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Category: OPB News and Announcements

Governor’s Budget Mandates 3% Salary Reductions for All State Employees

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Yesterday, the Governor released her 2011-13 budget, and an obscure section of it mandated that all state employees’ salaries, regardless of fund source, be reduced by 3 percent in both fiscal years of the coming biennium.

For the UW, this means that those employees supported by General Operating Funds, working in the hospitals, supported by grants and contracts, and even funded with self-sustaining, locally-derived funds would recieve compensation cuts. While we are still analyzing the feasibility and legality of this wholesale reduction, the Governor’s budget mandates that all state employees receive a pay cut and for the UW, that amounts to $32 million in BOTH FY12 and FY13 (or $12 million per year if we isolate the cuts to just employees supported by our General Operating Fund base).

This action would exacerbate the UW’s state funding cut to 29%.

A revised brief about this action is available on P&B’s website.

Massive Funding Cuts for Higher Ed in Governor’s 2011-13 (FY12 & FY13) Budget

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The Governor released her 2011-13 Operating Budget today and it calls for major cuts across all state agencies. This is just the first budget released to address the next biennium; we will review and analyze many Legislative budget proposals during session, which starts on Monday, January 10. The Governor’s budget addresses the $5.7 billion deficit forecasted for the coming biennium.

As predicted, the Governor’s budget reduces state support for the UW over the next two years. These cuts came in several forms: budget reductions, fund shifts, and pension cuts. While some of the reductions are “back-filled” with authority to raise resident undergraduate tuition rates 11% per year over the next two years, the additional revenue from doing this and raising tuition for all other students (by commensurate amounts to current 2010-11 rates) will not make up the funding cuts in the Governor’s budget.

Please review our briefing on the Governor’s budget for more information and contact us directly with any questions.

We anticipate that the Governor’s proposal for a third and final FY 2011 Supplemental Budget will be released Friday. Information and analysis on that budget will be available Friday on this blog and on our website.

Interactive Maps: Endless Possibilities

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We are pretty excited by opportunities to view and present large sets of complex data via interactive maps. The New York Times has developed one such map that allows you to explore the recently released US Census Bureau’s American Community Survey results by zip code, city or census tract. Mapping America: Every City, Every Block is an amazing new tool that not only makes exploring such a large dataset much simpler and more enjoyable, but allows the user to more effectively marshal data to answer specific questions from multiple levels of analysis.

Speaking of the wonder of interactive maps, hopefully you’ve had a chance to check out the new UW in Your Community Map recently launched by the UW Office of State Relations. This interactive map allows you to see a selection of the many activities the UW is involved in across the state. The map will continue to evolve and grow, and is a fantastic way to learn about many amazing UW projects and initiatives, as well as all of the ways in which the University contributes to our state and local economies.

The Chronicle of Higher Education has also been increasing their development and publication of interactive maps, including this mapping of state cuts to higher education that they developed last year using data collected by our Office of Planning and Budgeting.

And to see interactive maps taken to a whole new level, watch this four minute BBC presentation from Global Health researcher Hans Rosling.

As consumers and presenters of data, we look forward to the increasing use of these kinds of tools, and we are very grateful for the highly skilled tech folks who design them!

Legislature Passes Second Supplemental Budget in Seven Hours on Saturday

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The Washington State Legislature quickly passed a second supplemental budget for Fiscal Year 2011 on Saturday, which closed $580 million of the FY11 $1.1 billion deficit. More cutting must be done; we anticipate that this action will occur in a final supplemental budget, which would be adopted in January 2011, likely as the first action of the 2011 legislative session set to begin on Monday, January 10th.

This Saturday’s budget included reductions to many areas of government but Basic Education, Human Services, and the Department of Social and Health Services were hardest hit. Meanwhile, Higher Education received a revision of October’s across-the-board cuts in order to maintain a  federally-required maintenance of effort (MOE) funding floor. While this federal requirement spared individual higher education institutions from major cuts this month, the MOE does not apply to state-funded financial aid programs, and the next round of FY11 cuts will likely include reductions to the State Need Grant.

Please review our briefing on Saturday’s budget for more information and contact us directly with any questions.

Additional Near- and Long-Term Cuts Expected as State’s Revenue Forecast Worsens

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After the November 18, 2010 release of the state’s November revenue forecast, Vice Provost of Planning and Budgeting Paul Jenny released the following information to UW leadership:

As most of you are aware, the November revenue forecast for the state was released yesterday, and it was not good news.  The forecast projects a shortfall of $385 million in the current fiscal year budget and a deficit for the upcoming 2011-13 biennium (FY12 and FY13) of $5.7 billion. There are many factors for the continuing lack of improvement in state revenues:  the real estate market remains weak, expected revenue increases will not materialize due to voter rejection of the soda and candy sales tax measure, case loads continue to increase, and so forth.The most immediate concern is the reduction in revenue of $385 million for the current fiscal year.  To bring the budget back into balance, there are three options available:

  • The governor could impose across the board reductions as she did following the September revenue forecast.
  • The governor could call a special session of the legislature to balance the budget.
  • The legislature could take up this issue in passing a final supplemental budget for FY11 that addresses this shortfall as the beginning agenda item in the normal legislative session that commences on January 10, 2011.

While we do not know what course of action will ultimately be taken, we need to anticipate another mid-year reduction as a result of any of these options. As a point of reference, the shortfall in the September revenue forecast of $520 million resulted in a cut to the UW of $17.1 million.  If the response to the current shortfall of $385 million is consistent with the September actions, we may see a reduction of approximately $10 million -$13 million.  Again, this is just our best guess at this point. My office will provide greater detail as it becomes known to us.

Longer term, we need to understand that the solution to a $5.7 billion deficit in the 2011-13 biennium will not be pleasant. We don’t know what our share of the cut will be.  What we do know is that only 30 percent of the budget can be touched at this point – the rest considered ‘off-limits’. We can safely assume that because higher education is the biggest part of the discretionary budget, we will be hit very hard. While we had to model a 10% reduction in a response to a request by OFM, we should anticipate that our cut may be higher than 10%.  Cuts of these magnitudes will inevitably place more pressure on the discussion surrounding tuition increases as a mitigating factor to these cuts.

While this is distressing news, the Offices of Planning & Budgeting, External Affairs, and State Relations will be working with our elected officials to consider different solutions that can stave off some of the impact these cuts, if not mitigated, would create.

Election Results Exacerbate State Budget Woes

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Washington’s General Fund-State account continues to decline in tandem with stagnant job growth and faltering tax collections. Last Tuesday, Washington voters reversed the 2010 Legislature’s tax measure on certain foods and beverages; the tax will sunset on December 1, 2010. Notably, the American Beverage Association contributed $16.7 million in total to the campaign repealing these taxes, the most external contribution to any Washington initiative in our state’s history.

Governor Gregoire has released several statements indicating her understanding of current taxpayer frustration and will release an all-cuts 2011 Supplemental Budget, which will include further budget cuts to resolve any existing budget deficit for the current 2009-11 biennium.  In addition, she must submit an all-cuts budget for the upcoming 2011-13 biennium by December 20. Both budgets will assume no new revenue growth and take into account past predictions of revenue, as summarized in the table below.

In the short-term, the UW already took a $17.1 million mid-term FY 2011 cut, and does not anticipate having to take another mid-term reduction before the start of the 2011-13 biennium on July 1, 2011. While we were asked to model 10 percent cuts for the upcoming biennium, UW administration anticipates that the state’s currently projected $4.7 billion revenue shortfall will necessitate further cuts to higher education institutions. Because two-thirds of the general fund budget is constitutionally protected and spent on K-12 education, corrections, and health and welfare activities, higher education is one of the major discretionary areas of spending left to cut.

Please check back regularly for more information about the budget, including an update to this table after the next revenue forecast is available on November 18. In addition, we will be providing more summary information about other mandated areas of the state’s budget, including the state pension system, K-12 education, corrections, and more.

Fall 2010 Submissions to the Office of Financial Management (OFM)

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UW administration recently submitted four budget exercises to not only close out the current biennium (2009-11), but also to plan for the coming biennium (2011-13). Each submission was required by OFM.

Information to make final adjustments to the current, 2009-11 biennium:

Information to help the Governor and the Legislature write initial budgets for the 2011-13 biennium:

  •  The state’s budget forecast for the coming biennium (2011-13) calls for a shortfall in state funds that could be between $4.5 and $6 billion. In an effort to understand how agencies would be affected by further state funding reductions in 2011-13, OFM ordered all agencies to submit information about the possible effects of a 10 percent reduction in funds, $58 million for the UW (please note this was an illustrative exercise and does not represent existing UW plans for implementing future budget cuts). The UW’s plan was submitted on September 30, 2010.
  • On September 13, 2010, the UW submitted its 2011-13 operating and capital budget requests, including all required university data plus any requests for funds for the coming biennium. As we’ve noted in the past, we do not anticipate any new operating resources from the state for new endeavors on campus. The UW’s operating budget and capital budget were submitted to OFM on September 13, 2010.

The University anticipated and responded to any requests for information about prior and future budget cuts by working with appropriate units that have experienced the most significant reductions in the past, and which will likely be affected by further reductions in the future. The reductions we’ve made in the past two fiscal years were strategic in nature; academic units were largely shielded from reductions and various administrative units were targeted for larger reductions.

While each unit had to take an immediate cut in funds to reconcile the $17.1 million October reduction, any future cuts will once again be strategic, differential, and the result of collaboration between units, the Provost, and Planning & Budgeting.

OPB Web Spotlight

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Be sure to regularly check the Spotlight section on the OPB homepage where we post links to important documents and work products that have been posted to our website. Currently you will find links relating to recent budget cuts, and the altered time-line for implementing an activity-based budgeting (ABB) approach at the UW, among other things.

Additionally, OPB Briefs (recent and archived) are always posted to our website.