February 15, 2012

Flexibility measures move forward

By Office of State Relations

The operational flexibility proposals introduced in Olympia this session moved forward on Tuesday. February 14 was the cutoff for non-budget legislation to pass out the chamber of origin.

HB 2585 passed in the House with 98 yea votes to move to the Senate.  The bill amends contract rules for institutions of higher learning in order to improve efficiency.  It would provide the University of Washington administrative and operational flexibility in areas of purchasing and procurement, capital projects, human resources and information technology.  As a result, the university would save over $1 million annually.

SB 6468 and SJR 8223 were passed out of the Senate on Monday. These bills will allow diversification of the University of Washington and Washington State University operating investments.  Since 1889, UW operating fund investments have been restricted to government-backed securities.  This restriction limits the ability to diversify university assets and reduce risk.  Annual returns have been negatively impacted by 0.8% annually over the last twenty years – approximately $11 million per year (at the current fund level).  Investment diversification would reduce the concentration of risk in a single investment instrument and allow the UW to react in a more timely way to opportunity and risk in the global economy.  It would also provide the university with an opportunity to raise additional revenue overtime, which would make available additional funding for UW’s education mission without raising taxes.  SB 6468 and SJR 8223 were referred to the House Higher Education committee and are scheduled for a hearing on Thursday.

SB 5576 would permit local management of capital fee resources – building fees, timber revenues and the metro tract – which are currently appropriated by the legislature for maintenance projects.  The current management system creates inefficiencies in the UW’s maintenance programs.  This affects the university’s ability to leverage its own bond capacity in a strategic way.  Allowing local management would create a more nimble, cost-effective maintenance program, provide the UW with additional local bonding authority to improve our credit worthiness, reduce the state’s cost of borrowing and complete capital projects.  SB 5576 passed the Senate on Saturday.

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