Senate bill seeks to ensure guaranteed tuition program remains healthy

A Senate bill that would change the basis for future payouts under the Guaranteed Education Tuition (GET) program was sent today to the House Ways and Means Committee, where its future could be affected by a pending evaluation by the State Actuary of the proposed bill.

The House Higher Education Committee sent SSB 5749  to the Ways and Means committee, but the higher education committee chair, Larry Seaquist, has said any further legislative action probably would await the Actuary’s report at the end of the month.

GET, the state’s 529 pre-paid tuition college savings program, allows families to save on their future college tuition expenses by purchasing units at today’s price. By purchasing 100 GET “units” today, a family can cover a full year of future tuition and state-mandated fees at the state’s highest-priced public university (either the University of Washington or Washington State University) in the future, even if it doubles or triples in price. GET investments are tax free if used for qualified higher education expenses.

Faced with a major state budget crisis, the Legislature is considering granting institutions greater tuition-setting authority to help offset proposed cuts in state appropriations for higher education.  Some fear that could lead to future tuition increases that the current GET model cannot sustain.

SSB 5749 would make a number of changes to the GET program. For Sen. Lisa Brown of Spokane, the bill’s prime sponsor, the most significant change would be tying payouts on units purchased in future GET accounts to the average increase in tuition, weighted by the number of students, at all public higher education institutions in Washington, rather than at the highest-priced institution.

“The GET program is an excellent opportunity for Washington families to invest in higher education for their family members,” Brown said at a hearing on the bill Monday. “However, I make modification suggestions in order to balance out the great opportunity to have a guaranteed program with fiscal responsibility down the road.”

State Actuary Matthew Smith, who presented an interim GET report to the higher education committee, stressed that GET account holders are not at risk if any future solvency issue was to occur, because the accounts are contracts backed by the full faith and credit of the state. The real risk is to the state, which must make good on the contracts.

Smith said three factors determine the program’s solvency: tuition growth, investment returns, and “purchaser behavior,” or how many GET units purchasers are willing to buy under an existing scenario. Smith said various scenarios would be discussed in his upcoming report.

Temporary fluctuations in the factors affecting the program’s solvency can be weathered under the existing program, “but if we’re talking about a decade worth or a whole new norm of tuition growth going forward, the program needs to be re-evaluated,” Smith said.  

In essence, Brown’s bill would create a “GET 2” program for new enrollees, Smith said. The changes included in the Senate bill would not affect units already held by current GET contract holders, he said.

Betty Lochner, director of the GET program, which is administered by the HECB, said changes in a similar college-savings program in Texas led to a significant drop in the number of signups for the new savings program, which is one of the factors that could affect program solvency. “There’s a lot of consumer confidence that gets lost no matter what you do, unless it looks very similar to the old program,” Lochner said.

Governor to sign bill authorizing new aerospace student loan program

Gov. Chris Gregoire today is scheduled to sign a House bill that would establish an aerospace training student loan program administered by the HECB. The Senate passed the legislation on Wednesday.

Under ESHB 1846, students attending the Washington Aerospace Training and Research Center in Everett and the soon-to-open Spokane Aerospace Technology Center will be eligible for student loans under the program, which will be designed in consultation with representatives of the aerospace industry, workers and aerospace training or educational programs.

The loan program will be self-sustaining and will operate on money received by the HECB, including repayments by loan recipients.

Prior to the Senate’s 47-member vote in the favor of the bill, Senate Majority Floor Leader Tracey Eide of Federal Way said the legislation will help the state meet demand for trained aerospace workers, caused in part by the aging of the existing workforce. The timing of the legislation is perfect because of the Boeing Co.’s recent winning of a contract to build a new Air Force tanker aircraft, she said.

The prime sponsor of the bill was Rep. Deb Eddy of Kirkland.

Lawmakers look for ways to offset higher ed budget cuts, paper reports

An article in the News Tribune and other newspapers today looks at the pressure building on higher education institutions as a result of proposed cuts in higher education funding in the next biennium.  A spokesman for the University of Washington says tuition would have to rise about 20.5 percent annually over the next two years to offset cuts in the Governor’s proposed 2011-13 biennial budget. A legislative budget proposal could be announced in a few days.

House and Senate committees wrap up work on other house’s bills prior to Friday cutoff

The House and Senate higher education committees last week recommended passage of a number of higher education bills that had been passed earlier in the other chamber.

On Friday, the Senate Higher Education & Workforce Development Committee wrapped up business on several bills, enabling committee members to focus on budget and other matters prior to the March 25 deadline for moving non-fiscal legislation passed by the other house out of committee.

Among the measures the Senate committee approved was SHB 1822, which would allow the on-line Western Governor’s University (WGU) to operate as a degree-granting institution recognized under Washington law. Supporters of the bill say the on line programs offered by WGU - Washington would expand higher education opportunities for all Washington students, including dislocated workers and place bound students.  A Senate version of the bill, 2SSB 5136, was sent to the Senate Rules Committee in late February but has not received a vote in the full Senate.  The difference between the House version approved last week by the Senate Higher Education and Workforce Development Committee and the Senate version currently in the Rules Committee is that the just-approved bill does not require WGU-Washington to win legislative approval in the future in order to participate in state financial aid programs.

The Senate committee also approved SHB 1650, which would allow the program to continue providing a State Need Grant (SNG) to students who participate in higher education programs on a less-than-half-time basis.  Until this 6-year pilot program was authorized, students had to be enrolled for at least 6 credits to be eligible for the program.  The version passed in the House removes the “pilot” designation from that program, which grants SNG eligibility to students enrolled for 3 to 5 quarter credits. As amended by the Senate committee, the pilot status would be extended another two years, to 2013, and the Higher Education Coordinating Board would be required to report on academic outcomes of participating students.

In explaining the amendment, Committee Chair Rodney Tom said he wasn’t satisfied that enough data has been gathered to determine if extending the SNG benefit to less-than-half-time students leads to higher degree-completion rates.  Other House bills that received a Senate committee endorsement on Friday:

Also last week, the House Higher Education Committee recommended passage of SSB 5442, which would authorize the state’s six public baccalaureate institutions to develop accelerated baccalaureate degree programs enabling students to receive a baccalaureate degree in three years, rather than the standard four.

·         HB 1586, which was requested by the HECB, would authorize the University of Washington and Washington State University to develop doctoral programs at their branch campuses, subject to HECB approval of specific degree programs. A more detailed look at this bill and a companion measure, SB 5315, was published earlier in the Legislative Report. 

·         HB 1424 would more closely align repayment requirements under the Health Professional Loan Repayment and Scholarship Program and the Future Teachers Conditional Scholarship and Loan Repayment Program for students who do not meet service obligations under those programs.  The bill was requested by the HECB, which administers the programs.

·         HB 1425, another piece of HECB request legislation, would save the state about $66,000 in the next biennium by eliminating a requirement that the HECB evaluate and report to the Legislature on the effectiveness of a Health Sciences and Services Authority (HSSA) in Spokane. HSSAs were authorized in 2007 to promote bioscience-based economic development, to advance new disease-fighting therapies, and to promote public health.  The HECB has suggested the Spokane HSSA could use established criteria to evaluate its own program effectiveness.

Last Wednesday, the House Higher Education Committee recommended passage of SB 5484, a companion to the House HSSA bill.  The Senate bill is now in the House Rules Committee.

·         ESHB 1846 would establish an aerospace training student loan program administered by the HECB. A self-sustaining student loan account would also be created and would consist of money received by the Board, including repayments by loan recipients.   The loan program would be designed in consultation with representatives of aerospace employers, aerospace workers, and aerospace training or educational programs. Loan recipients would be selected from among students participating in the Washington Aerospace Training and Research Center in Everett, and the Spokane Aerospace Technology Center, which is scheduled to open this year.

The engrossed substitute House bill is similar to SB 5674, which passed the Senate in February and is scheduled for executive action in the House on Tuesday.

While the three-year degree path would not represent a new standard for all students, the legislation states that the option would enable academically qualified students to enter the job market faster and would improve graduation rates, an important higher education goal. 

Under the bill, plans for accelerated degree programs would be submitted the HECB for approval.