Higher education cuts will challenge state institutions

FOR IMMEDIATE RELEASE:  December 19, 2008

OLYMPIA — Ann Daley, executive director of the Higher Education Coordinating Board (HECB), said the cuts proposed in the Governor’s 2009-2011 budget present a serious challenge for state higher education institutions as they attempt to maintain their current level of core services. However, she added, the cuts are less than originally expected and far less than in past recessions.

“In the past, higher education has had to bear a disproportionate share of the budget reductions during economic downturns,” Daley said. “Viewed with hindsight, the cuts proposed in Gov. Gregoire’s budget are far less severe than those in past cycles and will help us preserve the basic integrity of our mission. However, there is no silver lining here.”

She emphasized the cuts could result in severe consequences for some institutions and would  stop progress toward the long-term goal of educating more Washingtonians, a key priority in the 2008 Strategic Master Plan for Higher Education.  Larger class sizes, reduced access, cuts in student services, and employee layoffs can be expected, she added.

“These cuts come at a most inopportune time for higher education,” Daley said. “In any economic downturn, more people seek access to degree and certificate programs.  This is especially so in this severe recession.  And we will need a skilled and educated workforce to help us climb back to economic prosperity. In addition, we need to be aggressively building the pipeline of new students to higher education to ensure a strong economy and stable society for the future.”

“Nonetheless, we are encouraged the Governor chose to limit tuition increases to those allowed under current law,” Daley said, noting that steep increases in tuition can upset the balance between tuition and financial aid, which must be increased to maintain access for students from low-income families.

Tuition is one of three main state revenue streams used to pay for higher education. The others are state per-pupil appropriations and financial aid.

Increased revenue from tuition will help the state’s higher education institutions partly offset the severity of the budget cuts, Daley said.  While significant, the tuition increases proposed are not as high as those authorized in past recessions, she added. Tuition increases for undergraduate, resident students are expected to average $450 annually at the two research institutions; $310 at the regional universities; and $125 at the community and technical colleges.

In 2007, the Washington Legislature passed a law that limited annual undergraduate tuition increases to 7 percent at the four-year universities and 5 percent at the two-year colleges.   The Legislature then approved 7 percent increases for the research institutions; 5 percent for the regional universities; and 2 percent for the community and technical colleges in both years of the current biennium.

In the Governor’s proposed budget for 2009-2011, all of the four-year institutions would be authorized to increase tuition by up to 7 percent annually, and the community and technical colleges would be allowed to increase tuition by 5 percent. The Governor’s budget essentially makes no change in per-student funding levels (it does not include money for additional enrollment) and it recommends a $19.1 million increase in financial aid.  Importantly, the budget does not require institutions to increase enrollments without funding, a practice that has been employed in the past, Daley said.

The $19.1 million for the State Need Grant program, which serves students with very low median family incomes, is less than recommended by the HECB and, although it will help offset the magnitude of the budget cuts, it will lead to lower award levels and fewer eligible students.  The proposed budget would lower the income eligibility ceiling for those receiving aid from 70 percent to 65 percent.

Taken as a whole, Daley said, the proposed budget will help prevent higher education from losing as much ground as it has in past downturns.  Lifting the hiring freeze imposed earlier this year and allowing institutions – not the state – to adjust their budgets individually will help, she said. And the budget also permits more than $1 billion in capital spending during the biennium, which will help economic recovery by creating construction jobs.

The Governor has said she intends to recommend the state move quickly to approve capital bonds for 22 construction and renovation projects on campuses throughout the state.

The Governor’s budget provides $455 million in 2009-2011 for projects on four-year campuses and another $390.3 million for construction in the community and technical college system, for a total capital expenditure of $845.3 million in 2009-2011. 

An additional $224.6 million in construction and renovation projects also are recommended for the four-year institutions to be paid for by issuing Certificates of Participation (COP), which are like bonds but can be paid back through operating revenues over a shorter period.

Daley said the Governor’s budget recommendations generally follow a set of principles the HECB approved at its November meeting to help guide the budget process for higher education in the next biennium - principles developed to ensure stability and maximize the system’s ability to help the state recover from the economic downturn.

HECB Budget Principles:

• Fully fund higher education carry-forward budgets.
• Fully fund any new enrollments or other enhancements.
• Establish tuition increases within current law and policy to preserve quality.
• Support the State Need Grant at a commensurate level to offset any tuition increases.

A Summary of Key Facts:

• The total 2009-11 adjusted maintenance-level operating budget appropriation for higher education would be reduced $297.2 million, from $3.885 billion to $3.588 billion. 
• Tuition increases for resident undergraduates would be held to the limit of current law.
• No change in enrollment levels. 
• No salary increases would be funded, including the salary components of negotiated collective bargaining agreements.  I-732 funding is suspended for faculty and staff cost of living adjustments at community and technical colleges. The budget does provide funding for negotiated increases in health benefits.
• Non-specific reductions of 13 percent for the four-year universities and 6 percent for the CTC system add up to a $343.7 million cut from maintenance level. 
• $19.1 million is appropriated for the State Need Grant program but eligibility is reduced to 65 percent of median family income with reduced awards for students between 51 and 65 percent MFI.
• Funds of $3 million are provided for the GET Ready for Math and Science scholarship program.

Capital funding projects approved for the four-year institutions (includes those approved for COP funding):

UW Global Public Health & Pharmacy Building

UW Anderson Hall

UW Miller Hall

UW House of Knowledge

UW Tacoma – Phase IV

UW Balmer Hall

UW Denny Hall

UW Tacoma – Phase III WSU Vancouver Applied Technology Classroom Building

UW Molecular engineering Building

WSU Veterinary Medical Research Building           

WSU Global Animal health building Phase II

WSU Riverpoint Biomedical and Health Sciences Facility

WSU Vancouver Applied Technology Classroom Building

EWU Patterson Hall Remodel

EWU Riverpoint Center

EWU Biology-Chemistry Science Center

CWU Science Phase II – Pre-design

CWU Hogue Hall Renovation/Addition

CWU Samuelson Union Building - Pre-design

CWU Combined Utilities

WWU Miller Hall

WWU Carver Academic Renovation

WWU CFPA Armory Renovation

TESC Laboratory/Art Annex Building Renovation

TESC Lecture Hall Renovation

TESC Comm. Building Preservation 

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For more information: Gary Larson

(360) 753-7817 or garyl@hecb.wa.gov