This morning Governor Gregoire released her 2011-13 budget.  In her message on the 2011-13 budget she stated “the budget I am proposing for the 2011-13 biennium is not a budget I ever expected to see in the State of Washington, and the choices in it are the most difficult ones I’ve ever faced.”

The Governor’s proposed biennial budget addresses the assumed budget shortfall in 2011-13 by reducing state programs and services by $3 billion and allowing for $1.1 billion in savings by suspending Initiatives 728 and 732. The balance of the solution is achieved through pension reforms, fund transfers and use of the state’s rainy day fund.

The Governor’s proposed biennial budget proposal for higher education includes:

• Reductions in funding for higher education by $344.7 million.
• Differential tuition increases for colleges and universities
  UW/WSU/WWU – 11%
  Evergreen/CWU/EWU – 9%
  Community and Technical Colleges – 10%
• Maintenance funding for the State Need Grant
• Reductions in funding for State Work Study by over 30%
• Suspension of all other state financial aid programs are suspended for new recipients. Current student recipients of these grants are held harmless in the proposal
• The creation of the Baccalaureate Incentive Program for the public, four-year institutions to boost performance and provides $5 million to fund this program.

Other areas of state government were also dramatically impacted by the Governor’s proposed biennial budget.

• The Basic Health Plan is eliminated.
• The Disability Lifeline grant is eliminated.
• The Student Achievement Program under Initiative 728 that provides smaller class sizes, extended learning time for students and professional development for teachers is suspended.
• Employee salary increases under Initiative 732 for K-12 and higher education teachers and other employees are suspended.
• K-4 class-size reduction funds are eliminated.
• Compensation for state employees is reduced by 3%.
• All state general funds are eliminated for state parks.
• McNeil Island Corrections Center is closed.

Finally, other key aspects of the governor’s proposal include:

• The requirement that government services that benefit a relatively small number of people and businesses, such as processing permit applications, be paid for by the beneficiary and not the general public.
• The requirement state agencies to deliver important state services at a lower cost. This may necessitate charging higher fees to visit state parks, obtain fishing and hunting licenses, process water rights applications and license adult family homes.

The Washington Legislature will convene on January 10, 2011 to begin the next step in the development of the 2011-13 biennial budget.

On Monday Governor Gregoire announced policy initiatives to further reduce the State’s fiscal footprint.  She announced changes in two signficant areas: (1) Health Care and (2) Pension Plans for the 2011-13 biennium.

Health Care

Governor Gregoire’s policy initiative focuses on further changing Washington’s health care delivery system in order to allow for higher quality, more affordable care. To facilitate this, and consistent with her intent to reorganize state government to operate more effectively and efficiently, she proposed the following.

• Consolidate a majority of the state’s health care purchasing into a single agency
• Take advantage of opportunities provided under federal health care reform – the Affordable Care Act
• Move forward with work launched with the federal Center for Innovation to have Washington serve as a pilot in testing models that ramp up quality and tamp down costs.

Pensions

Governor Gregoire proposed the following actions to reduce future costs to employers and taxpayers while maintaining reasonable benefits for valued public employees and retirees.

This morning Governor Gregoire announced her policy initiative to consolidate public services.  She announced the consolidation of public services in five areas.

Consolidating Natural Resource Agendas

• This initiative consolidates the state’s current eleven agencies to five.
• Proposes the consolidation of the Department of Fish & Wildlife, the State Parks & Recreation Commission, the Recreation and Conservation Office and the law enforcement unit of the Department of Natural Resources into a new Department of Conservation and Recreation.
• Proposes the consolidation of the work of the Columbia River Gorge Commission, the Pollution Liability Insurance Agency, and the Department of Health’s reclaimed water program into the Department of Ecology.
• Proposes the consolidation of the State Conservation Commission into the Department of Agriculture and the Department of Archaeology and Historic Preservation into the Department of Natural Resources.

Consolidating Central Services

• Eliminate duplicate functions at state agencies
• Proposes the consolidation of the Department of General Administration, Personnel, Printing and portions of the Department of Information Services and the Office of Financial Management into a new Department of Enterprise Services. 
• The Department of Enterprise Services will provide the “back office” services and the Office of Financial Management will continue to address policy, budget, forecasting and labor relations.

Creating the Office of Civil Rights

• Proposes the consolidation of the state’s Human Rights Commission, Office of Minority and Women’s Business Enterprise, Commission on African Affairs, Commission on Hispanic Affairs, and Commission on Asian Pacific American Affairs into the Office of Civil Rights.

Eliminating Boards and Commissions

• Proposes the introduction of legislation to eliminate 36 boards and commissions and move appointment authority for 16 boards from the Office of the Governor to state agencies.
• A list of the boards and commissions that will be impacted has yet to be released.

Integrating Correctional Services

• Proposes potential changes from ongoing discussions between the Department of Corrections and the Washington Assocation of Sheriffs and Police Chiefs regarding short-  and long-term strategies to maximize each correctional system’s strengths and integrate certain services.

Governor Gregorie will roll out her 2011-13 biennial budget this week.

The 2011-13 biennial budget will be released on Wednesday, December 15. Prior to the release of the budget, the Governor will announce proposed policy changes to healthcare and pension plans sometime today (December 13) and efforts to streamline government and/or fund current services and programs differently in the future on Tuesday (December 14).

The Governor will not likely release her revised 2009-11 budget until Monday December 20.  In addition, it is expected that she will announce additional policy initiative in January.

On Wednesday, the House Ways & Means Committee received a brief presentation regarding the recommendations put forth by the Governor’s Committee on Transforming Washington’s.

The Governor’s Office released a list of ideas representative of committee members. The ideas fall into five major catgories.

• Restructuring Ideas
• Budget Ideas, Cost Savings and Other Ways to Pay for Services
• Privatization or Outsourcing Ideas
• Better Customer Service Ideas
• Regulatory Ideas

No votes were taken by the Committee. In addition, the recommendations provided were not developed with an  attempts to achieve consensus or to represent a majority opinion. Instead, the list contains ideas put forward by at least one of the committee members.

Several ideas were put forth that would impact the four-year higher education sector if implemented. In addition, several more would impact higher education institutions as public agencies.

Restructuring Ideas

• Decide if four-year universities are state agencies or not. If they argencies or not. If they are agencies, then the Higher Education Coordinating Board (HECB) should become a cabinet agency with full authority over the four-years. If they aren’t agencies, funding could be switched to block performance agreements with additional funds structured around the student achievement initiative the two-years are using.

Budget Ideas, Cost Savings, and Other Ways to Pay for Services

• Consider moving to an outcome-based funding model for higher education including: (1) Fund students on a per-credit basis rather than funding institutions; and (2) Pay for degree completions rather than student enrollment.
• Increase tuition so students pay a higher proportion of higher education costs.
• Negotiate master contracts and require joint purchasing of reference data bases by law libraries and higher education institutions. The state should buy in bulk in order to get better prices. Regarding law libraries – this purchasing at lower rates could also benefit county law libraries. Purchasing should allow at least some public access.
• Limit state support to one baccalaureate degree per individual. Individuals seeking another BA degree would pay full cost of second degree.
• Increase the building fees on student tuition – so students contribute more to the cost of higher education buildings.
• Dedicate a portion of revenues from patents and royalties generated from research at universities and colleges to a higher education building funds.

Privatization and Outsourcing Ideas

• Incentivize greater private higher education investment in the state. Look at options to privatize programs and components of colleges and universities. Balance with concerns regarding quality and cost-effectiveness of some of the current private for-profit programs.

The Governor will now study each of the ideas and determine which are viable either in the short or long term. Ideas that can be successfully implemented, save money, or improve the delivery of services to the people of the state will be included in the Governor’s budget proposal in December. Ideas which the Governor chooses not to pursue at this time may be picked up by members of the Legislature or others for consideration at any time.