways.

The law creates a new Consumer Financial Protection Bureau (CFPB) that specifically has jurisdiction over any person or entity that offers “private education loans”. The CFPB will be a part of the Federal Reserve System  and has the power to issue and enforce regulations to protect consumers from abuses. The jurisdiction of the CFPB also covers entities that offer “private education loans”.

In addition, the law creates a Private Education Loan Ombudsman in the CFPB to resolve private education loan borrowers’ complaints. The Ombudsman is authorized to collaborate with the U.S. Department of Education, institutions, lenders, loan servicers, and guaranty agencies to resolve complaints.

The law also directs the Federal Reserve to  issue rules by April 21, 2011 to ensure that debit card interchange fees charged to debit-card-accepting merchants are reasonable and proportional to the cost of processing those transactions. This is a big benefit to university and college bookstores.

Finally, the law prohibits card networks from keeping any merchant, including universities, from setting minimum transaction amounts for credit card payments. However, the minimum transaction cannot be greater than $10. The card network also cannot prohibit any institution of higher education or federal agency from setting maximum transaction amounts or prevent any merchants from offering discounts for certain forms of payment.

Financial Aid May Get Bump from Lottery

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A  new marketing campaign promoting Washington’s Lottery as a source of funding for higher education financial aid programs is expected in the coming months.

At the direction of the 2010 Legislature, Washington’s Lottery can now be used to partly fund the State Need Grant, State Work Study, Washington Scholars, the Washington Award for Vocational Excellence (WAVE), and other programs.

The HECB is working with Washington’s Lottery to communicate this news statewide. Senate Bill 6409, prime-sponsored by Senator Jim Kastama, established a Lottery-funded Opportunity Pathways account, from which funds can be directed to student financial aid and early learning programs.

In the current Fiscal Year 2011, about 65 percent ($73.5 million) of Lottery dollars in the Opportunity Pathways account will be used to help fund the State Need Grant program, and 35 percent ($40 million) will support early learning programs.

Other funding for these programs will come from the General Fund. Lottery proceeds that previously contributed to K-12 construction projects will continue to be funded at $102 million under the General Fund.

General Fund appropriations for financial aid were reduced significantly in the 2011 supplemental budget. It is hoped that greater awareness about the Lottery’s contribution to higher education scholarships and financial aid will spur increased public support, reducing the need for General Fund appropriations.

Evergreen Receives Energy Grant

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The Evergreen State college was one of 29 public schools and colleges that received an energy grant this week.

The grants from the Washington Department of Commerce will assist schools and colleges with paying for lighting and heating upgrades, new electrical and hot water systems, and air conditioning improvements.

Evergreen received $415,742 to provide a heat recovery system, control system renovation, and lighting.

Governor Announces Next Steps in the Budget Process

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During a press conference this afternoon, Governor Gregoire announced the steps she will take to address a potential shortfall in the current state budget and direct agencies to prepare for an additional shortfall in 2011-13.

Despite the receipt of federal funds for Medicaid and teachers, agency and department savings, and reductions in state spending, dollars for the state budget remain difficult.

Over the last two months revenue collections have declined by $125 million below forecasted levels. Though the state has a $72 million ending fund balance for the 2009-11 biennium, after taking into consideration revenue declines, the potential for additional budget shortfalls that would eliminate the remaining dollars in the ending fund balance remain possible if future revenue reports continue to show a decline.

Beyond the current biennium, the state is also estimated to face a $3 billion deficit over the next two year budget (2011-13).

Given this context, the Governor announced three actions she will direct state agencies to undertake to prepare for the upcoming two-year budget and potential revenue shortfalls in the short-term.

  • Prepare reductions of 4-7% for the possibility of across-the-board cuts starting October 1 if the September forecast or revenue receipts are lower than expected.
  • Prepare budget reductins for a supplemental budget for the last six months of the current biennium equal to $500 million statewide to be passed in January.
  • Draft 2011-13 budgets to prepare for the expected $3 billion shortfall which will require a 10% reduction in the expected general fund budget.

State Revenue Declines

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State revenues fell again for the second month in a row.

The latest revenue collections released earlier this week showed revenue collections were $124.5 million less than was predicted in June.

Additional details regarding revenue will emerge over the next month. In September the Economic and Revenue F’orecast Council is expected to release an economic report (Sept. 3), a follow-up on tax collections (Sept. 10), and the quarterly revenue forecast (Sept. 16).

Governor Says No to Federal Position

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 Governor Gregoire will not be moving to D.C. anytime soon. 

This afternoon the spokeswoman for Governor Gregoire announced that the Governor informed the White House that she did not want to be considered for the job of solicitor general. 

“She (the Governor) explained that she does not want to be considered. She mentioned it is not the right time for here and it is not the right time for the state”, stated Karina Shagren, spokeswoman for the Governor.

It was announced earlier this summer that Governor Greogire was on a list of individuals to be considered for the position of solicitor general which was vacated by Elean Kagan upon her appointment to the Supreme Court last week.

Senate Committee Moves Veterans’ Education Legislation

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Yesterday the U.S. Senate Veterans’ Affairs Committee approved S. 3447 to expand benefits in the Post-9/11 GI Bill.

The bill would increase the number of people who could receive benefits and expand the list of programs/training for which veterans could use the aid.

In addition, the bill changes how allowances for textbooks and housing are calculated and provides in-state tuition/fees at public colleges or up to $20,000 adjusted annually and based on the national average cost.

In the U.S. House similar legislation is scheduled to be considered on September 16.

State’s Budget Gap Shrinks Thanks to Federal Funds

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Today, the U.S. Senate took the necessary final vote to provide $26 billion to states for Medicaid and education.

The bill extends programs enacted in last year’s stimulus law to help preserve the jobs of teachers and other public employees and provides an extension of federal Medicaid funds to states.

The U.S. House will return from their August recess to take a vote on the bill next Tuesday.

Once the House passes the bill and the legislation is signed by the President, Washington is expected to receive $530 million. The state will receive $320 million for Medicaid and $208 million to pay salaries for 3,000 teachers who were in line to lose their jobs.  

The influx of federal dollars does stave off a special session for now. However, Washington policymakers are now focused on the latest revenue forecasts, expected August 10, to gauge the health of the state budget.

Special Session Unlikely

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It is unlikely that Washington will experience another special session this year. Early this week, Democratic leaders in the Washington Senate and House ruled out holding a sepcial legislative session to fill budget gaps related to a lack of federal aid and declining state revenues.

Governor Gregoire had set a noon deadline on Monday for Democratic leaders to determine whether or not they could bring their caucuses for a short special session to remedy the looming budget gap.

Though the spokeswoman for the Governor did not announce how the budget gap will be bridged, the alternative is to require across-the-board cuts of up to 4 percent to solve the budget gap.

The question of whether to hold a special session or implement across-the-board cuts would be eliminated if Congress acts. The U.S. Senate is considering an extension of $16.1 billion in federal medical assistance funding and $10 billion in aid for schools to avert teacher layoffs for states.

Action on the added funding was delayed from Monday to tomorrow (Wednesday). Even if the Senate approves the funding it is required to go to the U.S. House for final approval.