Curtain falls on long, difficult session

The Legislature adjourned sine die Wednesday night after passing final legislative operating and capital budgets in what was perhaps the most difficult legislative session in three decades.

Bottom line? Sacrifice.

Operating budget

The final version of the operating budget was the same as passed the House on Tuesday. Highlights of the final 2011-13 Legislative Operating Budget Proposal for the community and technical college system include:

State funding reduction

The final legislative budget reduces system funding by $76.8 million (11.5%) in FY 2012 and $84.3 million (12.6%) in FY 2013.

State funding drops from $669 million in the current year (including the $26 million 2011 early supplemental cut) to $592 million in FY 2012 and to $585 million in FY 2013.

The general budget reduction is $54 million in FY 2012 and $59 million in FY 2013.

Efficiencies

The budget makes a reduction of $2 million in FY 2012 and an additional $3.5 million in FY 2013 for “efficiencies.” The budget bill directs these savings to be achieved through consolidation of college districts, consolidation of administrative and governance functions such as human resources, budget and accounting services and presidents’ offices; consolidation of student services functions and libraries; and other administrative efficiencies such as greater use of telephone and video-conferencing and reducing travel costs. A report is due to the Legislature on how the savings were achieved by December 2013.

Enrollments

Enrollment targets

The system enrollment target is unchanged from the current biennium at about 140,000 Full-Time Equivalent Students (FTES), a calculation of enrollment based on total credits or credit equivalents taken by all students for an academic year divided by 15.

This includes a Running Start enrollment target of 11,558 FTES, the same as the current biennium.

Running Start

The budget limits state funding for Running Start students to 1.2 FTE between the high school and the college. Currently, the state funds a Running Start student for up to 1 FTE at the college and 1 FTE at the high school.

WSU and Olympic College

WSU is required to offer an additional 15 FTES in mechanical engineering at Olympic College, within existing funds.

Tuition- and financial aid-related

Tuition Increases

The budget provides authority for tuition increases of up to 12% per year for resident students and upper division applied baccalaureate tuition.

Worker Retraining and Opportunity Grants

The additional funding the system received this biennium for Worker Retraining ($17.6 million per year) and Opportunity Grants ($1 million one-time new funding) is eliminated. New additional ongoing funding for Worker Retraining is provided at $4.5 million per year for 970 FTE.

State Need Grant Funding

State Need Grant is increased to cover tuition increases, but will still not cover all the currently eligible—but un-served—students.

State Need Grant for Part-Time Students

The budget bill makes permanent the pilot project currently in place making part-time students (enrolled for three to five credits) eligible for State Need Grants. The eligibility would have expired without this language.

Work Study

Funding for the Work Study program is reduced by $23.2 million for the biennium by making permanent changes made during Fiscal Year 2011, including increasing the required employer share of wages and discontinuing non-resident student eligibility for the program.

Key provisos

Student Achievement Initiative

The Student Achievement Initiative is provisoed $5 million for the biennium.

Applied Baccalaureate Degree Programs

Seattle Community College District and Bellevue College are authorized to offer additional applied baccalaureate degrees. Bellevue is authorized to offer degrees in information technology, health care services and management, biotechnology, and pre-professional preparation for medical fields. Seattle is authorized to offer degrees in business/international business and technology management, interactive and artistic digital media, sustainability, building science technology, and allied and global health. Bellevue and Seattle are required to develop a two-year plan for offering the new degrees to deliver to the legislature by June 30, 2012.

Compensation provisions

6% Cap on Pension Contributions

The budget cuts $8.3 million a year through limiting state contributions for higher education retirement plans to 6% of related salaries. Colleges are still legally obligated to maintain contributions above 6% for current employees, with costs shifted to local fund sources, including tuition. For example, currently, a 40-year-old faculty member in TIAA-CREF has 7.5% deducted from her salary and the state funds the 7.5% match. The 6% limit requires the college to locally fund the 1.5% difference.

Additional Charge for Supplemental Retirement Plan

House Bill 1981, as passed by the 2011 Legislature, requires an employer contribution of .25% of the salaries for employees in TIAA-CREF to be deposited into a new account that will be used to fund the supplemental retirement benefit in the future. This will drive additional system costs of about $500,000 in FY 2012 and $1 million in FY 2013. No additional funding was provided for this in the budget.

Faculty Increments

The budget allows salary and benefit savings from faculty turnover to be used to fund increments.

Health Benefit Funding

State contributions for employee health care benefits are the same as this year at $850/month. However, due to medical inflation, this is expected to represent about 85 percent of the cost, on average. Currently, the state pays 88 percent of health care costs, on average. This means employees will be paying more for health care benefits.

3% Salary Reductions

State funding is reduced by $30 million (biennial) to reflect savings from reducing employee compensation expenditures by 3% for the duration of the biennium.

While institutions are expected to reduce compensation expenditures by 3% (with one exception) higher education institutions are exempt from the 3% individual salary reductions mandated for other state employees.

The exception applies to represented community college classified staff in FY 2013 whose salary must be reduced by 3% (except for those making less than $2,500 a month). Temporary salary reduction (TSR) leave of 5.2 hours per month for a full-time employee will be earned.

This applies to positions funded from state and non-state funds.

For all other higher education employees, a 3% individual salary reduction is not required. There is an expectation that state-funded compensation costs will be reduced by 3%. This can be accomplished through various means such as permanent and temporary layoffs, reduced work hours, vacancy savings, and salary reductions. TSR leave may be provided for employees who earn leave.

Other items of interest

Life Transitions Program

Funding for the Displaced Homemakers/Life Transitions program is eliminated. This will impact eight colleges: Clark, Spokane, Olympic, Skagit, Green River, Pierce, Walla Walla, and Whatcom.

Facilities-Related Funding: Increases for leases and assessments were funded as requested. Maintenance and Operations (M&O) funding for new facilities was provided consistent with state-funded capital projects in HB 1497. The 2011 supplemental changes in the conference budget M&O funding is provided as requested for Peninsula, Columbia Basin, and South Puget Sound.

Baccalaureate tuition: Increases ranging from 11% to 16% are assumed in the budget for the baccalaureate institutions. However, under HB 1795, the institutions have unlimited authority to increase tuition. Their students will receive State Need Grants up to the increases assumed in the budget bill. The institutions must provide additional financial assistance for increases above those assumed in the budget bill.

HECB: The Higher Education Coordinating Board is eliminated in FY 2013 and two new agencies are created: the Council for Higher Education and the Office of Student Financial Assistance both created in SB 5182.

Next steps

The operating budget bill now awaits the Governor’s signature. The Governor will consider vetoes and sign the budget by June 16. The State Board will make final decisions at its June 22-23 meeting on the following:

• Initial 2011-12 Allocations
• 2011-12 Tuition Schedules
• ERP Funding (how much tuition fee revenues to deposit into the Innovation Account for the ERP).
• Running Start Fee (optional under HB 1795)

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Capital budget

The conference capital budget provides community and technical colleges about $193.5 million in new appropriations for capital projects and follows the system’s capital projects priority list in order. A side-by-side comparison shows this budget versus the most recent House and Senate proposals and the initial system request.

The budget funds five new construction projects at 85%, subject to a 15% reduction (or $21 million) from the requested amounts:

• Clover Park Technical College allied health care facility
• Everett Community College Index Hall replacement
• Green River Community College science math and technology building
• South Puget Sound Community College learning resource center
• Spokane Falls Community College campus classrooms

The Senate also funded $22.8 million for Maintenance and Operation (M&O) from the building fee account.

Comparison to the rest of the state

The community and technical colleges received $149.5 million—or 15%—of the total $1.01 billion in new state construction bonds in the conference budget.

Debt Reduction Act

Unlike the Senate’s proposed Joint Resolution 8215 (which would have asked voters to constitutionally reduce the debt limit and include dedicated property taxes in the calculation of revenue), Senate Bill 5181 as passed does not require a vote of the people or address property taxes.

It puts the working debt limit into statute and starts reducing it July 1, 2015 from the current 8-3/4% by 1/4% per biennium down to 7-3/4% on July 1, 2021.

The bill also creates a 12-member “Blue Ribbon” committee to recommend improvements in state debt policies and limits, including amendments to the limits set in SB 5181 or potential constitutional changes.

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Trustee and State Board appointments confirmed by Senate

One of the responsibilities of the Senate is to confirm the appointments of community and technical college trustees and members of the State Board for Community and Technical Colleges. The appointments are made by the Governor and then referred to the Senate for confirmation.

When it was all said and done, 24 two-year college trustees and two State Board members were confirmed.

Two SBCTC were confirmed: Sharon Fairchild, Liberty Lake, for a second term, and Elizabeth Chen, Federal Way, for her first term.

Trustees confirmed for a first term on local boards were Jim Lowery, Centralia College; Royce Pollard, Clark College; Jada Rupley, Clark College; Sherry Armijo, Columbia Basin College; David Mitchell, Columbia Basin College; Linda Cowan, Green River Community College; Robert Roegner, Highline Community College; Cathy McAbee, Renton Technical College; Albert Shen, Seattle Community Colleges; Bridget Piper, Community Colleges of Spokane; Elizabeth Dunbar, Tacoma Community College; Robert Ryan, Tacoma Community College; Roland Schirman, Walla Walla Community College; Kathy Small, Walla Walla Community College; June Darling, Wenatchee Valley College; and Robert Ozuna, Yakima Valley Community College

Trustees receiving confirmation for reappointments to local boards were: Quentin Powers, Edmonds Community College; Richard Van Hollebeke, Edmonds Community College; James Shipman, Everett Community College; Max Anderson, Lower Columbia College; Margaret Rojas, Skagit Valley College; Brian Vance, South Puget Sound Community College; Jim Tiffany, Wenatchee Valley; and James Carvo, Yakima Valley Community College.

Names of those trustees and State Board members not receiving confirmation this session will be automatically resubmitted for confirmation before the Senate in 2012.

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Bills signed or on the way to the Governor

Below is a recap of significant bills of interest to the community and technical college system that passed out of the Legislature and were sent to the governor for possible signature, veto, or partial veto.

In coming weeks, the system’s complete final Session Summary will be posted at the SBCTC legislative session page.

E2SHB 1371 Boards and Commissions
Rep. Jeannie Darneille, D-Tacoma; Governor’s Request, Delivered to Governor May 25

Eliminates various boards and commissions. Makes permanent the current travel restrictions for Class 1-5 Boards, eliminates restriction to use state-only facilities, and encourages "travel reductions" and costs associated with travel for Board business and meetings (also to include the encouragement to use alternative non-travel means for meetings) for all Class 1-5 boards paid by non-state funds. The bill takes effect on July 1, 2011.

E2SHB 1795 Enacting the Higher Education Opportunity Act
Rep. Reuven Carlyle, D-Seattle; Delivered to Governor – May 25

Provides tuition-setting authority for 4-year colleges and universities beginning in 2011-13 and ending in 2015-16. If tuition is raised more than 11% at UW, WSU and WWU, or more than 9% at CWU, EWU and Evergreen, the institutions must provide financial aid to students with family incomes up to 125% of median family income. Requires 4-year institutions to report on various measures, including course and degree completion. Establishes a legislative taskforce to review the funding formula for baccalaureate institutions.

Permits the SBCTC to pilot or institute differential tuition models. The board may define scale, scope, and rationale for the models. Allows SBCTC and 4-year institutions to charge Running Start students a fee equal to up to 10% of tuition and fees. Establishes a work group to define issues related to creating common course numbers and common course descriptions for all common lower division courses at all public institutes of higher education. Establishes a work group to increase the number of students who receive credit for prior learning and to increase the types of credits awarded for prior learning.

E2SSB 1808 Launch Year Act
Rep. Kristine Lytton, D-Anacortes; signed by Governor April 15

Known as the Launch Year Act, the bill directs all public high schools to work toward the goal of offering enough high school courses to give students the opportunity to earn the equivalent of one year's worth of postsecondary credit toward a certificate, apprenticeship program, technical degree, or associate or baccalaureate degree.

By December 1, 2011, each college or university is required to develop a list of postsecondary courses that can be fulfilled by taking Advanced Placement, International Baccalaureate, or other recognized college-level proficiency exam and achieving a qualifying score or by meeting demonstrated competencies.

Each college is required to publish on its website and in its admissions materials its own list of courses that can qualify for credit for lower-division general education requirements and provide that list to the HECB and the SBCTC in a format OSPI is able to distribute to school districts.

SHB 1822 Establishing the First Nonprofit Online University
Rep. Phyllis Gutiérrez Kenney, D-Seattle; signed by Governor April 22

Recognizes a regionally accredited non-profit online institution (Western Governors University) as a self-supporting baccalaureate degree granting institution in Washington, which will not receive state support.

2SHB 1909 Innovation at Community and Technical Colleges
Rep. Chris Reykdal, D-Olympia; signed by Governor May 5

Creates the community and technical college innovation account. Up to 3% of operating fees could be transfer to the account to fund and secure a bond for the CTC strategic technology plan.

ESHB 1981 Addressing higher education employees’ annuities and retirement income plans
Rep. Barbara Bailey, R-Oak Harbor; Delivered to Governor – May 25

Changes certain provisions of higher education sponsored retirement plans and limits retire/rehire. Higher education retirement plan (TIAA-CREF) state funded contributions are capped at 6%; eliminates supplemental benefits for future participants; requires providing TRS 3 or PERS 3 as alternative options to newly eligible employees; requires pre-funding of supplemental benefits for current participants at a rate of .25% of salary from 1/1/12 through 6/30/13 (actuary will recommend future rates). Effective January 1, 2012, re-hired retirees (current and future) are limited to receiving their DRS paid pensions to 867 hours per year.

ESHB 2088 Creating the Opportunity Scholarship and Opportunity Expansion Programs
Rep. Tim Probst, D-Vancouver; Delivered to Governor – May 25

Creates the Opportunity Scholarship Program and the Opportunity Expansion Program, both administered by a Program Administrator (a private non-profit corporation) with an Opportunity Scholarship Board to advise them. The advisory Board has seven members, two appointed by the legislature and five appointed by the Governor.

Students who received a diploma or GED in Washington may apply for Opportunity Scholarships if they are in an eligible education program leading to a BA at either two- or four-year institutions and they intend to earn a BA. Eligible education programs include “high employer demand programs” that yield “substantially” fewer graduates than there are job openings in that field, and other programs as determined by the Opportunity Scholarship Board. Scholarship awards are $1,000 or the difference between tuition charged in 08-09 and tuition charged in the year the scholarship is awarded, but may be higher based on income.

Establishes two separate accounts for scholarships: the “scholarship” account and the “endowment” account. Both accounts are managed by the Program Administrator. The scholarship account may be used to fund scholarships annually, beginning December 2011, or as soon as the state has deposited $5 million in matching funds to the account. The endowment account may be used to fund scholarships only in years when: the state match has been made to both scholarship accounts; state funding for the State Need Grant exceeds funding made in the 11-13 biennium; and, the state demonstrates progress toward the goal of total per-student funding equal to the 60th percentile of the global challenge states (GCS).

In years when progress is not made toward the total per-student goal of 60th percentile of the GCS and state funding for higher education is at least 5% less than the year before, private sector pledges and contributions to the scholarship accounts may be revoked or refunded.

The Opportunity Expansion Program is created. The Opportunity Scholarship Board accepts proposals and selects institutions to receive Opportunity Expansion awards designed to increase the number of BA degrees produced in high employer demand programs of study. These awards are funded by contributions from the tax credit earned by individuals or businesses that are eligible for the high tech research and development tax credit.

Extensive reporting on Opportunity Scholarship and Expansion Programs are required annually by the Program Administrator beginning in 2012. JLARC shall report on both programs in 2018.

E2SSB 5182 Establishing the Office of Student Financial Assistance by Eliminating the Higher Education Coordinating Board (HECB) and Transferring its Functions to Various Entities
Sen. Scott White, D-Seattle; Delivered to Governor – May 25

Subject to interim taskforce recommendations and legislation in 2012 session: As of July 2012 - Eliminates the HECB; creates the Council for Higher Education (CHE), and; moves state financial aid functions to new Office of Student Financial Assistance with Executive Director appointed by the Governor.

Interim taskforce will make recommendations regarding membership and duties of CHE. Taskforce will be chaired by Governor (or designee) and will include four legislators, equal representation of key higher education sectors, and at least two other members appointed by the Governor.

SB 5463 Common student identifier
Sen. Derek Kilmer, D-Gig Harbor; signed by Governor April 18

Requires the State Board For Community And Technical Colleges to establish minimum standards for common student identifiers so that once a student has enrolled at any of the 34 community or technical colleges, the student retains that same ID number throughout the system no matter which CTC he or she attends.

2SSB 5636 (Haugen) University Center of North Puget Sound
Sen. Mary Margaret Haugen, D-Camano Island; Signed by Governor May 12

Transfers management and leadership for the University Center from Everett Community College (EvCC) to WSU after WSU develops a plan for meeting the academic needs of the region and establishes an engineering program. The plan must be developed in collaboration with EvCC and other university partners that offer degrees at the Center. The plan must build on degrees offered at the University Center; address demand for degrees by students and employers in a variety STEM disciplines; and include a multi-biennium budget that addresses both operating and capital expenses required to effectively implement the plan.

A Coordinating and Planning Council (Council) is established for long-range planning, inter-institutional collaboration, collaboration with local communities, and dispute resolution for the University Center. The Council is comprised of the WSU president or designee; WSU provost; EvCC president; two representatives of other schools offering degree programs at the Center; council’s director, as the non-voting chair; one student from the center; a community leader appointed by EvCC president; and a community leader appointed by the mayor of Everett.

The bill will only take effect after the HECB determines whether a needs assessment and analysis is required and if so, conducts a needs assessment and recommends that this should move forward, July 1, 2012. The WSU plan must be completed by December 2012, and submitted to the legislature for review. The plan shall be considered approved if the legislature does not take further action during the 2013 legislative session. The transfer of the University Center to WSU must take place by July 1, 2014.

SSB 5664 Lake Washington Institute
Sen. Rosemary McAuliffe, D-Bothell; signed by Governor April 18

Changes name of Lake Washington Technical College to Lake Washington Institute of Technology.

SB 5860 State Employee Compensation
Sen. Edward Murray, D-Seattle; Delivered to Governor – May 25

Vehicle used to implement state employee 3% salary reductions. Bill’s provisions, primarily as they apply to the CTC system:

•   Exempts higher education, state employees’ base salaries are reduced by 3%. The CTC system’s budget is reduced by $15 million each year due to the 3% compensation expenditure reduction. Higher education is not prohibited from reducing salaries and providing temporary salary reduction (TSR) leave.

•   Provides for higher education to achieve “compensation reductions” as specified in the budget. Student employees and employees whose monthly salary is less than $2,500 are exempt from compensation reductions. (While the appropriations act provides higher education flexibility, it requires represented civil service employees’ salaries to be reduced by 3% and temporary salary reduction leave be granted in the second year of the biennium (FY 2013).)

•   Maintains current limits on salary increases to those negotiated for represented employees (faculty, exempt, technical college classified) and increases related to retention. Requires reports on salary increases to be provided to the Legislature at the end of each fiscal year.

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