House Ways & Means committee chair’s budget proposal would suspend financial aid programs

House budget writers Monday released a 2011-13 budget proposal that would raise tuition from 11 to 13 percent annually at public higher education institutions, suspend  all student financial aid programs except for State Need Grant, and cut higher education funding $482 million overall.

The House budget makes deeper cuts than those proposed by Gov. Chris Gregoire in December, before the Governor and others learned state government would be losing another $800 million in projected revenue due to the continuing effect of the recession on the state’s economy.

“It’s incumbent upon us to produce a budget that actually works, and we’ve done our best to do that,” said House Ways & Means Committee Chair Rep. Ross Hunter, who introduced the new proposal as a substitute to HB 1087. The bill is scheduled for executive action in the Ways & Means Committee on Wednesday.

The committee chair’s budget proposal would close a projected $5.05 billion revenue shortfall through the next biennium by implementing $4.4 billion in program reductions, and additional changes in the form of program transfers, privatization of liquor distribution, revenue source consolidations, and other actions.

In many cases, the proposed reductions represent a continuation of funding decisions made in December and February to address revenue shortfalls during the 2009-11 biennium. A summary of the proposed budget has been posted on the Legislative Evaluation & Program Accountability website.

Although the proposed House budget would reduce state General Fund appropriations for higher education by $482 million, about $379 million of that amount would be offset with additional tuition revenue. The budget proposes annual tuition increases of 13 percent at the UW, WSU and WWU, 11.5 percent at CWU, EWU and The Evergreen State College, and 11 percent at community and technical colleges.

 “You cannot avoid the fact that we have fundamentally changed the mix between state support and tuition, particularly in our research institutions and our other four-year institutions,” Hunter said.

Because of that, Hunter said, it will be necessary to adopt policy changes that reflect the new situation.  He said the options include proposals contained in SHB 1795 sponsored by Rep. Reuven Carlyle of Seattle and others. It would allow public baccalaureate institutions to set tuition rates for all students through the 2014-15 academic year. If a four-year institution raises tuition beyond thresholds provided in the bill, that institution would be required  to mitigate the effects on middle class students with incomes up to 125 percent of median family income.

The thresholds triggering this institutional aid requirement for low and middle income families are 11 percent for the UW, WSU and WWU, and 9 percent for CWU, EWU and The Evergreen State College.  In addition, public institutions are required to set aside 5 percent of tuition revenue for institutional financial aid, up from the current requirement to set aside 3 and one-half percent of tuition revenue for such aid.  Finally, public institutions are authorized to charge Running Start students a fee of up to 10 percent of tuition.

A more in depth discussion of SHB 1795 was posted earlier in the HECB Legislative Report.    

The House Ways & Means Committee chair’s budget proposal also would make further reductions in student financial aid programs. Although the proposal calls for adding $103 million to the State Need Grant program to mitigate the effects of tuition increases on low-income students, it would reduce awards for students at private schools to the amounts students at the regional institutions can receive, and would eliminate new awards for students at for-profit institutions.

In addition, the budget proposal would:

• Suspend the State Work Study program, which provides both state support and employer matching funds to low-income students who work in jobs related to their academic or career interests.
• Suspend new awards under the Health Professionals Conditional Scholarship Program, which provides scholarships or loan forgiveness for health professionals who agree to work in rural or underserved areas of the state.
• Suspend funding for future awards under the Washington Scholars and Washington Award for Vocational Excellence programs.
• Suspend the Educational Opportunity Grants (EOG) program. The EOG provides grants to financially needy, placebound Washington residents as an incentive to complete their first bachelor’s degree. About $5.2 million in savings would be transferred to the State Need Grant program.
• Suspend other small grant programs, including the College Assistance Migrant Program, the Community Scholarship Matching Grant program, Western Interstate Commission for Higher Education student exchange, the Foster Care Endowed Scholarship, and the Child Care matching grant.   

At a public hearing on the budget proposal Monday, Sam Shaddox, a University of Washington law student and the student member on the HECB, said continuing to provide adequate funding for Washington’s public higher education system is important because the state currently produces insufficient numbers of educated workers to meet demand.  As a result, businesses have to import educated workers from outside Washington.

Bill would establish new legislative council to advise HECB on Strategic Master Plan

Under a bill just introduced in the House, a new Higher Education Performance Advisory Council would advise the HECB on development of the state’s Strategic Master Plan for Higher Education, and would examine system changes designed to improve governance structures and increase efficiencies in educational delivery and administration.

In addition, the council, which would continue to exist under the bill until July 1, 2015, would identify and prioritize public higher education objectives that provide the greatest benefits and that require public funding. 

The HECB, which is responsible for developing a 10-year strategic master plan and updates every four years, would consider the council’s recommendations for inclusion in the plan.

HB 2049 is the most recent of a number of education governance bills introduced during the 2011 legislative session. Other proposals call for eliminating or merging state-level education entities in various ways, or for developing further recommendations on education governance.  

The prime sponsor of HB 2049 is Rep. Hans Zeiger of Puyallup.  Other sponsors include House Higher Education Committee Chair Larry Seaquist of Gig Harbor, ranking minority member Larry Haler of Richland, and committee members Reuven Carlyle of Seattle and Susan Fagan of Pullman.

The Higher Education Performance Advisory Council would consist of four members each from the House and Senate, a HECB representative, and a representative of the State Board for Community and Technical Colleges.

House Ways & Means offers changes in GET bill following Actuary's report

After a report from the state Actuary affirmed the fiscal soundness of the Guaranteed Education Tuition (GET) program, the House Ways & Means Committee last Thursday recommended passage of an amended bill that would leave intact the current basis for determining future payouts under the college savings program.

The new version of SB 5749 endorsed by Ways & Means would require GET’s governing body to adopt an “actuarially sound and prudently predictable” payout factor sufficient to cover the program’s long term obligations.  It also gives the state Actuary a defined role in that process.   

Responding to concern that escalating tuition rates at higher education institutions might someday force the state to cover some of the cost of tuition payments guaranteed under the GET program, the Senate in early March passed a different version of SB 5749. It would implement a less-generous GET-payout formula for future enrollees in the program.  

However, Thursday’s report from the state Actuary estimated a less-than 1 percent chance the existing GET program would require help from state resources to meet its financial obligations over the next 50 years.

Both the current GET program and the proposed “GET 2” alternative passed by the Senate could withstand unfavorable tuition and investment growth for many years if the program prices future GET units with a long-term tuition growth assumption of 9.5 percent, according to the report.  However, the report noted that GET’s program solvency could also be negatively impacted by declines in “consumer confidence,” or the willingness of people to invest money in a new GET program in the future. 

GET, the state’s 529 pre-paid tuition college savings program, allows families to save on their future college tuition expenses.  By purchasing 100 GET “units” today, a family can cover a full year of resident undergraduate tuition and state-mandated fees at the state’s highest-priced public university in the future. GET investments are tax free if used for qualified higher education expenses.

The GET 2 proposal supported by Senate Majority Leader Lisa Brown of Spokane would base payouts on units purchased in future GET accounts on 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.

In earlier testimony, Brown said the GET 2 proposal would allow the state to continue providing an excellent opportunity for Washington families to invest in higher education for their family members, but would also ensure that the program remains fiscally sound in the future.

Pros and cons of online university proposal explored in newspaper columns

The Seattle Times editorial page today offered contrasting views of a proposal in the Legislature to expand higher education opportunities by creating a partnership between the state and the online Western Governor’s University (WGU).

Writing in favor of the proposal is Robert W. Mendenhall, president of Western Governor’s University.  Opposing the measure in a separate column is Johann Neem, an Associate Professor of History at Western Washington University.

SHB 1822, which would establish the state partnership with WGU, passed the House in late February and is currently in the Senate Rules Committee.  A companion measure, SB 5136, was not passed by the Senate.  For more on the WGU legislation, see this earlier post in the HECB Legislative Report. 

New education department proposal heard in Senate committees

A new education governance proposal heard by two Senate committees in recent days would establish the Department of Education sought by Gov. Chris Gregoire, but the department’s state-level responsibilities over early learning, K-12, and higher education would be implemented in phases through mid-2013.

The new proposal, offered as a second substitute to SB 5639, received a public hearing in the Senate Ways & Means Committee Wednesday.  The proposal was initially unveiled during a public hearing last week on an amendment to a different bill, ESHB 1849. During that hearing, Senate Early Learning and K-12 Education Committee Chair Sen. Rosemary McAuliffe of Bothell, who supports the new governance proposal, announced it would most likely be reintroduced as a second substitute to SB 5639.

At the Wednesday public hearing in Senate Ways & Means, the proposal received endorsements from the Governor’s office and the Washington Education Association.  Opponents included the Washington State Association of School Administrators, the Service Employees International Union, and Superintendent of Public Instruction Randy Dorn.

A spokesman for Dorn said the Superintendent continues to oppose the Governor’s education department proposal because of concerns it will create confusion over responsibilities for K-12 education in the state, and because of doubts about the efficiencies and cost savings it would create.

A fiscal analysis of an earlier version of the Senate bill estimated savings from the education department proposal at about $570,000 in the first biennium, and about $1.6 million per biennium thereafter.  A Senate staffer said the savings with the new proposal would be somewhat less than that estimate because of changes in the proposed legislation.

Under the new proposal, the Superintendent would be housed within the education department but would retain the supervisory duties pertaining to public schools that are granted by the state Constitution.

The new education department Secretary—who would be appointed by the Governor subject to confirmation by the Senate—would be required to “coordinate and collaborate” with the Superintendent of Public Instruction and to provide administrative support services for that office.

The bill also requires the development of a system-wide strategic plan that integrates goals for early learning, K-12 and higher education, and it establishes a 13-member state Education Council to advise the Secretary on broad policy issues affecting the education system.    

The version of ESHB 1849 that passed the House March 2 does not immediately create a new state education department.  Instead, it would establish an education council to “develop recommendations for restructuring state entities with responsibilities for early learning, K-12 education and postsecondary education.” The House version was discussed in more detail in an earlier post on the Legislative Report.

In addition to coordinating and collaborating with the Superintendent of Public Instruction, the new governance proposal would give the Education Department Secretary the responsibility to administer state and federal higher education financial assistance programs. Those programs currently are administered by the HECB. 

Under the proposal, the HECB and other state-level higher education agencies would continue to perform other current statutory duties. However, the proposal calls for the Governor to appoint a transition team “to develop a plan specifying the technical and practical steps required to bring the current state-level education agencies and structures” into the new Education Department. A transition-team subgroup appointed by the Governor would specifically work on recommendations for incorporating state-level higher education entities into the Department of Education.

The Education Department’s initial operations and responsibilities over early learning, K-12 education, and higher education financial assistance would be phased in starting July 1, 2012, with implementation completed by January 16, 2013.

The higher education transition subgroup would develop recommendations for including the duties of state-level postsecondary entities into the education department by July 1, 2013. Those recommendations would be submitted to the Governor and Legislature by Dec. 1, 2011, in time to enact legislation necessary to implement the recommendations during the 2012 legislative session.

Senate takes final action on targeted workforce loan repayment bill

The Senate on Monday gave final passage to a House bill requested by the HECB that is aimed at reducing administrative costs, providing clearer guidance, and improving equity between program recipients in conditional scholarship and loan repayment programs for health professionals and teachers.

HB 1424, which passed the Senate on a 46-0 vote with three members excused, makes improvements to existing statutes. The bill grants the HECB interest-setting authority for the Health Professional program, which will allow repayment interest rates to be set at the same rates assessed by similar programs. It prescribes a maximum repayment period, aligns grace periods and interest accrual periods, as well as addresses appeals procedures.

The Future Teachers and Health Professional targeted workforce programs recruit and retain high demand professionals for the state of Washington. They have fulfilled needs in medical and teaching shortage areas throughout the state. Under the conditional loan programs, recipients commit to working for a period of time in subject or geographic shortage areas in the state. Failure to meet the service commitment triggers loan repayment provisions.

In addition to making the repayment provisions similar for participating students, the legislation also is intended to simplify administration and reduce costs for the HECB, which administers the programs.

The House passed the bill on a 94-0 vote on Feb. 14. It now goes to the Governor for signature.

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.