Tag Archives: Capital Budget

Committees Continue to Work to Move Bills

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Policy committees in both the House and Senate continued their work to move bills forward in the process. Today marks the last day for House policy bills to move out of committee followed by a February 3 deadline in the Senate.

This morning kicked-off with dualing committees in the House. The House Capital Budget Committee held a public hearing on legislation that would provide increased flexibility around minor works and predesign requirements for institutions of higher education. The Council of Presidents, which represents the six public baccalaureate institutions in Washington, testified in support of the bill. The Committee followed the public hearing with an executive session in which the bill was passed by the committee and moved forward in the process.

At the same time the House Education Appropriations & Oversight Committee held a public hearing on legislation that requires a model policy for open licensing of courseware developed with state funds at higher education institutions.  Higher education institutions, students, faculty, and others, while supportive of the intent of the legislation, expressed concerns about the scope of the legislation, the impact on innovation, and lack of resources -both fiscal and personnel – to undertake this initiative. In addition representatives from higher education testified to the work already being done at institutions to provide for low-cost textbook options for students and highlighted other successful programs across the nation that might serve as models for the development of such an effort in Washington.

In the Senate, the Senate Higher Education & Workforce Development held a marathon public hearing on legislation ranging from developing an open courseware policy at insitutions of higher education to creating a database of services provided to students with disabilities at institutions of higher education to putting into law that athletics not receive any state funding at WSU and UW.

Governor Releases 2012 Supplemental Capital Budget

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Yesterday Governor Gregoire released her proposed 2012 supplemental capital budget.  The proposed capital budget makes a handful of changes to higher education capital funding, but does not alter Evergreen’s capital funding for FY2012.

These include:

  • Reducing the state building construction account at the state level for the Jobs Act for K-12 Public Schools & Higher Education Institutions by $225,000
  • Reducing the Bid Savings Contingency Pool by $6.5 million
  • Funding $246,000 for the Capital Projects Advisory Review Board
  • Reducing funds to the UW for Anderson Hall Renovation by $1.553 million
  • Funding UW Minor Capital Repairs $4.019 million
  • Reducing minor works for health, safety, and code requirements at Eastern Washington University by $157,000
  • Funding for CWU for combined utilities $273,000

Higher Education Presents on Multiple Budgets

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This afternoon the public, baccaluareate institutions presented and testified on the future impacts of the operating budget and the capital budget.

Capital Budget

The four-year institutions were represented by the University of Washington and Evergreen before the House Capital Budget Committee.  Representing both the research and comprehensive institutions, the UW and John Hurley, VP for Finance & Administration at Evergreen, provided a joint presentation on the 10-year outlook for capital projects and funding at the six institutions.

The comprehensive institutions (EWU, WWU, CWU, and Evergreen) highlighted two major priorities over the next decade: (1) instructional needs will dominate capital projects and (2) the majority of minor works dollars from the state will focus on preservation and maintenance.

In addition the comprehensives spoke to the challenges reductions in state funds for capital and the downturn in the economy have had on institutional capital budgets. Among the challenges is the difficulty of modernizing instructional and lab space, reduced staff, and the need to move projects from the current biennium out to future biennia.

Finally the comprehensives highlighted the critical economic impact capital funding has on state and local economies, especially job creation and revenue.

Operating Budget

The four-year public higher education institutions testified with concerns regarding the Governor’s proposed supplemental budget for higher education before the House Education Appropriations and Oversight Committee.

The Governor’s proposed supplemental budget would reduce funding for Washington’s public baccalaureate institutions by double-digit percentages and suspend state work study.

Higher education representatives from the six public baccaluareate institutions in Washington, including The Evergreen State College, testified with concerns about further reductions to higher education and the impact on students.

Since 2008 state funding for Evergreen has declined by half.  To mitigate this dramatic loss of state funding over the last four years Evergreen has increased tuition by 70%, reduced institutional support (a.k.a. administration) by 32.3%, reduced the College’s workforce by over 8%, and suspended the Master of Education program and consolidate other programs among several other reductions and regorganizations.

Evergreen testified that further reductions would immediately impact students at the College. Over 80% of Evergreen’s students receive some form of financial aid, over 40% are low-income (at or below 150% of the federal poverty level), over 50% are community and technical college transfers, and nearly 30% are first-generation. 

Evergreen also expressed concerns about the impact of further reductions on the success of the College. Evergreen leads the public baccaluareate institutions in Washington in time to degree and is only behind the UW in four-year graduation rates.

Evergreen asked legislators in the coming months of budget discussions to: (1) Prioritize higher education in the budget, (2) Pursue a balanced approach to the budget, and (3) Remember that only six months ago the Legislature overhauled much of higher education, leaving little untouched with regard to policy changes and asked legislators to let these policy changes settle out and if new policy is considered to make sure it does not create new barriers to maximizing the success of students.

Governor Gregoire Asks Agencies to Prepare for Additional Cutbacks

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If state revenues continue to decline, as witnessed in June and July and expected in September, Governor Gregoire will ask agencies to trim their budgets further.

This afternoon Marty Brown, Director of the Office of Financial Management, sent a memo to all state agencies asking each agency to prepare for possible cutbacks by submitting 5% first-priority reductions and a second 5% for a total of 10% in state funding reduction options as part of the agency’s 2012 supplemental budget request.  The request does make exceptions for basic education, pensions, and debt service.

The impact to Evergreen of a 5% reduction of state funds would be a reduction of $1.545 million (a 1.5% reduction to total funds) and a 10% reduction of state funds would be a reduction of $3.89 million (a 3% reduction to total funds).

Recognizing the difficulty of this task given the limited amount of time that has passed since the passage of the 2011-13 budget, the memo encouraged agencies to revisit essential service assessments compiled last year and budget reductions included in the Governor’s 2011-13 biennial budget but were not enacted by the Legislature. In addition, the memo suggests additional consideration be given to new or additional policy choices and structural or business process changes that allow improved efficiencies and reduce state funding expenditures.  Finally capital-budget proposals should be limited to technical corrections, emergency issues, or return of project savings.

Governor to Sign Budget Bills into Law Next Week

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A bill signing ceremony has been scheduled – Wednesday, June 15- to act on the operating and capital budget bills and all remaining policy bills that have not been signed to date.

Among the bills to be signed by the Governor is the 2011-13 operating budget (HB 1087), and the two bills that comprised the capital budget (HB 1497- capital budget and HB 2020 – bond authorization bill).  In addition the Governor will consider action on the compensation reduction bill (SB 5860), legislation to create the Department of Enterprise Services (SB 5931), and a  bill that makes several changes to Higher Education Retirement Plans and retire-rehire practices at higher education institutions (HB 1981).

Senate Passes Operating and Capital Budgets; Budgets Now Head to Governor

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This evening the Washington Senate passed the conference operating and capital budgets for the 2011-13 biennium. 

2011-2103 Operating Budget
The Senate passed the operating buget with a vote of 34-13. The conference biennial budget addresses a $4.9  billion shortfall, making approximately $4.5 billion in policy level reductions. The budget reduces funding for higher education institutions by $535 million.  The Evergreen State College is reduced by $12.152 million and authorized to increase tuition by 14% per year for the biennium.

In addition the budget maintains the state need grant to offset budgeted tuition increases to students and reduces, but does not eliminate , state work study.

Bond Bill

With a vote of 46-1, the Senate passed legislation (HB 2020)  to provide $1.4 billion in new state general obligation bonds to support the 2011 Supplemental and 2011-13 Capital Budget. In addition the bill reduces 2011 Supplemental bond appropriations by $32 million.

Capital Budget

With a vote of 47-0, the Senate passed the 2011-13 capital budget (HB 1497). The  2011-13 Capital Budget authorizes $3.1 billion in new capital projects, of which $1.4 billion are financed with new state general obligation bonds.

It is the combination of HB 1497 and HB 2020 that will provide the funds to support Evergreen’s capital projects

House Passes Trio of Bills to Implement Capital Budget

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This morning the Washington House passed a series of bills that together will implement the capital budget for the 2011-13 biennium.

State Debt Limit

With a vote of 79-14 the House passed legislation to reduce the state debt limit. Senate Bill 5181 requires the State Finance Committee to recommend a working debt limit for purposes of budget development for capital bond appropriations that is lower than the constitutional debt limit. The working debt limit must be updated periodically following the Economic and Revenue Forecast Council’s forecasts, and may be modified in response to extraordinary economic conditions.

The State Finance Committee must recommend the following working debt limits: 
  •  8.5 percent for the 2015-2017 biennium
  • 8.25 percent for the 2017-2019 biennium;
  • 8 percent for the 2019-2021 biennium; and
  • 7.75 percent for the 2021-2023 biennium and thereafter.

The State Finance Committee may reduce or delay the issuance of bonds if an issuance would result in exceeding the recommended working debt limit. Finally, the Governor and the Legislature must develop capital bond budgets within the recommended working debt limit.

In addition the bill creates a Commission on State Debt to assist the Legislature in examining the kinds of debt incurred by the state, and the limits on the amount and use of debt.

The twelve-member Commission is chaired by the State Treasurer, and also includes the Director of the Office of Financial Management, four legislative members, and six independent members.

Bond Bill

With a vote of 84-10, the House passed legislation (HB 2020)  to provide $1.4 billion in new state general obligation bonds to support the 2011 Supplemental and 2011-13 Capital Budget. In addition the bill reduces 2011 Supplemental bond appropriations by $32 million.

Capital Budget

With a vote of 94-0, the House passed the 2011-13 capital budget (HB 1497). The  2011-13 Capital Budget authorizes $3.1 billion in new capital projects, of which $1.4 billion are financed with new state general obligation bonds.

It is the combination of HB 1497 and HB 2020 that will provide the funds to support Evergreen’s capital projects.

All three bills now go to the Senate for further consideration.

Legislature Releases Conference Capital Budget

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The Legislature released a conference agreement on a biennial capital budget.

The conference capital budget provides for $1.1 billion in bond-supported capital budget capacity for the state.

The conference capital budget provides $496.5 million for higher education facilities. Over half of the funds go to the four-year institutions. This includes funding for Evergreen’s Communications Building (partial funding) and science lab renovation.

Agreement Reached on State Debt Limit

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Late this afternoon the House and Senate announced an agreement on the capital budget and the key policy issue that has prevented a budget to date – the state debt limit.

The 2011-13 biennial capital budget will be a capital budget with some limits to the debt capacity.

The key points of the agreement include:

  • A smaller 2011-13 capital budget (approximately $1.1 billion) 
  • Something will be placed into statute this year on a working debt limit but a constitutional amendment will not be sought at this time.
  • The debt limit will be reduced over a period of time.
  • A blue ribbon commission will be established (SB 5181) to study and recommend changes to the state’s debt capacity, with the authority to block bonds if its recommendations are ignored. The commission will include legislators, the state treasurer, OFM, and others with expertise on bonds and financing.

The actual budget for capital projects will come in two stages. The cash projects in the capital budget will appear in a striking amendment for SHB 1497.  In addition the Legislature will pass a striker to a second bill (HB 2020) which is the bond bill.

The capital budget is expected to be released some time tomorrow.

House Capital Budget Moves Debt Limit Legislation

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This afternoon the House Capital Budget Committee took action and passed legislation that would direct the Secretary of State to submit a constitutional amendment – that would reduce the state’s debt limit from 9% to 7%  by FY 2022 – to the voters for approval and ratification, or rejection, in the next general election to be held in the state.

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 key points both supporters and opponents have made about the bill were echoed by committee members this afternoon during deliberations. Those in support shared their belief that it is critical to reduce the state’s debt levels. While those in opposition raised concerns about the impact the reduction in the debt limit would have on state capital projects and workers.

The bill that passed the House Committee – with a vote of 6 to 5- was designed to reflect many of these concerns, especially the need to reduce the debt limit, while minimizing the impact to state projects and workers. The House amended version does the following: 

  • Reduces the debt limit from 9% to 8.5% beginning in FY 2018 and thereafter. The Senate version reduced the limt from 9% to 7% in half-percent increments every two years beginning in FY 2016 and ending in FY 2022. Current law sets the debt limit at 9%.
  • Directs the Legislature to establish an advisory debt limit that is one-half of one percent lower than the constitutional debt limit; and allows the advisory debt limit to be adjusted to reflect changes in economic trends and conditions. The Senate version would allow the Governor and the Legislature to adopt a working debt limit and assumes a working limit of one-quarter of one percent lower than the constitutional limit. In recent years the Governor and Legislature have adopted a working debt limit since 2003. From 2003-2009 it was 8.5% and from 2009-2013 it was 8.75%
  • Bases the limit on a prior 3-year average of General State Revenues (GSR) until July 1, 2015 and on prior 10-year average of GSR on and after July 1, 2015. The Senate version contains the same language. Current law basis the limit on a prior 3-year avarage of GSR.
  • Includes the State Property Tax in GSR beginning in FY 2016, based on a 10-year average from FY 2006 through FY 2015. The Senate version contains the same language. Current law excludes the State Property Tax from GSR.

Senate Joint Resolution now goes to the House Floor for further consideration.