Concerns Rise Regarding State Budget

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Doubt is emerging about anticipated federal funds for Washington.

Washington State’s budget was balanced based on four strategies: (1) Reductions to public services and programs, (2) Transfer of funds to the General Fund, (3) Increases in revenues, and (4) Incorporation of approximately $618 million of approved/anticipated additional federal relief to Washington State.

The 2010 supplemental operating budget anticipated $480 million in additional resources based on the Federal Medical Assistance Percentage (FMAP) enhancement being extended by an additional six months through June  2011.

In addition, based on  U.S. Department of Health and Human Services reversal of the decision to disallow state savings from Medicare Part D “clawback” payments for prescription drugs, the state expected to receive $87 million in additional federal resources beyond the current level assumed in the state budget.

At the time the state budget was signed into law, Congress was considering legislation that would extend the enhancements beyond the current end date, December 2010. Legislation that both the House and Senate had considered before and passed.

However, today states, including Washington, are running into roadblocks with regard to the anticipated funds in Congress.

Last week the U.S. House of Representatives stripped language for a six-month, $23 billion extension. Washington is seeking approximately $480 million of these funds as part of the four-strategy approach to balancing the state’s most recent shortfall (2010).

Without these funds ($480 million) the dollars in reserves ($450 million) planned as a cushion would be eliminated, leaving the state vulnerable to changes in tax revenues.

Governor Gregoire along with 47 other governors, both Democrat and Republican, have asked for the extension. More than 30 states counted on these dollars in their budgets.

The legislation now moves to the Senate where the bill could be taken as soon as after the Memorial Day week long recess.

Stay tuned…

Common Core State Standards Released

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This week the National Governors Association Center for Best Practices (NGA Center) and the Council of Chief State School Officers (CCSSO) released a set of state-led education standards, the Common Core State Standards.

The standards built on the foundation of standards states have set. The standards were developed on behalf of 48 states, two territories, and the District of Columbia.

The standards are:

  • Aligned with college and work expectations;
  • Clear, understandable and consistent;
  • Include rigorous content and application of knowledge through high-order skills;
  • Build upon strengths and lessons of current state standards;
  • Informed by other top performing countries, so that all students are prepared to succeed in our global economy and society; and
  • Evidence- and research-based.

The release of the standards signals the start of the adoption and implementation process by the states.  In the coming months, each state will follow its own procedures and processes for adoption of the Common Core State Standards.

Candidate Pool Narrows in Washington’s Third U.S. Congressional District

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The Democratic candidate pool for the Office of Washington’s U.S. Representative for the Third District narrowed substantially this week. The Third Congressional District represents The Evergreen State College.

In a press release from the National Democratic Congressional Campaign Committee, current Washington State Senator Craig Pridemore (D-Vancouver) cites the long state legislative session as an impediment to fundraising, setting him too far behind.

Three Democratic candidates are still in the running for this congressional seat. They include Denny Heck, Cheryl Crist,  and Maria Rodriguez-Salazar. In addition, four Republican candidates also remain active in the race for this seat. They include David Castillo, David Hendrick, Jaime Herrera, and Jon Russell.

Senator Pridemore issued the following statement with regard to his decision to drop out of the race for the Third Congressional District.

“I want to first of all thank all of the individuals and organizations who supported my campaign. I am so grateful to have earned your trust, and look forward to continued service in the State Senate. I am especially humbled by the endorsements of organizations and friends who have rallied in recent weeks, knowing that we left the session with a steep hill to climb. Thank you.

I regret the need to exit this race, but it is clear to me that the long session placed our campaign at a clear disadvantage. While I wish I had been able to focus on my campaign earlier, I am proud that my focus this winter was where it needed to be: addressing the real issues facing the working families and small businesses of Southwest Washington. I entered politics to excel at public service, not the other way around.

I also want to congratulate and offer my immediate and full endorsement to Denny Heck, who is now in the best position–and is the best candidate–to win the seat in November. Denny is a bright, hard working and authentic SW Washington leader and we need his broad experience working for us in Congress. I encourage my supporters to help him and Senator Patty Murray in their elections this November.”

Legislation Introduced to Extend Perkins Loan Program

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Last week legislation (H.R. 5448) was introduced in the U.S. House of Representatives to push the statutory deadline for returning the federal share of Perkins Loan collection from October 2012 to October 2013.

The legislation is intended to address confusion about when the Perkins Loan Program is scheduled to end. The re-authorization of the Higher Education Act (HEA) took several years, during which original dates for distribution of loan fund capital and subsequent collections stopped being updated.

In addition, current language in the HEA (Section 466) calls for schools to return their federal share by October 2012 even though the latest re-authorization of the HEA reauthorized the Perkins program through fiscal year 2014 (Section 461).

Finally, the Obama Administration has sent clear signals that it is interested in changing the Perkins Loan Program, though no changes have been made to date.

Sponsored by Rep. Tim Bishop (D-NY) and John Spratt (D-SC) the hope is that, if passed, the  legislation will allow the financial aid community additional time to sort through the future of the Perkins Loan Program.

Passage of Tax Bill May Impact Higher Education

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Last week, the U.S. House passed legislation focused on extending certain taxes. The American Jobs and Closing Tax Loopholes Act (H.R. 4213), with a vote of 215 to 204, includes a provision that would extend the above-the-line tax deduction for qualified education expenses for one year (through 2010).

Under the provision, taxpayers who qualify for a greater net reduction in tax liability from current tax credits, the Hope and Lifetime Learning credits, would not qualify for the above-the-line tax deduction for qualified education expenses.

The Act, according to the U.S. House Ways & Means Committee, also includes several other provisions that impact higher education.

  • Supports 350,000 jobs for youth ages 14-24 through summer employment programs.
  • Extends for one-year (through 2010) the provision that encourages businesses to contribute computer equipment and software to elementary, secondary, and post-secondary schools.
  • Expands the current grant program to education institutions to develop, offer and improve education and career training programs for workers eligible for Trade Adjustment Assistance for Communities to also benefit individuals who are eligible for unemployment insurance, who are likely to be eligible for unemployment insurance or who have exhausted their unemployment insurance.

The Act now goes to the Senate where additional amendments will likely be considered.

Washington Receives Federal Funds to Support a Statewide Longitudinal Data System

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Last week, the U.S. Department of Education’s Institute of Education Science announced the awarding of $250 million in grants to twenty state education departments to design and implement a statewide longitudinal data system.

Among the twenty state education departments awarded funds, Washington received $17.3 million to assist in the development and implementation of systems that promote linking of data across time and databases, from early childhood into career, including matching teachers to students, while protecting student privacy and confidentiality consistent with applicable privacy protection laws.

The grant funds will be directed by Washington’s Office of Superintendent of Public Instruction and the Education Research and Data Center.

The grants are funded through the American Recovery and Reinvestment Act (ARRA, a.k.a. stimulus dollars) of 2009.  The awardees were selected in a competition based on the merit of the applicants’ proposals and the funding available for the program. All fifty states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands applied.

U.S. Senate Passes Financial Reform Bill Help to Higher Education Minimal

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Last week the U.S. Senate passed the Restoring American Financial Stabiliy Act of 2010 (S. 3217).  The Act, with a vote of 59-39, is expected to strengthen regulations governing financial institutions and prevent the risky behavior that led to a near-collapse of the economy in recent years.

The debate on the Act in recent weeks included several proposed amendments that would benefit student borrowers and higher education institutions.

In a review of the bill it appears that none of the amendments proposed by higher education organizations were included in the final version passed by the Senate. This included proposals to include language that would move the Direct Loan Program under the asupices of a new Consumer Financial Protection Bureau, allow private loans to be discharged in bankruptcy, provide an exemption for Title VII and Title VIII from new Truth in Lending Act disclosures, and require school certification on private student loans.

It appears that the only higher education related language to be amended to the bill targeted the “swipe fees” that banks charge merchants to process credit- and debit-card payments. The fees average 1-2 percent of a purchase. The added language would result in lower fees paid by colleges when students use credit and debit cards to pay for tuition and books.

The Senate’s Act must now be reconciled with the Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173), passed by the House last year through conference committee.

Pell Grant Extended to Students of Deceased First Responders

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Yesterday, the U.S. House of Representatives passed legislation to extend the Pell Grant to students whose parent(s) are deceased first responders.

The Officer Daniel Faulkner Children of Fallen Heroes Scholarship Act of 2009 (H.R. 959) would provide the maximum federal Pell Grant award beginning in the 2010-11 year to children of law enforcement officers, firefighters or members of a rescue squad or emergency medical services crew who are killed in the line of duty.

The Act would allow for the awarding of the maximum grant to students whose parent or guardian died in the line of duty while actively serving as a public safety officer.

The bill now goes to the Senate for further consideration.

Latest on Higher Education-Related Actions on Financial System Legislation

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Earlier this week the U.S. approved an amendment to the Restoring American Financial Stability Act of 2010 (S.3217) that would result in lower fees paid by colleges when students use credit and debit cards to pay for tuition and books.

Amendment S. Amdt. 3989, with a vote of 64-33, targets the “swipe fees” that banks charge merchants to process credit- and debit-card payments. The fees average 1-2 percent of a purchase.

The amendment would require the government to issue regulations to ensure that debit-card swipe fees are “reasonable and proportional” to the cost of processing transactions. In addition, the amendment would allow retailers to set minimum transaction amounts for card purchases and offer discounts to customers who pay with lower-cost cards or with cash.

As reported earlier in this blog, efforts to include an amendment to require private educational lenders to obtain institutional certification prior to making loans to students is still under consideration. Representatives from several organizations that represent financial aid administrators, lending institutions, and students continue to urge the U.S. Senate keep this student loan related-language in the bill.

Finally, several additional amendments are still in the works that could effect private student loans. These amendments include:

  • An amendment from Senator Al Franken (D-MN) that would restore bankruptcy protections to student loan borrowers.
  • An amendment from Senator Dick Durbin (D-IL) that would extend the newly created Consumer Financial Protection Bureau’s (CFPB) authority to banks and credits unions with assets between $1 billion and $10 billion that originate private student loans.
  • An amendment from Senators Charles Schumer (D-NY) and Jack Reed (D-RI) that would enhance CFPB enforcement over non-bank entities that extend credit or make loans.  A vote on the final version of the bill is expected some time next week.

Potential Student Loan Language in National Finance System Legislation

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The Consumer Bankers Association, the Education Finance Council, the National Council of Higher Education Loan Programs, the National Association of Student Financial Aid Administrators, the Institute for College Access and Success and the U.S. Public Interest Research Group are urging the U.S. Senate to include student loan related-language in the Restoring American Financial Stability Act of 2010 (S.3217).

The language would require providers of non-federal student loans to get colleges’ approval before they make such loans to students. The intention is 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 provision would mimic similar language passed in December by the U.S. House of Representatives in the Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173), which included a provision (Sec. 4818) that would require private educational lenders to obtain institutional certification prior to making loans to students.