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Special Session 2015-17 House “Offer” Operating Budget Proposal

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Leadership in the House Committee released a new Operating budget proposal in the form of P2SHB 1106 as a counter offer to the Senate budget released last week. This proposal still differs from the Senate budget and varies slightly from the engrossed House operating budget, ESHB 1106.

All of higher education (including financial aid) would receive nearly $3.49 billion or 9 percent. UW receives a total appropriation of $612.3 million of which $591.39 million is from Near General Fund account.

Here are some of the key points from the House “Offer “Budget proposal:

  • Tuition – This budget freezes tuition to all higher education institutions at the levels charged in 2012-2013. Funding is provided to freeze resident undergrad tuition.
  • Compensation Increase – This budget proposal is similar to prior proposals in authorizing a 3% and 1.8% for FY16 and 17, however this budget would only partially fund the cost of increase. This budget provides limited funds for the UW’s contracts with SEIU and WFSE.
  • WWAMI – This budget contains a proviso to transfer $4.68 million a year from WSU to the UW to maintain WWAMI and also a contains a requirement to support 60 first year medical students and 60 second medical students through WWAMI program in Spokane.
  • O&M Funding – $1.762 million over the biennium to cover the Operating and maintenance cost of UW Bothell Discovery Hall which is the same as the House budget, but slightly higher than the Governors funding.
  • Computer Science – This budget provides $4.25 million over the biennium to increase bachelor’s degrees awarded in computer science.

Please refer to our OPB Brief for more information about the special session House “Offer” budget.

Special Session 2015-17 Senate Chair Operating Budget

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Leadership in the Senate Ways and Means Committee released a new Operating budget proposal on May 28th 2015 in the form of Senate Bill 6050. This proposal makes significant changes to the engrossed Senate operating budget, ESSB 5077 and continues to differ from the engrossed House operating budget, ESHB 1106.

Though the 2015 legislature is scheduled to adjourn today, no compromise operating or capital budget exists. Thus a second special session will be required.

All of higher education (including financial aid) would receive nearly $3.6 billion or 9.2 percent increase from the Governor and House budgets. UW receives a total appropriation of $685.7 million of which $666.36 million is from Near General Fund account.

Here are some of the key points from the Senate “Offer “Ways & Means Budget proposal:

  • Tuition affordability program– This budget reduces the operating fee portion of resident undergrad tuition to 14 percent of the State’s average annual wage in FY16 and FY17. It provides $107 million to offset the reduction in operating fees and an additional funding to backfill the foregone tuition revenue. In spite of the above funding, UW anticipates a shortfall of $3.7 million over the biennium.
  • WWAMI – Senate budget provides $9 million over the biennium for continued operations of the WWAMI medical school program, and the bill requires that the state cost per student per year not exceed $45,000 in Spokane.
  • O&M Funding – $1.762 million over the biennium to cover the Operating and maintenance cost of UW Bothell Discovery Hall which is the same as the House budget, but slightly higher than the Governors funding.
  • Compensation Increase – “Like the House proposal, this budget authorizes 3% and 1.8 % increases for FY16 and FY17, respectively. However, this budget would only partially fund the cost of those increases”.

Please refer to our OPB Brief for more information about the special session senate chair budget. Special session house budget is expected to be released Monday.

Report Affirms State Divestment, Not Administrative Bloat, Largely Responsible Tuition Increases

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A report released today by Demos, a New York public policy think tank, attempts to identify the reasons why tuition prices at public four-year institutions have increased over the last decade. The findings reinforce the understanding that declining state support, rather than “administrative bloat,” is the primary cause of tuition increases. Although administrative spending did increase marginally, the authors attribute the slight change to rising health care costs[1]  and to new support services required over the past decade – such as those to support growing technology needs.

The report analyzed data from the Delta Cost Project and examined research institutions separately from institutions that primarily award bachelor’s and master’s degrees.

Between 2001 and 2011, state funding per student fell by $3,081 at research universities and, simultaneously, tuition per student increased “in near lockstep,” by $3,628. Consequently, the majority of funding formerly provided by the state is now borne by students and their families.

The Causes of Rising Tuition at Public Research Universities

(taken from Figure 6 in the report)

Causes of rising tuition - research universities

As seen in the figure above, of the tuition hikes at public research universities:

  • 79 percent is attributable to declining state appropriations,
  • 9 percent is due to higher instruction costs (largely the result of rising health insurance premiums)
  • 6 percent is due to more construction costs, and
  • 6 percent is due to increased administrative spending.

With regards to “administrative bloat” – which some still view as a key driver of tuition increases – the report finds that “the number of executives and administrators has actually slightly decreased relative to the size of the student body” and the average number of total employees per 1,000 students has remained relatively constant over the last decade.

Instead, public institutions are employing more part-time faculty and professional staff (e.g. employees who work in admissions, human resources, information technology, etc.). “All of these things are necessary to support the growing university,” said Robbie Hiltonsmith, the report’s author.  Hiltonsmith also noted that when state funding for higher education declines, colleges can either raise tuition to make up for the forgone revenue or look for ways to trim expenses.  “If there isn’t a lot of fat to cut, then their only option is to raise tuition or lose quality of education.”

[1] On average, the amount spent by public universities to provide health insurance to staff and faculty rose by nearly $2,700 per employee between 2001 and 2011, a 40 percent increase.

Report confirms continuing economic recovery and restoration of state funding for higher education

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State Higher education Executive Officer (SHEEO) announced its annual release of State Higher Education Finance (SHEF) report for FY14, which provides a comprehensive review of state and local funding, tuition revenue, and enrollment trends for public higher education.

National trends and Current status of state funding for higher education

On average, state and local support per full time equivalent (FTE) student was $6,552, a slight increase from $6,215 in 2013. Net tuition collections per FTE student is at $5,777, a 2.7 percent increase from 2013. Two rather interesting findings were highlighted in the report:

  • State and local support was 57.3 percent in 2014 as a share of per-student total educational revenue available to public institutions of higher education.
  • The explosive enrollment growth at public institutions from 2008 through 2011 tapered off in 2012 and is continuing in the downward trend. In 2014 enrollment fell another 1.3 percent from 2013.

Washington State compared to U.S Average

As a reminder, the SHEEO SHEF report combines community and technical college and college/university enrollment, state appropriations and tuition revenue for purposes of this report. In it, they found that enrollment (FTE) increased by 3.5 percent from 2009 to 2014, which is close to U.S. average (3.9 percent). They also found that public higher education in Washington improved in a number of other dimensions; including:

  • 15.3 percent increase in educational appropriations per FTE since 2013, higher than the U.S. average of 5.4 percent;
  • 3.7 percent increase in net tuition revenue per FTE from total educational revenue, higher than the U.S. average of 2.7 percent; and,
  • Total educational revenue per FTE increased by 9.4 percent, which was higher than the U.S. average of 4.1 percent.

However, two years of per-student funding increases might have meant that national average was on the path to exceeding pre-recession funding levels, which was not the case. Educational appropriations per student in FY14 remained 18.9 percent below 2008 pre-recession levels.

Read the full report for more data, analysis and methodological details.

2015-17 Senate Capital & Engrossed Senate Operating Budget

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The Senate capital budget appropriates $102 million in new funding from the State Building Construction Account, which is significantly more than the House capital budget appropriation of $41 million.

Here are some of the major funding items from the Senate capital budget:

  • $32.5 million for computer science and engineering expansion.
  • $16 million for UW Tacoma Urban Solution Center.
  • $46.2 million for Burke Museum.
  • $4 million for Health Science education MHSC T-wing renovation predesign.

The Senate voted its operating budget, Engrossed Substitute Senate Bill 5077 off the floor, adopting only five floor amendments, making virtually no changes to the higher education budget presented in our prior budget brief, available here. However, one of these five adopted amendments would redirect state marijuana-related revenues to the general fund, in lieu of allocating those funds to the state’s research universities (per citizen’s Initiative 502).

We will keep you updated as the House and Senate continue to work toward a final conference budget.

2015-17 House budget adopted after amendments

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On Thursday, the House passed its operating budget proposal (Engrossed Substitute HB 1106) off the floor, with several amendments.

The original tuition and compensation proposals from the House Chair budget remain unaltered, however there some key changes compared to the original bill:

  • Funding for computer science and engineering is reduced by $3.75 million, bringing the biennial total to $4.25 million, rather than $8 million.
  • An additional $1.9 million is provided for the Family Medicine Residency Network, bringing the biennial total to $4.9 million.
  • New funding of $300,000 is provided for the UW’s Latino Health Center over the biennium.
  • New funding of $400,000 is provided for the Climate Impacts Group in the College of the Environment over the biennium.

Please see our OBP brief for more information about the original House proposal.

The Senate is expected to vote on its operating budget on Monday.

 

2015-17 Senate Chair Operating Budget

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On Tuesday, Leadership in the Senate Ways & Means Committee released its operating budget proposal, Proposed Substitute Senate Bill 5077 which makes significant changes to the Governor’s proposal and differs significantly from the House proposal.  Under the Senate proposal, the UW would receive $674.39 million of Near General Fund State across the biennium.

Here are some of the key points from the Senate Budget proposal:

  • Tuition affordability program – The Senate budget reduces the operating fee portion of resident undergraduate tuition to 18 percent of the state’s average wage in FY16 and 14 percent of the state’s average wage in FY17 onwards. It provides $96 million over the biennium to offset the reduction in operating fees, which we believe falls short by $1.2 million in FY16 and $2.8 million in FY17.
  • WWAMI – The Senate budget provides $1.25 million per year for continued operations of the WWAMI program.
  • O&M Funding – Like the House budget, the Senate provides $1.762 million over the biennium to cover the operation and maintenance costs of UW Bothell Discovery Hall.
  • STEM Investments – The Senate proposal  provides $2 million per year to increase bachelor’s degrees in Science, Technology, engineering and Math fields.
  • Compensation Increase – The Senate bill rejects state-funded contracts with classified staff. Instead, the Senate Chair budget would fund wage increases at $1,000 per employee and require that the University either renegotiate contracts to match this funding level or locally fund the difference in perpetuity. The Senate budget provides funds for faculty and staff wage increases at $1,000 per employee and allows the UW to deviate from this assumption with local funds.

The Senate capital budget is expected to be released next week .  For more information, please see the OPB Brief.

 

2015-17 House Chair Operating and Capital Budgets

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Leadership in the House Appropriations Committee released their 2015-17 operating budget proposal on Friday – Proposed Substitute House Bill 1106 . The proposal provides $3.48 billion of Near General Fund State for higher education which is a slight increase over the total higher education appropriations in the Governor’s budget.

On the operating side, the UW would receive $595.6 million of Near General Fund State across the biennium – $95 million more than we received in 2013-15.

Here are some of the key points from the House operating budget proposal:

  • Tuition freeze for resident undergraduate students over the biennium.
  • $50 million in biennial funding to offset tuition freeze and fund compensation increases.
  • $8 million in FY17 to support Computer Science engineering enrollment.
  • $3 million in FY17 for additional medical residencies in Washington State.
  • $4.68 million transfer from WSU to the UW in both FY16 and FY17 to support the WWAMI program.
  • $1.7 million over the biennium to cover operation and maintenance costs for UW Bothell Discovery Hall.
  • $1 million for an ungulate predation study — $600,000 of which would pass through to another state agency.
  • No funding for Climates Impacts Group, although the Governor’s funding had provided$1 million provided for this purpose.

Overall, the UW fared well in the House operating budget compared to the Governor budget.

On the capital side, the UW would receive $41.156 million in new funding from the State Building Construction Account. This is significantly less than the Governor’s proposed budget of $86.2 million, with less funding for the CSE Expansion ($6.033 million of the $40 million requested) and no funding to support the completion of the phased renovation of Lewis Hall. It does however propose a greater amount of funding for the Burke Museum ($26 million), but is still less than the Burke’s requested $46 million.

The Senate will release its proposed operating and capital budgets in the coming weeks.  For an analysis and summary of the operating and capital budgets, please review the OPB Brief.

 

February 2015 State Revenue Forecast Update

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General Fund-State (GF-S) revenue forecast has been increased by $107 million for the 2013-2015 biennium and by $129 million for 2015-2017.

  • GF-S revenue for the 2013-2015 biennium is now $33.547 billion (9.4% higher than collections in the 2011-13 biennium) and
  • The forecasted GF-S revenue for the 2015-2017 biennium is now $36.449 billion (8.7% higher than collections in the 2013-15 biennium)

Revenue collections through February 10th were $69 M (1.5%) higher than forecasted. Of this amount, $52 M came from Revenue Act Sources (retail sales, business and occupation, public utility and tobacco products taxes).

A few additional highlights from the update:

  • Oil Prices have declined further since November forecast.
  • Sales tax growth is strong and is driven by sales in construction, autos and building materials.
  • Real estate excise tax since November forecast came in $11 M higher than forecasted.
  • Average monthly increase of 7,000 net new jobs in Washington. Seattle area employment is growing much faster than the rest of the state.

Note: Caseload forecast Council will release their report this afternoon at 1.30PM

 

Governor Inslee’s 2015-17 Operating and Capital Budgets

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The Governor released operating and capital budgets yesterday morning. Though the UW fared well in the capital budget, we believe the operating budget, as currently proposed, presents challenges. Please note that the Governor’s budgets will be taken up by the Legislature in January; we are many months away from a final legislative compromise. As usual, we will be sending out budget briefing documents throughout legislative session to keep you updated.

For an analysis and summary of the operating and capital budgets, please review the OPB brief.