Tag Archives: Governor

Governor’s Budget Task Force Releases Recommendations for Change

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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.

Special Session Still Possible

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Yesterday, Governor Gregoire met with Democrat and Republican leaders from the House and Senate, but did not reach an agreement regarding a special session to deal with the looming $1.2 billion budget deficit in the current fiscal year.

Governor Gregoire would like action this month to balance the 2009-11 budget, but is hesistant to call in legislators without an agreement.  Legislative leadership still needs time to talk with their caucuses about proposals for reductions.

More meetings are planned with the Governor.

State Revenue Declines: Another $1.2 Billion Gap

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Washington’s state budget took a large hit this morning. The November Economic & Revenue Forecast, released today, shows an additional $1.2 billion decline in revenue between now and 2013.

The Forecast will require Washington to further reduce the budget for the current fiscal year by $385 million. This is in addition to the $520 million across-the-board cuts the Governor ordered earlier this fall.

State Chief Economist Arun Raha stated that the additional decline in state revenues for the current biennium is due to the repeal of the soda, candy, and bottle water tax in November and weaker future revenue growth than was assumed in September.

According to Raha, credit to small business remains tight, recovery in the commercial construction sector is not expected until 2012, and single-family housing remains weak. In addition though some signs show positive movement with regard to multifamily housing and auto sales, neither can be assumed to be sustainable or substantial.

In addition, the budget shortfall for 2011-13 increased by $800 million, increasing the total budget gap for the upcoming biennium to $5.7 billion. The increase in the 2011-13 biennium is also related to the reduction in revenue as a result of the repeal of the candy, bottled water, and soda tax combined with a weaker outlook for revenue growth.

The forecast caught many by surprise, including the Governor and policymakers since revenues had been closely tracking to the September forecast.

The Governor has stated that further across-the-board cuts are not feasible.

“I have been working with legislative leadership in both parties to collect ideas on how to address our current shortfall. This forecast has added even more urgency to those discussions, and I’ve asked them to provide their options to me by November 29. Quite frankly we can’t cut any deeper without ending significant programs. Extremely difficult choices must be made, and given this sharp revenue decline, they must be made now,” Gregoire said.

The only positive note in all of this. According to Raha, Washington’s strong aerospace and software industries combined with important exports to Pacific Rim nations may mean that Washington could perform better than other U.S. states in the economic recovery.

Governor Gregoire Elected Chair of National Governors Association

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Governor Gregoire was elected to chair the National Governor Association, a bipartisan organization, through July 2011.

Gregoire is only the second woman to chair the association, and replaces W.V. Gov. Joe Manchin, who was elected to the U.S. Senate, according to an NGA press release.

The governor announced she will continue Manchin’s “Complete to Compete” initiative, which seeks to increase the number of American students who complete college degrees and improve the productivity of U.S. high education institutions.

“All-Cuts” Budget on the Horizon

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Reports indicate that Governor Gregoire heard the message from Tuesday’s election – no on taxes- and is now preparing the state for an all-cuts budget next session.

The 2011-13 budget shortfall ($4.8 billion), which increased slightly with the repeal of the soda and candy tax on Tuesday, will need to be addressed when legislators arrive in Olympia for the 2011 session. In addition, it is assumed that legislators can expect little help from the feds on issues such as extention of employment benefits to help ease the burden here at home.

There is speculation that a December special session may be in the works. Governor Gregoire remained open to the idea of a special sesion if lawmakers can agree on quick passage of her supplementa budget. Gregoire expects to share that proposal with lawmakers soon after the November 18 revenue forecast.

The November forecast will be the basis by which Governor Gregoire rewrites the current two-year budget to respond to the $520 million shortfall in the current biennium and drafts a new budget for the 2011-13 biennium.

With a potential for increases in caseloads in November, the Governor predicts she will either need to order additional across-the-board cuts in December or call a special session.

Governor’s Association Names Advisory Group for Accountability Initiative

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The National Governor’s Association (NGA) recently announced the members of the Complete to Compete National Advisory Group.

Complete to Compete is a yearlong initiative, developed by the current NGA Chair Governor Manchin (WV), focused on increasing the number of students in the U.S. who complete college degrees and certificates and improving the productivity of the country’s higher education institutions.

The members of the Advisory Group include:

Charlie Earl- Executive Director, Washington State Board for Community & Technical Colleges
Fred DuVal – Vice Chair, Arizona Board of Regents
Roger Ferguson, Jr. – President/CEO, TIAA-CREF
Juliet Garcia, President, Universit of Texas at Brownsville & Texas Southmost College
Bill Green, Chairman/CEO, Accenture
Brian Noland, Chancellor, West Virginia Higher Education Policy Commission
Charlie Reed, Chancellor, The California State University
Eduardo Padron, President, Miami Dade College
Eric Smith, Commissioner, Florida Department of Education
Nancy Zimpher, Chancellor, State University of New York

Washington State Agency Responses to Recent Across-The-Board Cuts

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This week the Washington Office of Financial Management released a website that provides information regarding the impact of the recent mandated 6.3% reduction for all state agencies.

The website offers inforamtion regarding what agencies are impacted and how across-the-board reductions are defined. In addition, the website provides a list of state agencies and details of each agency’s response plan. Some agencies have yet to submit their plans.

These plans will remain in effect until the Legislature approves a new supplemental budget during the 2011 legislative session.

Across-the-Board Cuts; State Revenues Decline

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Today Governor Gregoire directed state agencies to reduce their 2009-11 budgets by 6.3% beginning October 1. The Governor did not provide any discretion with regard to how the reductions should or would be applied.

The across-the-board cut imposed by the Governor comes on the heels of this morning’s release of the September state economic and revenue forecast.  The forecast shows the state faces a projected shortfall of $770 million for the 2011 fiscal year.  With $250 million in reserves, this creates an immediate deficit of $520 million for the state.

Washington’s Chief Economist, Dr. Arun Raha set the context for the latest reduction in state revenues. According to Raha, job growth is anemic, the housing market is in search of a bottom, and small businesses are still challenged in the credit environment. 

What the state is facing is not risk (defined as the unknown knowns) but uncertainty which are the unknown unknowns.

“Things will eventually get better, but at a slow and uncertain pace,” Raha said. “That cannot be entirely reassuring, but that is the best that I have at this time.”

Governor Issues Across-the-Board Cuts

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Yesterday, Governor Gregoire issued an executive order directing across-the-board cuts to state programs and agencies.

The level of the reductions, as stated in the executive order, are to be based on the September Economic and Revenue forecast.  As a result, the level of reductions to state agencies will not be revealed unitl after the release of the September Economic and Revenue forecast on Thursday.  The reductions will go into effect on October 1, 2010.

Over the last month, Governor Gregoire informed state agencies to prepare for across-the-board cuts that could range from 4 to 7 percent. However, given the continual decline in state revenues since June,  the Governor warned that the cuts could be even higher.

In addition, the Governor has stated that quick action by the 2011 Washington Legislature will be needed to pass a supplemental budget that reduces state support for public services by $500 million from the last six months of the current fiscal year. 

It is also expected that the 2011-13 budget will need to be reduced by 10 percent to bridge an estimated state shortfall of $3 billion.

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.