Senate budget proposal would transfer tuition money to financial aid account

The Senate Ways and Means Committee Wednesday held a public hearing on a supplemental budget bill for FY 2011 that would transfer $25.4 million in tuition revenue from institution local fund accounts to the Opportunity Pathways Account to help fund student financial aid programs. The committee has tentatively scheduled executive action on the bill this afternoon.

Public colleges and universities administer tuition revenue accounts to support institution operation, primarily the instruction of students. Representatives from the University of Washington and Washington State University urged the committee not to shift these local tuition revenue funds to financial aid.

In contrast to ESHB 1086, the 2011 supplemental operating budget passed by the house, The Senate Ways and Means Committee version reduces the magnitude of cuts to some K-12 education and health care programs, including K-4 class size and the Basic Health Plan, proposed by the House and the Governor.

The Senate amendments would cut another $394 million in overall state spending for the balance of the biennium, compared to $352 million in the House version.    Neither proposal completely eliminates a $1.1 billion shortfall in state revenue for the remainder of the biennium, which ends June 30.  The Legislature began whittling away at the shortfall in December, with passage of a supplemental budget that cut $588 million in state spending.

Other cost-saving measures in the Senate budget proposal include implementing a 3 percent pay reduction for non-represented state workers three months earlier than planned, tightening eligibility for the Children’s Health Program, reducing management at the Department of Social and Health Services, and cutting agency public relations staffs.

Several speakers at Wednesday’s hearing testified against the proposal to use tuition dollars to pay for state financial aid programs.  Current law requires public two- and four-year institutions to set aside 3.5 percent of tuition revenue to help fund institutional financial aid programs. And in the current biennium, baccalaureate institutions were required to set aside additional tuition revenue as part of the authority they were given to raise tuition by 14 percent per year.

Margaret Shepherd, the UW’s director of student relations, said using tuition revenue to cover the state’s obligation to its neediest students “represents a fundamental policy shift in higher education and also further illustrates that the public higher education financing model in Washington state is both unsustainable and broken.”

Chris Mulick, director of state relations for WSU, also cautioned against the appropriation of tuition dollars, saying tuition is “our primary flex tool for navigating these difficult budgetary waters.”

Both Shepherd and Mulick said institutions are ready to work with the Legislature to develop long-term solutions to higher education’s funding problems.