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UW Asked to Model Steep Budget Cuts for 2011-13

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Last week, Senate and House Fiscal and Higher Education Committee leadership asked all public baccalaureate institutions and the community and technical colleges to identify specific budget reductions at three levels for 2011-13. For the UW, those cut intervals were:  The Governor’s proposed $189.8 million cut, a $218 million cut (Governor’s cut + 15%), and a $246 million cut (Governor’s cut + 30%). For scale, the UW received $627 million in state funds for the 2009-11 biennium (Fiscal Years 2010 and 2011).

Potential reductions identified by the UW and submitted by President Wise to the Legislature yesterday were sobering, although President Wise pointed out in correspondence to campus leadership that some of the examples in the letter,  “…may come to pass, but only as a result of the strategic budget process currently underway, not because of reference in the letter.”

Neither the House nor the Senate Fiscal Committee has submitted their budget proposal for the 2011-13 biennium yet and we do not know how each committee will ultimately handle the UW’s state appropriation. While we have the Governor’s proposed budget in hand, the appropriations process is far from being over. We will continue to post state budget updates to this blog as they develop.

Media coverage of our submission to the Legislature is available in the Olympian, the Seattle PI, and The Seattle Times.

University of Wisconsin Poised to Receive Greater Autonomy?

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Current protests in Wisconsin have dominated press coverage of Governor Scott Walker’s proposed 2011-13 state budget this week. Lost in the shuffle may have been news that the proposal contained a provision that would lead to greater autonomy for Wisconsin’s largest public institution of higher education, the University of Wisconsin at Madison. UW Madison Chancellor Biddy Martin has requested that the UW System Board of Regents not oppose the move, which she argues would be essential to protecting excellence and access for the state’s flagship campus.

Potential legislation based on the Governor’s proposal is expected to be introduced by Republicans and would be likely to include the following freedoms for UW Madison:

  • Tuition setting authority and freedom to manage all funds
  • Authority to implement institutional budget without System approval
  • Ability to recruit, hire and retain employees outside of the state system
  • New flexibility in purchasing
  • Authority to handle its own building projects

The University has sought such freedoms from the state for years, and the article suggests that the chancellor has been working for over a year to craft the current proposal, which she calls the New Badger Partnership.

For more information about this topic, read our recent OPB brief on institutional autonomy and the varying degrees to which it currently exists at the UW Seattle and our Global Challenge State peers.

Closing in on a Final Compromise for the FY 2011 WA State Budget

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Leadership in both fiscal committees of the House of Representatives and Senate signed a compromise budget to closing the remaining FY 2011 budget deficit. Both new cuts and fund transfers are included in the compromise.

While the budget is not final and both chambers must take a floor vote, the conference budget is in near final form. Higher education institutions would not receive direct state funding cuts, but would be asked to backfill a new cut to the State Need Grant (SNG) with institution resources. The UW would be directed to use $5,658,000 of internal funds to cover the general fund reduction to the SNG.

Also note that higher education institutions were exempt from a salary reduction (furlough) requirement.

Lastly, the compromise budget did not close the Basic Health Plan but it did make significant cuts to K12 and other social services.

Federal Budget Proposals Affect Higher Education

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The UW Office of Federal Relations has posted detailed summaries of how recent federal budget proposals may affect higher education. As the House Republicans propose major spending cuts for FY 2011 that target Pell grants and funding for federal agencies that support academic research, President Obama has released a FY 2012 proposal that largely protects financial aid and research and development.

Visit Federal Relations often for updates on federal budget negotiations.

Virginia Close to Passing Major Higher Ed Reform

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Virginia’s Governor, Robert McConnell, endorsed all of the recommendations made by the Higher Education Commission he created last year to explore policy options for higher education reform. The resulting Virginia Higher Education Act of 2011 has moved quickly through both the House and Senate and may soon be on its way to the Governor. The bill provides $50 million in new funding for higher education institutions in Virginia, a UW Global Challenge State peer, as a ‘downpayment’ on the lofty reform goals outlined by the bill, including:

  • Producing 100,000 additional degrees over the next 15 years.
  • Providing incentives to increase enrollment of Virginia residents by creating target resident enrollment goals for institutions.
  • Creating incentives for improving retention, graduation, and time-to-degree.
  • Crafting new performance agreements focused on policy outcomes.
  • Enhancing efficiency by increasing institutional managerial autonomy.
  • Creating a higher education rainy day fund for use in economic crisis.
  • Establishing objective, peer-based funding goals.
  • Increasing state support and reducing reliance on tuition revenue.
  • Restoring state aid for students attending non-public Virginia colleges.
  • Increasing state need-based aid for low and middle income students.
  • Increasing year-round use of physical and instructional resources.
  • Increasing use of technology in the classroom, and increasing online course offerings.
  • Increasing enrollment in dual credit programs to shorten time-to-degree.
  • Creating public/private partnerships to increase STEM degree attainment, and facilitate commercialization.
  • Creating a catalog of R&D assets and activities so that the state can align investments with existing strengths/activities.
  • Creating an emerging technologies fund to recruit faculty, purchase equipment and provide seed funding.

The Washington State legislature is considering its own Higher Education Funding Task Force bill right now. Make sure to follow its progress via our UW BillTracker (bill number 5717).

Americans Struggling Economically, Worried about Affordable Higher Ed

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That Americans are concerned about the rising price of higher education is not news. However, Public Agenda’s newly released survey results, Slip-Sliding Away: An Anxious Public Talks About Today’s Economy and the American Dream, shed some new light on how the continuing economic crisis may have heightened those concerns. The telephone survey was administered to a representative sample of 1,004 individuals. Among the results:

  • Respondents were most likely (75+%) to say that people with no college degree, working families, and small business owners were struggling ‘a lot’ (compared to ‘a little’ or ‘not at all’) in this economy, whereas only about half of respondents felt that college graduates were struggling a lot in this economy.  Meanwhile, 40% of respondents reported that they themselves were struggling a lot, and, notably, only 10% of respondents felt that those who work on Wall Street were struggling a lot.
  • More than half of respondents (51%) reported that they are very worried about being able to pay for college education for their children, and 27% reported being somewhat worried about being able to afford higher education for their children.
  • When  asked how effective particular policy options might be in helping Americans who are struggling financially, making higher education more affordable received the highest positive response (63%). Also ranking highly (above 50%) were preserving social security and medicare, and expanding job training programs.
  • Respondents reported that Governments and individuals are about equally responsible for helping those Americans who are struggling economically.

Given the dominant news coverage focusing on private institutions with the highest sticker prices, it is important to note that 75% of students enrolled in higher education attend public institutions, which carries a much lower net cost of attendance than private institutions.  For previous OPBlog posts and briefs on this topic and, in particular, the UW’s financial aid and funding issues, see:

State of the States

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We continue to closely follow the fate of Washington State’s budget, but are also keeping our eyes on what is happening in other states. Below are some resources that you might also find of interest:

Education Week provides brief coverage of and links to the State of the State addresses as they are made in each state.

The Center on Budget and Policy Priorities (CBPP) continues to track and report on state budget deficits and policy actions as they unfold.

The National Association of State Budget Officers (NASBO) posts links to reports and stories relating to state budgets, including this letter from Governor Gregoire to the Washington State federal delegation in response to the idea that the Federal Government may be considering legislation allowing for state bankruptcies.

New OPB Brief on Institutional Autonomy

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The economic outlook for state budgets remains bleak and additional steep cuts to public higher education inevitable, making it imperative to re-imagine how institutions can become more efficient and self-sufficient while remaining effective and accountable to the public. For many institutions greater autonomy from the practices and requirements of state government seems attractive, and this topic is explored in OPB’s latest brief on variations in institutional autonomy among the UW and its peers.

Somber State Budget Update Presented to UW Regents

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Paul Jenny, Vice Provost of Planning & Budgeting, presented the Governor’s proposed budget for higher education and the UW to our Board of Regents last Thursday. Paul touched on the upcoming state revenue forecast, the Governor’s cuts to all institutions, and the impact of future state funding cuts on campus.

The Regents expressed many concerns throughout the presentation, but a few points proved especially troubling:

  • If the Governor’s budget is adopted, higher education institutions’ funding would be cut by half, or $500 million since FY 2008.
  • State funding for higher education institutions on a per student full time equivalent (FTE) basis has deteriorated. While the state covered 70% of funding per student FTE in 1991, the Governor’s budget would only cover 30% of needed funding per student FTE.
  • The Governor’s budget proposes 11% tuition rate increases for resident undergraduates, but even with tuition increases factored in from all student categories, the UW would still face a net $91 million reduction in state funding.

As usual, Planning & Budgeting will continue to post budget updates throughout the 2011 Legislative Session on this blog. As we’ve stressed before, the Governor’s budget is the first budget proposal for the upcoming biennium; we have a long session before us and no budget is final at this point.

Are the States Alright?

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You may have read a widely circulated New York Times article today concerning the possibility of the federal government creating a pathway for states to seek protection in federal bankruptcy court if their debt burdens spiral out of control. Some policymakers think that the severe economic strain created by the Great Recession has revealed deep structural problems in state budgets that may be unfixable without intervention.

However, in Misunderstandings Regarding State Debt, Pensions, and Retiree Health Costs Created Unnecessary Alarm, the Center on Budget and Policy Priorities puts current state budget woes in historical perspective, and emphasizes that, while the near-term future for state budgets across the country remains grim, we must exercise caution in conflating the short term problems caused by the recent recession with the very long term structural issues associated with revenue systems and pension plans.