Legislature makes significant cuts in higher ed appropriations and okays tuition hikes to help balance state budget

Faced with a daunting budget-balancing task, the 2011 Washington Legislature sent Gov. Chris Gregoire an operating budget bill, E2SHB 1087, which significantly reduces state appropriations for Washington’s public higher education system.

The reductions in higher education and other areas are in response to a projected $5.1 billion revenue shortfall for the 2011-13 biennium. The $535.5 million in cuts at two- and four-year institutions represent a 24 percent reduction in state funds to the public universities and colleges.

To partially offset the steep reductions in state appropriations, the Legislature assumed significant tuition increases for each year of the 2011-13 biennium:

• 16 percent - UW, WSU, Western Washington University 
• 14 percent - Central Washington University, The Evergreen State College
• 12 percent - Community and Technical Colleges
• 11 percent - Eastern Washington University

Given those assumptions, tuition is expected to comprise nearly 60 percent of higher education operating funds.  Just a few years ago, tuition represented between 40 and 45 percent of total operating funds.

Tuition at the public baccalaureate institutions could rise even more if institutions exercise new tuition-setting authority granted to them by the Legislature. E2SHB 1795 authorizes the baccalaureate institutions to raise tuition beyond levels assumed in the budget in each of the next four years, and extends this authority another four years to 2019 with some restrictions. The bill also establishes institutional performance metrics.

In an effort to offset the impact tuition increases will have on students least able to pay, the Legislature increased funding for the State Need Grant (SNG) program by $107.3 million and also made permanent a pilot program making SNG awards available to students attending less than half time.  At the same time, the budget includes $16.7 million in SNG reductions by lowering award amounts available for students attending private and for-profit institutions.

The Legislature’s efforts to deal with the state’s budget crisis also meant cuts or suspensions for other state financial aid programs.  The appropriation for the State Work Study Program was reduced by $31 million for the biennium, leaving approximately $15.6 million for that program. A change earlier this year increasing the employer share of wages under the program is made permanent.

Other budget items of interest:

Applied Baccalaureate Degree programs

The Seattle Community College District was authorized to offer additional applied baccalaureates in business/international business and technology management, interactive and artistic digital media, sustainability, building science technology, and allied and global health.  Bellevue Community College was authorized to offer applied baccalaureates in information technology, health care services, and management. A two-year plan for offering the degrees must be provided to the Legislature by June 30, 2012.

Degree Authorization Fees

Budget proviso language was changed to allow the HECB (and Council for Higher Education in FY 2013) to charge fees equal to the cost of administration for degree authorization for institutions that wish to begin or continue operating in Washington. Fees previously met only 20 percent of these costs.  The new fee structure will increase revenue to the state general fund by $118,000 in FY 2012 and $102,000 in FY 2013.

Aerospace Training Scholarship/Training

 A $250,000 appropriation for FY 2013 was provided to implement a new aerospace training scholarship and student loan program as specified in ESHB 1846 (aerospace student loans).

GET program revisions

The Legislature passed SB 5749, with amendments from the House that provide additional legislative oversight and participation on the GET Committee, additional actuarial analysis of the program by the State Actuary, and making optional the use of services of a nationally recognized actuary.

 In addition, the budget passed by the Legislature suspends new awards under the Health Professionals Conditional Scholarship program, the Washington Scholars and Washington Award for Vocational Excellence programs, and several other smaller grant programs. The Legislature maintained sufficient funding to fulfill commitments made to previously selected students in merit and conditional scholarship programs, but provided no funding for new students.

Opportunity Scholarship Act to focus on students in high employer demand studies

Legislation passed in the final hours of the 2011 session establishes two new public/private-funded Opportunity Scholarship accounts for low- and middle-income students enrolled in high employer demand studies in Washington.

The new law also establishes a new program to fund institution proposals designed to increase the number of older adults seeking bachelor’s degrees in high employer demand fields.

The Opportunity Scholarship Act (ESHB 2088) is similar to one of the recommendations of the Governor-appointed Higher Education Funding Task Force – convened last fall to study and propose new alternatives for higher education funding in Washington. The new law had the backing of key state businesses, including Boeing and Microsoft, and broad legislative support.  

One of the new scholarship accounts can begin providing scholarships to eligible students as of Dec. 1, 2011, assuming the state and private entities each contribute at least $5 million to the fund.  Students enrolled in the two- and four-year institutions will be eligible to receive the scholarships.

The other account is designed to provide a longer-term scholarship endowment fund which will generate additional money for scholarships over time. The act contains a number of restrictions on the use of this fund tied to state higher education appropriation levels, state contributions to the fund, and reaching a funding base of $20 million.

A third provision in the new act establishes an Opportunity Expansion Program, also funded by public/private contributions, designed to fund institutional proposals that directly increase the number of bachelor’s degrees awarded in high employer-demand and other fields by Washington high school graduates and adults returning to college.

A seven-member, Governor-appointed board, which includes three legislators and four foundation and business and industry members, will provide oversight for the programs established by the act. A program administrator under contract with the board will provide staff support, including publicizing the program, distributing scholarship awards, and ensuring maximum returns on fund investments.

Bill appoints steering committee to create a new Council on Higher Education

A bill passed this session names a steering committee, chaired by the Governor or her appointee, to study, issue findings, and make recommendations for a new Council on Higher Education to replace the HECB on July 1, 2012.

E2SSB 5182, on its way to the Governor, contains the following language: “On July 1, 2012, the higher education coordinating board is abolished and the council for higher education is created subject to the recommendations of the higher education steering committee and implementing legislation enacted by the 2012 legislature.”

The bill also creates a new Office of Student Financial Assistance with a director appointed by the Governor. This office will be responsible for administering state and federal student financial aid programs and overseeing the state’s Guaranteed Education Tuition (GET) program.

The steering committee on higher education will consist of two members each from the House and Senate representing the caucuses, equal representation from the key higher education sectors of the state, and at least two members of the public appointed by the Governor.

The steering committee is required to report its findings and recommendations to the Governor and appropriate committees of the Legislature by December 1, 2011.

During FY 2012, some of administrative and policy work now performed by the HECB is eliminated by the bill. This includes a number of reports now required by law: State Support Received by Students; the Costs of Higher Education; Gender Equity; Technology; and Degree Production.

The bill requires the HECB to complete the first four-year update to the state’s 2008 Strategic Master Plan for Higher Education and continue to produce other studies and reports required by law.