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Results of Higher Ed Ballot Initiatives Across the Country

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On Tuesday, 11 states voted on ballot measures that could impact higher education. The following table (based on one from The Chronicle) summarizes how those measures fared.

YES–the measure passed           NO—the measure failed

CALIFORNIA
YES Prop 30 Would temporarily increase sales and income taxes in order to raise approx. $6-billion in revenue and stave off $963-million worth of cuts to the public colleges.
MAINE
NO Question 2 Would allow a $11.3-million bond issue to fund capital for a diagnostic facility at the University of Maine.
MARYLAND
YES Question 4 Would let children of illegal immigrants pay in-state tuition rates provided they meet certain conditions.
MICHIGAN
NO Proposal 2 Would let graduate students form unions and bargain collectively.
MISSOURI
NO Prop B Would raise cigarette taxes and use the revenue to create a Health and Education Trust Fund. About 30 percent of revenue would go to higher education.
MONTANA
YES LR-121 Would require proof of citizenship in order for a person to receive certain state services, which includes attending Montana’s public colleges.
NEW JERSEY
YES Question 1 Would let the state issue a $750-million bond for buildings and upgrades at public and private colleges.
NEW MEXICO
YES Question C Would authorize a $120-million sale for certain higher education repairs and improvements.
OKLAHOMA
YES Question 759 Would ban affirmative action programs in the state, including their use in public colleges’ admission policies.
RHODE ISLAND
YES Question 759 Would give Rhode Island College up to $50-million for its health and nursing programs’ facilities.
WASHINGTON
NO SJR 8223 Would allow the UW and WSU to invest publicly-generated revenue (i.e. parking fees and indirect-cost reimbursement for grants) in corporate stock.
YES Initiative 1185 Would renew the requirement of a two-thirds legislative vote in order to create new taxes or raise existing ones–effectively making it more difficult for the state to generate new revenue for programs including higher education.

 

Possible Federal Sequester Will Harm State Budgets

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The UW’s Office of Federal Relations posted information this morning detailing the federal sequester’s impact on state budgets. The grim summary is available on the News & Updates website.

The Offices of Federal Relations, Planning & Budgeting, and Research recently collaborated on a policy brief summarizing basic sequester information. Note that sequester updates are available on the Office of Federal Relations’ blog.

Pell Expenditures Decrease as Recipients Increase

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The Pell Grant program, the largest federal student grant program, was expected to be $20 billion short of the $40 billion price estimated for FY12 (which ended July 1). However, the Department of Education surprised many with newly-released data showing the federal government not only spent well under that estimate at only $33.4 billion, but in fact $2.2 billion less than FY11.

Recently, Pell eligibility increased dramatically as college enrollments rose and the recession continued to impact family/student income. This trend continued in FY12 and, interestingly, the dip in Pell spending occurred despite a 58,000 increase in Pell recipients—to almost 9.7 million. In fall 2011, nearly one quarter of UW freshmen were Pell eligible.

Reasons for the decline in Pell spending include:

  • The elimination of the year-round, or summer, Pell Grant, which allowed students to qualify for two awards in a year.
  • More students attending college part time as part-time status reduces Pell award amounts.
  • Fewer students attending for-profit institutions, which tend to enroll students who qualify for larger awards. Recent bad press and slumping enrollments have hit for-profits hard. Consequently, the number of Pell recipients at for-profits declined by 108,000 students, to roughly 2.1 million, and accounted for $1.4 billion of the decrease.

The drop in Pell expenditures is a relief for most lawmakers as they face next year’s “fiscal cliff” and must address both the impending tax hikes (when Bush tax cuts expire) and the automatic spending cuts (as mandated by the sequester). The Obama administration and congressional Democrats have resisted financial aid-related budget cutting, maintaining the maximum Pell award of $5,550 and writing specific protection for Pell Grant funding into the Budget Control Act. However, recent financial straits have already caused the federal government to eliminate several student loan programs such as the previously-mentioned summer Pell Grant, the six-month grace period for loan repayment, subsidized Stafford Loans for graduate students, and incentives for early loan repayment. With the sequester and difficult budget decisions looming on the horizon, it is safe to say that no funding is safe.

Another Depressing State Budget Forecast

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Yesterday, Governor Gregoire’s budget office issued a lackluster four-year revenue and expenditure outlook for the state’s near general fund. The coming 2013-15 biennium (FY14 & FY15), for which the Governor will release a budget in December, comes up short on anticipated revenue and long on expenditures. Before accounting for required increases in K12, across-the-board salary increases, and minor increases to financial aid spending, the anticipated deficit for both years of the coming biennium is $1.7 billion. If the Legislature appropriates funds from the budget stabilization account, the biennial deficit shrinks to $956 million. The deficit was calculated based on the assumption that near general fund revenue will grow 2.2% in FY14 and 4.4% in FY15.

Expenditure assumptions include the backfill of an equivalent 3% salary reduction in each of the prior two fiscal years (FY12 & FY13). In other words, it is presumed that the Legislature will backfill the UW’s budget by approximately $12 million per year to replace the temporary salary-related reductions it imposed on the University during the prior biennium. However, without an infusion of revenue, the Legislature will not be able to fund required K12 policy enhancements, financial aid, or salary increases.

The outlook serves as a reminder that the state’s economy remains tenuous and even a minor replenishment of higher education spending is questionable.

New Report Suggests State Budget Woes Will Continue

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A new study from the State Budget Crisis Task Force concludes that in many states, anticipated revenues will be insufficient to cover mounting Medicaid enrollment caseloads, underfunded pension commitments, and local government budget obligations. The authors focused their investigation on California, Illinois, New Jersey, New York, Texas, and Virginia. They predicted that anticipated revenues (from sales, income, or other taxes) would be both insufficient to cover expenses and fairly instable, as personal income remains volatile and unemployment (and underemployment) high. In other words, we are edging towards the state budget precipice, even as the national economy distances itself from the official end of the Great Recession proclaimed in 2009.

These conclusions are not unfamiliar to readers; we recently blogged about state-level fiscal uncertainty and sluggish revenue growth. However, this study sheds additional light on the subject, being the first to make a comprehensive assessment of the tension between mounting expenses and shaky revenues in highly populated states.

While Washington State continues to experience slow economic growth in some sectors and in its generation of tax revenue, the Economic Revenue and Forecast Council (ERFC), in its July collections report, refrained from making any firm economic revenue projections due to the excessive variability of receipts. The ERFC report also emphasized slowing job growth: while reducing state unemployment by 0.5 percent would require 160,000 new jobs each month, the state only added 80,000 new jobs in June.

While anticipated revenue is increasing slightly, the downside risks of a second recession brought on by the debt crisis in Europe, disappointing job growth, and depressed consumer confidence are significant. Despite these concerns, ERFC predicts slight revenue increases for both the 2011-13 and 2013-15 biennia, due to legislative action from the 2012 supplemental budget.

 

No Material Change to UW Funding in New House Budget

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In a final effort to pass an omnibus operating budget before the end of the first special session of 2012, the House introduced what the Democratic Caucus deemed a compromise, amended budget Wednesday and passed the budget off the floor yesterday. This second engrossed House budget is nearly identical to the first engrossed House budget in its treatment of higher education institutions.

As a reminder, an engrossed budget must be adopted by the opposite chamber before it is sent to the Governor. If the opposite chamber amends the budget, the budget is returned to the house of origin for concurrence or further amendments.

What remains to be seen is whether the Senate will hear the House budget before Tuesday (which marks the end of the first special session of 2012) and either amend it or pass it. This appears unlikely by most accounts.

For the UW, the second (newly) engrossed House budget and the most recent Senate “philosophical coalition” budget are mostly identical. Both budgets make no NEW service cuts to higher education. The House budget, like the Senate budget, contains a number of central agency service reductions for specific “state” services that would have some impact on the UW, and both budgets redirect existing state appropriations to the UW to fund specific initiatives in the College of Engineering ($3.8 million), WWAMI ($210,000) and RIDE ($190,000).

The primary difference between the two approaches is that the second engrossed House budget does not swap $5 million of state funds for $5 million of State Toxics Control funds in the College of the Environment’s budget.

Planning & Budgeting continues to develop drafts of the FY13 UW capital budget, operating budget, and tuition item for Regental consideration on May 3. If we do not have a firm state appropriation figure to include by that time, our ability to accurately project central educational operating resource budgets will compromised.

A New Senate “Coalition” Budget Proposal

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The first new budget proposal of special session was released today by the same bipartisan Senate coalition that quickly passed an engrossed supplemental budget two weeks ago. Last week, the House further revised the Senate engrossed budget before session ended without agreement on a compromise budget. Although complex and at times confusing, this year’s budget process appears to now be moving forward as today’s Senate budget release moves closer to the House engrossed budget.

The new Senate coalition budget proposal would make the following changes to the UW’s 2011-13 biennial budget:

  • Reduces state general funds for the College of the Environment and replaces these funds with State Toxics Control revenue ($5 million);
  • Requires that the UW devote a portion of its state funding base to convert existing student FTE to College of Engineering FTE ($3.8 million); and,
  • Provides new funds for a Center for Aerospace Technology Innovation ($1.5 million).

All told, the redirect of state funding for engineering enrollment funding  and College of the Environment fund swap would affect our FY13 budget base. Please review our Planning & Budgeting brief for more information about the new Senate proposal and how it compares to the current House engrossed budget.

Olympia Budget Update

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On Thursday morning (3/8), around 12:30 AM, yet another version of the budget (making changes to the Senate engrossed budget) was proposed by Representative Hunter (Chair, Ways & Means) on the last scheduled day of legislative session. This proposal was intended as a compromise between the Senate engrossed budget, written by Senate Republicans, and the budgets proposed by Senate and by House Democrats.

This new House budget amends the Senate engrossed budget, and does not contain new state funding cuts for the UW or the other higher education institutions. However, the budget does contain small central agency service reductions and two unfunded provisos that the UW would fund through its current appropriation. Similarly to previous iterations of the budget, these provisos specify that $3.8 million must be redirected to support engineering enrollments in FY13, and that $790,000 be directed to WWAMI/RIDE in FY12. While the Senate engrossed budget provided new funds for these provisos, the House budget does not; thus, it would require a shift of existing UW state funds and constitute a cut that University units would have to accommodate.

This budget was heard, amended, and passed off of the House floor last night but was not heard in the Senate afterward. A special session to continue the process was announced shortly after midnight, and Governor Gregoire called the Legislature back to session next Monday. We anticipate that negotiating a compromise budget between the multiple versions that have been introduced will be the Legislature’s primary focus next week.

At this stage, changes to the UW’s state funding for FY13 remain uncertain. The two current proposed approaches include a House “budget” that would require the UW to shift $5 million of its appropriation to fund the two provisos noted above, but contains no new overall funding cuts. Meanwhile, the Senate engrossed budget bill does include new funding for the engineering proviso ($3.8m), but makes other changes that result in a loss of $12 million in state funding.  When special session starts next week, entirely new versions of the budget may emerge. Stay tuned.

Senate Republicans Stage “Coup,” Forcing Adoption of New Budget

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In a rare, surprise move (which has not occurred in the state capitol since 1987), Senate Republicans introduced a striking amendment to the Senate Ways & Means budget on the Senate floor yesterday afternoon and eight hours later, passed their version of the supplemental operating budget with only one amendment adopted. Many amendments were introduced to make changes to the Republican striker, and restore funding to specific areas of state spending, but in the end, only one amendment was carried.

Derek Kilmer (D-Gig Harbor) offered an amendment  last night to restore most of the cuts that the Senate Republicans would apply to higher education institutions, passionately declaring, “You don’t have to do this,” after asking where Senate Republicans were doing student testimony on the original Senate budget, which spared higher education institutions from additional cuts.

Despite passionate testimony and procedural action to delay a vote, the new engrossed Senate budget passed 25-24 just after midnight.

This budget is described in greater detail in an OPB brief, which compares the new Senate engrossed budget to the House engrossed budget. All told, the Senate budget would require the UW to take a $12 million cut next fiscal year.

Legislative session is scheduled to end this Thursday, March 8, but this recent shake up will no doubt complicate the last few days of scheduled action.

Debate on the Senate floor yesterday evening was highly emotional and it could take several days before legislators are ready to negotiate differences between the two now very different budget spending plans.