Author Archives: garverj

Signatures for State Initiatives Due Today

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Today is the deadline for initiative campaigns to submit signatures to the Washington Secretary of State for the November ballot.  Washington requires 241,000 valid signatures for an initiative to be placed on a ballot.

Over sixty proposed initiatives were filed with the Secretary of State.  As of today, six initiatives appear to have met the signature requirement and will be on the November 2010 ballot.

  • I-1100: Privatizes liquor sales
  • I-1082: Privatizes workers’ compensation option
  • I-1105: Privatizes liquor but includes some state controls around pricing and licensing
  • I-1053: (Re)Institutes a two-thirds majority rule on the Legislature for raising taxes
  • I-1098: High earners income tax
  • I-1107: Repeals the recently passed tax on soda.

Federal Financial Reform Legislation Changes Student Loan Practices

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The Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173) passed the U.S. Senate this week and is now headed to the President’s desk for signature.

The Act has significant implications for the student loan industry. The most significant change provides the newly created Consumer Financial Protection Bureau with authority over virtually all types of non-federal student loans, including those that for-profit colleges make to their own students.  The Bureau will have supervision over loans made by all non-banks and by banks with more than $10 billion in assets.

The Act also creates a separate student loan ombudsman position within the Bureau. The ombudsman position is designed to provide student loan borrowers with a central place for information and to seek assistance with concerns and/or problems.

What is the Status with Washington’s Anticipated Federal Dollars for 2010-2011?

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Congress continues to debate over the inclusion or exclusion of federal Medicaid dollars to states.

Twenty-eight states, including Washington, crafted budgets for FY10 assuming Congress would approve additonal Medicaid dollars.

Governors, including Washington’s Governor Gregoire,  from across the country lobbied Congress hard this week with an eye to the July 1 state budget deadline. The Medicaid extension is set to expire at the end of 2010, halfway through the fiscal year that begins in most states on July 1. 

The extension was first included in the 2009 economic stimulus bill. Since then the extension has faced a rocky road. Both chambers of Congress have passed different variations of the request and President Obama has called the aid necessary to avoid massive layoffs.

Despite this support, the extension and the dollars it would bring to states cotninues to be attached to congressional bills that die for one reason or another.

As Congress continues to move forward without securing the extension and funding, states are moving forward and beginning to consider their next steps. At question is how quickly cuts would have to be made if Mediciad dollars are not included in legislation passed by Congress.

For Washington the lack of additional federal Medicaid dollars would result in a reduction of $480 million to the state budget. If the dollars do not come through Washington’s budget reserves could be eliminated and the state would face an additional $200 million in budget cuts.

The Governor could make these cuts across-the-board or call the Legislature in for a special session.

Stay tune!

U.S. House Passes Supplemental Spending Package, Benefits to Higher Education

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On Thursday, the U.S. House of Representatives passed the Supplemental Appropriations Act of 2010 (H.R. 4899). The Act is a mixed bag for higher education.

H.R. 4899 included a provision to provide $10 billion to help school districts avoid educator layoffs. Though this is good news, the funding provision comes at the cost of reductions ($800 million) to several of President Obama’s key education initiatives. 

The initiatives vulnerable to reductions have been referred to as “new discretionary grant awards”. Among these awards includes a reduction of $500 million to the Race to the Top Round 2 awards. Washington is one of thirty states competing for Race to the Top dollars in the second round.

On a more positive note, the House bill includes $4.95 billion to pay down most of the $5.7 billion Pell Grant shortfall. The $4 billion included in the bill is not based on new estimates regarding the Pell Grant shortfall, but is the most the bill’s authors could include into the package of spending and offsets. If the package passes the Senate with the Pell Grant funding included there still remains a $717 million shortfall in Pell funding.

Finally, the Act passed by the House included a budget enforcement resolution that would limit discretionary spending for FY11 to $1.12 trillion, which is $7 billion less than the President requested in his budget in February.

The Act passed by the U.S. House must still be approved by the U.S. Senate.  As the Senate considers the Act, it is expected to face pressures from the education and higher education sectors, the U.S. House, and the White House which has indicated that the President would likely veto any final bill that includes reductions to education reforms.

State Releases Six-Year Budget Outlook

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The combined released today of the Governor’s plans to transform the state budget and the Office of Financial Management’s six-year budget outlook make it clear that the state economy will slowly recover. The Governor in her letter to Washingtonians stated, “…we expect budget challenges to be in place for at least the next four years.”

This is evident in the documents provided by the Governor’s Office and the Office of Financial Management. Both show projected budget shortfalls for the 2011-13 biennium ($3.053 billion) and 2013-15 biennium ($8.761 billion).

Both shortfalls are directly related to expected new costs over the next four-years, including replacement of federal funds, medical inflation, pension obligations, K-12 basic education obligations, and funding for voter initiatives I-728 (class size) and  I-732 (teacher salaries).

In its release of the six-year budget forecast, the Office of Financial Management notes that the shortfall estimates for 2011-13 and 2013-15 are based on budget obligations in current law and the latest official revenue and caseload forecasts. In addition, they recognize that any solution to the 2011-13 budget gap would reduce the projected gap in later years.

Governor Announces New State Budget Process

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Governor Gregoire announced a new state budget process for the 2011-13 biennium. Her intention is to develop a new biennial budget with more transparency, community involvement, and expert outside advice.

The new budget process will assume zero-based budgeting from the beginning. Zero-based budgeting focuses on reviewing the current and alternative funding levels for each agency activity (including zero).

In addition, each agency will be asked eight critical questions before their budgets are increased or shuffled. These eight questions are:

  • Is the activity an essential service?
  • Does state government have to perform the activity or can it be provided by others?
  • Can the activity be eliminated or delayed in recessionary times?
  • Does the activity need to be paid for with state general funds? Should users pay a portion of the costs?
  • Are there federal funds or other fund sources available to support this activity?
  • Are there more cost-effective, efficient ways to do the activity?
  • Can the activity be the subject of a performance contract?
  • Can the activity be the subject of a performance incentive?

The process will include a public component involving the opportunity for citizens to submit suggestions and a statewide tour to share the new budgeting process.

Finally, the Governor has asked leaders from across the state in a variety of fields to serve on the Governor’s Committee on Transforming Washington’s Budget. This panel will serve in an advisory capacity to the Governor during the budget development process. The charge of the committee is to quest budget assumptions, serve as a sounding board, and lend guidance.

The Governor also issued a time-line for the development of the 2011-13 budget. It is expected that as other dates and locations for budget hearings across the state are confirmed they will be announced.

  • Spring 2010                        Committee on Transforming the Budget formed
  • July 19, 2010                     First Budget hearing (Tacoma)
  • Early September 2010   Agency budget requests due
  • September 16, 2010        Updated revenue forecast adopted
  • November 18, 2010        Update revenue forecast adopted
  • Mid-December 2010      Governor’s proposed 2011-13 budget released
  • January 10, 2011             2011 Legislative Session begins

Quality Education Council Work Plan for 2010

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Yesterday, State Superintendent of Public Instruction Randy Dorn presented the Washington House Committee on Ways & Means with the Quality Education Council’s 2010 Work Plan.

The work plan is a product of the recent passage of state reform legislation for basic education and education funding. The legislation passed (H.B. 2661 and H.B. 2776) includes the following:

  • Requirements to identify funding and programs that close the achievement gap and improve graduation rates
  • All-Day Kindergarten included in basic education
  • Funding allocations and reporting on expenditures using a prototypical school model. Translates all major funding formulas to this new transparent structure by September 2011
  • Better transportation funding formula
  • Requirement to identify adequate levels for classified staff
  • Increased instructional hours once funded
  • Enhanced high school diploma requirements

With this in mind, the Quality Education Council has set forth the following work plan.

  • Identify measurable goals and priorities for the educational system utilizing the state reform plan and current performance data as a baseline
  • Recommend programs and funding to Close the Achievement Gap, Increase Graduation Rates, and Decrease the Dropout rate, including: recommend an improved Learning Assistance Program, including funding methodology; recommend an improved Transitional Bilingual Program, including funding methodology; review recommendations made by the Achievement Gap Oversight and Accountability Committee; and review recommendations made by the Building Bridges Workgroup
  • Implementation schedule for revised graduation requirements and increased hours of instruction
  • Making necessary reports to the Legislature regarding classified staffing adequacy and capacity of school districts to implement new funding including for class size reductions.

Finally, Superintendent Dorn spoke to the framework provided by the adoption of S.B. 6696 – Race to the Top legislation.

The legislation provides a framework for important changes that are required for the development of a comprehensive state reform plan.  The framework for this education reform plan is set out in three categories: (1) Goals, (2) Capacities, and (3) Outcome measures.

The framework identifies four goals for all Washington students,

  • Enter kindergarten prepared for success,
  • Compete in mathematics and science nationally and internationally,
  • Attain high academic standards regardless of race, ethnicity, income or gender, and
  • Graduate able to succeed in college, training, and careers.

In addition, in the area of outcomes, goals are set that highlight the link between pre- K12 and higher education. These include increasing graduation rates; increasing teacher and leader effectiveness; increase college readiness, attendance, persistence & completion; increase post-secondary degree and certificates; and increase work placements.

Washington House Ways and Means Committee Meets to Discuss Current Budget Issues and Potential Reform Ideas

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Yesterday afternoon the Washington House Committee on Ways & Means met to receive several updates on the current budget and discuss potential areas of reform as the 2011 legislative session approaches.

The Committee began the hearing with an update on the June Revenue Forecast released last week.  The forecast showed an economy that is recovering at a slow and uneven rate. This was perhaps best exemplified in the news that the June forecast was down over $200 million from the February forecast.

The Committee then received an update with regard to the anticipated federal Medicaid funds that have been up in the air.  At this time, the U.S. Senate is considering H.R. 4213 which includes the six-month extension for Medicaid funds to states. The Senate has voted twice to close debate and move the legislation, but both votes have failed.

The latest information shared with the committee suggests that policymakers in Congress may consider an extension with a phase out. What this means for Washington is that instead of receiving the full $480 million anticipated in the 2010 supplemental budget, the amount provided to the state would be tapered over the six months resulting in fewer dollars.

Though many things remain up in the air, for example policymakers may extend the Medicaid funding in other legislation or provide for another option for distribution of these funds to states, it was shared that the tapering of funds could provide as much as $410 million to Washington or it could be much less.

Finally, though the Committee agenda publicized a discussion of possible budget reform ideas, including the fiscal note process, standard approaches to reviewing the budget and agency budget requests, and adding performance measures to the budget, the committee chose to continue to discuss these issues among themselves via email and continue this discussion at the next meeting of the Committee.

U.S. Senate Rejects Certification on Private Education Loans

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Yesterday, the U.S. Senate rejected a House-sponsored amendment in a bicameral conference committee on the Restoring American Financial Stability Act of 2010 (S.3217) that would have mandated institutional certification on all private student loans.

This is a blow to many stakeholders in the private education loan world, of which most supported full school certification.

As shared in this blog in mid-May, the House-sponsored amendment would require providers of non-federal student loans to get colleges’ approval before they make such loans to students. The intention being to assure that borrowers turn to more-expensive private loans only after they have exhausted federal, state, and institutional grants or at least less costly federal student loans.

The Chairman, Senator Chris Dodd (D-CT), of the U.S. Senate Banking Committee stated, “the Senate cannot accept this provision..the Senate cannot agree to mandatory certification. I authored self-certification with Senator (Richard) Shelby (R-AL)…and it’s far too early in our view to make a judgment if we need something more.”

Dodd did note that the bill includes other “strong protections” for private student loan borrowers, including new Consumer Financial Protection Bureau (CFPB) oversight of private education loans and a new private student loan ombudsman to assist students who need help with their private loans.

Conferees are expected to continue to meet this week in hopes of finalizing negotiations so that the bill can be passed by Congress prior to the July 4 recess.

On This Date Over Six Decades Ago the G.I. Bill Became Law

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Sixty-six years ago, on June 22, 1944 President Franklin D. Roosevelt singed into law the Servicemen’s Readjustment Act (a.k.a. G.I. Bill of Rights).

The impact of this single piece of legislation has been monumental over the years.

  • Before WWII fewer than 15 percent of high school graduates earned college degrees. By 1950 nearly 500,000 Americans had graduated from college compared to 160,000 in 1939 as a result of the educational benefits provided under this legislation.
  • Under this program, approximately 2.4 million ex-service personnel took out home loans provided by the Department of Veterans Affairs, which were low-interest and zero-down- payment loans.
  • Under the 52-20 clause, all former service personnel were entitled to receive $20 a week for 52 weeks a year, while they looked for work.