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Special Session Begins Today

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Today at Noon lawmakers will return to Olympia to begin a thirty-day special session focused on closing a $2 billion budget shortfall. The first week of the special session is packed full of work sessions and public hearings on the state budget.

November 28
The House Ways & Means Committee will hold a public hearing on the Governor’s proposed supplemental budget.

November 29
The House will convene for a floor session to take action on some early bills. On the Senate side the Ways & Means Committee will hold a work session on the Governor’s proposed supplemental budget. In addition a handful of Senate policy committees will convene.

November 30
Both the House and Senate will convene for a floor session. In addition policy committees in both chambers will meet. Finally the Senate Ways & Means Committee will hold a public hearing on the K-12 and higher education portions of the Governor’s supplemental budget.

December 1
Several appropriation and policy committees will convene. Of particular interest to higher education will be:

  •  A work session of the Senate Higher Education & Workforce Development Committee on the Governor’s proposed supplemental budget for higher education, a report on the GET program, and a report from the Higher Education Steering Committee tasked with developing a new state-level higher education entity.  
  • The House Capital Budget Committee will convene a work session that will focus in part on the ten-year capital needs of higher education institutions. 
  • The House Ways & Means Committee will hold a work session on the November economic and revenue forecast, the budget outlook for 2012 and the impact of recently passed initiatives on the operating budget.

December 2
The House Higher Education Committee will convene for a work session on the legislative priorities of the Higher Education Coordinating Board (HECB), State Board for Community and Technical Colleges, Workforce Training and Education Coordinating Board, and the Public Baccaluareate Institutions. In addition the Committee will receive reports regarding the Higher Education Steering Committee’s work on a new state-level entity for higher education, the HECB’s work on the higher education master plan, and the community and technical colleges’ efficiencies efforts.

Finally the House Ways & Means Committee will convene to hold a public hearing on any bills referred to committee.

 

 

 

Lack of Agreement of Debt Committee Triggers Cuts to Education

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Yesterday the deadline to reach an agreement on deficit reduction passed. The Congressional Deficit Committee announced that they were unable to reach an agreement. As a result, this set into motion $1.2 trillion in automatic spending cuts over the next decade if Congress does not act by 2013 on the deficit.  

The impact to education is likely to be hard. The U.S. Department of Education’s budget would be reduced by $3.54 billion in 2013. In addition $134 million for non-Pell Grant financial aid programs will likely be lost.

While the Pell Grant is exempt from cuts in the current fiscal year they remain at risk. The overall spending caps that will be enacted by Congress will place constraints on the federal budget and make it difficult to maintain support for current funding levels.

The 12-member Joint Select Committee on Deficit Reduction, formed in the July compromise that increased the nation’s debt limit, was charged with cutting $1.2 trillion from the deficit before Thanksgiving.

Congress still has a year to decide how to apply the $1.2 trillion in cuts – to be split evenly between defense and nondefense spending.  In the meantime it is possible that Congress could reach a long-term agreement on deficit reduction or change how the mandated cuts are enacted. Though President Obama has vowed to veto any legislation that would eliminate the automatic cuts.

The budget conversation will now shift back to the congressional appropriation committees to decide on several budget bills and enact 2013 spending caps.

Governor Releases Supplemental Budget and Proposes Revenue Package

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This morning Governor Gregoire released her proposed 2012 supplemental budget and a revenue proposal.

2012 Supplemental Budget
The proposed supplemental budget reduces public services and programs by $1.7 billion and leaves an ending balance of $601.5 million for the remainder of the current biennium.

Higher Education
The Governor’s proposed supplemental budget reduces state support for higher education by $168.2 million. This includes a $160.1 million reduction to the two- and four-year public institutions. This represents a reduction of 17% in state funding for UW, WSU, and WWU; 16% for EWU, CWU, and Evergreen; and 13% for the community and technical colleges. For Evergreen this is an additional reduction of $2.95 million in state support. In addition, the Governor proposes suspension of the state work study program ($8.1 million) beginning fall 2012.

The Governor’s supplemental budget does make an investment in graduating more engineers ($7.6 million). These funds are directed towards the UW and WSU to enroll additional engineering students.

Governor’s Revenue Proposal

The Governor’s revenue proposal would raise more than $830 million in revenue. Gregoire recommended revenue options that support or have limited negative effects on the state’s economic recovery, promote fairness among taxpayers, simplify the state’s tax structure, and provide immediate benefits to address the budget shortfall.

The majority of funds would come from a 0.5% temporary increase in the sales tax (est. $494.1 million). The revenue generated from an increase in the sales tax would go to education ($411 million), long-term care and developmental disability services ($42 million), and public safety ($41 million). Of the new revenue for education $160 million would go to offset the proposed reduction to the two- and four-year public institutions in the Governor’s proposed 2012 supplemental budget.

The Governor recommends the remaining revenue come from an array of options such as imposing a $10 fee per invoice issued to a taxpayer for unpaid taxes and imposing a 1.5% gross receipts tax on gambling and lottery winnings. Her proposal divides additional revenue to be approved by the Legislature into two groupings: (1) revenue increases that would require a simple majority vote of the Legislature ($59 million) and (2) increases that would require a two-thirds vote of the Legislature ($282 million).

The Governor’s proposal does include recommended priorities if the Legislature does arrive at additional revenues beyond the increase in the sales tax. Among these priorities is support for the state work study program ($8.1 million).

The Legislature returns to Olympia next Monday (November 28) to consider the Governor’s proposed budget and develop their own proposals.

Governor Invests in Higher Education to Support Aerospace Industry

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Yesterday Governor Gregoire held a news conference at Renton Technical College to announce proposals to invest in education to ensure the Boeing 737 MAX is built and manufactured in Washington.

The proposal provides $9.8 million in funding to support aerospace education.

  • $7.6 million to the UW and WSU to enroll 775 more engineering students;
  • $1.5 million with additional support from companies, foundation, and donors to create a Center for Aerospace Technology Innovation at UW and WSU to support university research that will grow the aerosapce sector and lead to new jobs in Washington;
  • $450,000 to expand the Launch Year program and provide 12 high schools with aerospace curriculum support to prepare high school students to enter the workforce. The investment would also provide two Skills Centers with aerospace manufacturing support to help train additional high school students; and
  • $250,000 to add “Project Lead the Way” courses at 10 high schools which focus on problem-solving using STEM fields and skills.

In addition the proposal includes the creation of a Governor’s Aerospace Office to provide focus, direction, oversight, and coordination to grow Washington’s aerospace industry.

The funds would come from a variety of sources including reserves and state dollars.

Revenue Forecast Down But Does Not Deeply Impact $2 Billion Budget Shortfall

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This morning the November state economic and revenue forecast was released.  The forecast shows projected General Fund revenues for the current biennium down by $122 million compared to the prior quarterly forecast in September.

Washington’s Chief Economist, Dr. Arun Raha stated, “the economic environment is much as we anticipated in the September forecast. Our November adjustments reflect uncertainty in various markets, but not another downshift in expectations.”

Governor Gregoire is expected to propose a supplemental operating budget on Monday, November 21 to address the shortfall and leave a reserve (the estimated target is $2 billion). Washington legislators will return on the following Monday (November 28) for a special session to address the budget shortfall.

Washingtonians Respond to Statewide Measures

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Yesterday Washingtonians headed to the ballot box. Among the multiple local and county measures and races, Washingtonians voted on three statewide initiatives.

Passed- Privitization of Liquor
Initiative 1183 closes state liquor stores and sell their assets, including the liquor-distribution center. The initiative allows private stores to sell liquor and create licensing fees for sale and distribution of liquor based on sales and revenues.

Too Close to Call (Oppose 51%; Support 48%) – Washington Tolls
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.

Passed – Background Checks and Training for Long Term Care Workers
Initiative 1163 would require background checks and training for long-term care workers and providers.

House Higher Education Committee Meets in Olympia

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Last week the House Higher Education Committee completed its tour of the state in Olympia. The Committee concluded their fall tour of the state at South Puget Sound Community College.

The Committee focused their discussion on the future. Members received an overview of the budget with an eye to higher education and an update on the revisions to the state’s Higher Education Master Plan.

The majority of the time was reserved for a conversation between legislators and presidents of Washington’s public baccaluareate institutions and community and technical colleges. The Committee heard from more than a dozen presidents with regard to the future of higher education in Washington, the risks associated with the additional proposed reductions to institutions and financial aid, and the limitations that greater innovations, reforms and efficiencies will have with regard to minimizing the impact of declining state support for higher education.

Among the public baccaluareate presidents that engaged with legislators in this discussion was President Purce alongside Presidents Shepard (Western Washington University) and Floyd (Washington State University).

The next meet of the House Higher Education Committee is scheduled for December 2 at The Capitol.

Third Meeting on Council of Higher Education Takes Place

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

The Committee received an overview from the Washington Educational Research and Data Center focused on the data the Center compiles across education sectors.

The Committee then delved into several critical unresolved topics with regard to a new state-level entity, including functions, goals, and structure.

Several representatives provided their views on the functions that a new entity should focus, including the four-year public baccalaureates and members of the committee. Among the functions identified for a state level entity were the analysis of outcomes and performance, long-range planning, information and advocacy, and consumer protection.

The Committee then spent a considerable amount of time hearing about and discussing potential goals and structures 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 different proposals with regard to goals and structures.

McGuinness offered two options for goals to be tracked by a new state entity. Option A included goals ranging from college participation of recent high school graduates to degrees granted in high demand fields. Option B included the range of metrics in Option A plus additional goals that consider that all children that enter kindergarten healthy, and emotionally, socially, and cognitively ready to succeed in school and life and all students that leave high school demonstrate that they are college- and career-ready.

McGuinness also offered two alternatives for structuring a new state entity. The first alternative focuses on higher education. The intention would be to establish a higher education coordination and policy analysis entity that would focus on strategic planning and policy analysis, seamless student transitions, and program administration and oversight.

The second alternative would focus on all sectors of education. The intention would be to create an education coordination and policy analysis entity that focuses on the same functions as in the first alternative but extends to all sectors of education.

The Committee is scheduled to meet for its final meeting on November 15.

Governor Lays Out Budget Reduction Ideas for Legislature

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At a press conference Thursday, October 27, Gov. Chris Gregoire presented a list of approximatlely $4 billion in “budget reduction alternatives,” including her “preliminary choices” to bridge a projected $1.4 billion shortfall in the current biennium and provide for a reserve of $600 million for the remainder of the biennium.

In announcing her choices for $2 billion in reductions, transfers and eliminations, the governor noted that the upcoming November 17 revenue forecast was likely to bring more bad news so it was important to meet the projected gap as well as plan for the future.

For higher education, her preliminary choices list represents $174 million in cuts and eliminations, including a 15% reduction to institutions (both two-year and four-year) and the elimination of the State Work Study Program.

In addition the Governor identified other potential areas for reduction or elimination including elimination of the State Need Grant and reductions to institutions of up to 20%.

Staff to the governor and the state budget office indicated the governor believed it was important to lay out all the possible cuts to programs in the “unprotected” part of the state operating budget.  The governor’s press conference on TVW can be viewed here.

In a letter to the Washington Legislature the Governor identified the principles that guided the development of the budget alternatives.

  • Washington state’s economic recovery must be a top priority;
  • Washington’s children deserve the best public education we can provide to ensure their future success and that of our state;
  • Washington’s vulnerable citizens continue to need protection despite -and perhaps in part due to – these tough times;
  • Our citizens must be safe in their homes and communities;
  • Service delivery is a more important investment of declining tax dollars than is advocacy; and
  • These principles must evolve when funding is tight. Our citizens should be served to the best of  our ability with limited available funds.

She closed her letter to legislators by stating “I look forward to receiving your input in the next few weeks as we work together in the special session on behalf of the people of Washington”.

The Washington Legislature will return to Olympia to consider Governor Gregoire’s supplemental budget on November 28.

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.