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Seattle Times Highlights Importance of Pension Funding Policy

The Seattle Times published an article yesterday that outlined the State Treasurer’s desire to pursue a state constitutional amendment that would require the Legislature, starting in 2015, to invest more money into pension plans up front to help the state avoid ever entering ‘pay-go’ status where pension obligations must be covered from the state general fund.

In the meantime, the Treasurer, Jim McIntire, has requested that the Legislature invest $1.4 billion in existing pension plans for the 2011-13 biennium, a doubling of the $770 million invested in 2009-11.

The current estimated state budget shortfall for the 2011-13 biennium is $5.7 billion, and pension policy will play an important role as the state is forced to reorganize a shrinking budget.

For more information about this issue, read the OPB Brief published earlier this month.

Elevating the College Cost Debate

As we reported last month, two economists at the College of William and Mary have published a new book called Why Does College Cost So Much?. We are almost finished reading this very well written and researched book and will provide our own assessment soon.

In the meantime, the book continues to generate passionate discussion–see Stanley Fish’s column at the New York Times. If you are as intrigued by this topic as we are, and have a lot of time to spare over Thanksgiving break, I might suggest reading some of the 400+ comments left on Fish’s column. To keep the discussion going, Fish handed his column over to the book’s authors, Robert Archibald and David Feldman, to address some of the most common objections to their arguments. If you really want to punish yourself, readers have thus far left another 240+ comments to sift through!

And for a break from all of this talk about budget cuts and cost crises, here are some links to a couple of feel-good, holiday themed pieces published today:

Inside Higher Ed: In Praise of the Americans

The Chronicle of Higher Education: On Gratitude in Academe

We wish the entire UW community a very happy Thanksgiving holiday. Stay warm and travel safely!

Additional Near- and Long-Term Cuts Expected as State’s Revenue Forecast Worsens

After the November 18, 2010 release of the state’s November revenue forecast, Vice Provost of Planning and Budgeting Paul Jenny released the following information to UW leadership:

As most of you are aware, the November revenue forecast for the state was released yesterday, and it was not good news.  The forecast projects a shortfall of $385 million in the current fiscal year budget and a deficit for the upcoming 2011-13 biennium (FY12 and FY13) of $5.7 billion. There are many factors for the continuing lack of improvement in state revenues:  the real estate market remains weak, expected revenue increases will not materialize due to voter rejection of the soda and candy sales tax measure, case loads continue to increase, and so forth.The most immediate concern is the reduction in revenue of $385 million for the current fiscal year.  To bring the budget back into balance, there are three options available:

  • The governor could impose across the board reductions as she did following the September revenue forecast.
  • The governor could call a special session of the legislature to balance the budget.
  • The legislature could take up this issue in passing a final supplemental budget for FY11 that addresses this shortfall as the beginning agenda item in the normal legislative session that commences on January 10, 2011.

While we do not know what course of action will ultimately be taken, we need to anticipate another mid-year reduction as a result of any of these options. As a point of reference, the shortfall in the September revenue forecast of $520 million resulted in a cut to the UW of $17.1 million.  If the response to the current shortfall of $385 million is consistent with the September actions, we may see a reduction of approximately $10 million -$13 million.  Again, this is just our best guess at this point. My office will provide greater detail as it becomes known to us.

Longer term, we need to understand that the solution to a $5.7 billion deficit in the 2011-13 biennium will not be pleasant. We don’t know what our share of the cut will be.  What we do know is that only 30 percent of the budget can be touched at this point – the rest considered ‘off-limits’. We can safely assume that because higher education is the biggest part of the discretionary budget, we will be hit very hard. While we had to model a 10% reduction in a response to a request by OFM, we should anticipate that our cut may be higher than 10%.  Cuts of these magnitudes will inevitably place more pressure on the discussion surrounding tuition increases as a mitigating factor to these cuts.

While this is distressing news, the Offices of Planning & Budgeting, External Affairs, and State Relations will be working with our elected officials to consider different solutions that can stave off some of the impact these cuts, if not mitigated, would create.

Latest NCES Report Provides Data on Higher Ed Employees

The National Center For Education Statistics (NCES) is a part of the US Department of Education’s Institute of Education Sciences. Every US University governed by Title IV of the Higher Education Act (federal student aid programs) is required to submit annual data to NCES via nine surveys that cover topics such as pricing, admissions, enrollment, employment, financial aid, graduation/completion, institutional finance and more.

NCES releases regular reports synthesizing the massive amount of data that institutions submit. The latest, Employees in Postsecondary Institutions, Fall 2009, and Salaries of Full-Time Instructional Staff, 2009-10, summarizes national trends in higher education employment. Some of the findings include:

  • Institutions reported employing (not including medical schools or hospitals) 3.8 million employees– 2.4 million full-time and 1.4 million part-time.
  • Of the 2.4 million full-time employees,  1.4 million were classified as professional (see report for definition), 46% of whom had faculty status: 21% with tenure, 9% on the tenure-track, and 17% not on the tenure-track or at an institution without tenure.
  • Of full-time faculty with tenure, 65% were men while 35% were women.
  • Of full-time faculty with tenure, 81% were White, 8% were Asian, 5% were African American, and 4% were Hispanic.

You can explore more NCES reports, facts, and figures online. Additionally, you can build your own queries and pull up institutional data based on any set of universities you identify.

Should Federal Government Support a Regional Approach to Public Higher Ed?

The Center for American Progress released a new report, Easy Come, EZ-GO: A Federal Role in Removing Jurisdictional Impediments to College Education, that presents a bold argument for the creation of Education Zone Governance Organizations (EZ-GO), which would provide federal resources to help ease barriers to higher education for citizens of metropolitan areas that cross state borders (20 out of 44). The Center argues that a more regional approach to higher education in such areas is necessary to reach ambitious new college attainment goals.

While higher education policy has historically been formed at the state-level due to state funding of institutions, the report asserts that this strategy is no longer sufficient given the growth of higher education participation coupled with the increased mobility of Americans. This is especially illustrated in the 20 metropolitan areas they identify as crossing state lines. In these locations, citizens are often restricted in their access to affordable, quality higher education based on their state of residence, primarily due to:

  • State based financial aid
  • Residency based tuition pricing
  • Credit transfer policies between institutions

One of five Americans live in such areas, including in Portland, a metropolitan area that reaches into Washington State. The majority of the institutional capacity in the Portland metropolitan area is located in the State of Oregon, which means that your specific address has real ramifications for your access to affordable higher education, which these authors argue is suboptimal for increasing attainment.

Ultimately, they recommend that the federal government create EZ-GO areas (overseen by an EZ-GO Commission) to:

  • Provide technical support to develop EZ-GO-wide articulation agreements
  • Support capital investments to built up institutional capacity
  • Assist in matching postsecondary programs to local labor markets
  • Encourage partnerships between institutions and across sectors

Expect a lot of proposals like this one to surface as stakeholders across the nation grapple with how to, in a relatively short period of time, raise the percentage of Americans with a two-year or four-year degree from 38% to 60%.

Election Results Exacerbate State Budget Woes

Washington’s General Fund-State account continues to decline in tandem with stagnant job growth and faltering tax collections. Last Tuesday, Washington voters reversed the 2010 Legislature’s tax measure on certain foods and beverages; the tax will sunset on December 1, 2010. Notably, the American Beverage Association contributed $16.7 million in total to the campaign repealing these taxes, the most external contribution to any Washington initiative in our state’s history.

Governor Gregoire has released several statements indicating her understanding of current taxpayer frustration and will release an all-cuts 2011 Supplemental Budget, which will include further budget cuts to resolve any existing budget deficit for the current 2009-11 biennium.  In addition, she must submit an all-cuts budget for the upcoming 2011-13 biennium by December 20. Both budgets will assume no new revenue growth and take into account past predictions of revenue, as summarized in the table below.

In the short-term, the UW already took a $17.1 million mid-term FY 2011 cut, and does not anticipate having to take another mid-term reduction before the start of the 2011-13 biennium on July 1, 2011. While we were asked to model 10 percent cuts for the upcoming biennium, UW administration anticipates that the state’s currently projected $4.7 billion revenue shortfall will necessitate further cuts to higher education institutions. Because two-thirds of the general fund budget is constitutionally protected and spent on K-12 education, corrections, and health and welfare activities, higher education is one of the major discretionary areas of spending left to cut.

Please check back regularly for more information about the budget, including an update to this table after the next revenue forecast is available on November 18. In addition, we will be providing more summary information about other mandated areas of the state’s budget, including the state pension system, K-12 education, corrections, and more.

Emphasis on STEM Degree Production

Hi, my name is Anja Speckhardt, and I am a student assistant here at the Office of Planning and Budgeting, as well as a freshman at the UW. As a part of my job at OPB, I have been given the privilege to occasionally post to the blog about interesting topics I’m researching. Today, I chose to write about the current emphasis many policymakers, employers and institutions place on STEM education. This is especially exciting and relevant to me as an incoming freshman, as I explore the plethora of major options here at the UW. Thanks for reading!

For some time now, legislators at the state and national levels have been emphasizing degree production in “high demand” fields such as science, technology, engineering, and math (STEM). Spurred on by President Obama’s call to increase the number and quality of math and science teachers, and aware of the large engineering, software, and technology corporations integral to Washington State’s success and job market, Washington State’s Higher Education Coordinating Board (HECB) proposed a Fund for Innovation to increase the number of high demand degrees awarded (among other objectives).  Among their reasons are that, in comparison to other fields, job prospects in STEM are still promising, student demand for these majors is high, and technology and science are important for innovation.

The University of Washington is well-known for its outstanding medical, nursing and engineering schools, as well as its strong math and science programs. Additionally, from its earliest days, the UW has had an important relationship with the firms in the area:  the wind tunnel, partly sponsored by Bill Boeing in 1939, is a perfect example of this. Support for STEM programs is integral to the UW’s success, because students have come to expect access to and excellence from these departments.

However, it is important to remember that not all of the students attending the UW are technologically or scientifically inclined and seek to impact the world in other ways. Some highly intelligent and motivated students choose to major in history, music theory, or political science, or one of the many other fantastic programs in humanities, social sciences, and fine arts. The UW is home to a highly ranked International Studies school, as well as a leading Business school. We don’t only have a wind tunnel, we also display the largest book in the world—a book of photography.

The UW’s extensive General Education requirements allow students to explore many disciplines and choose to pursue those that interest them the most. The University is a venue for exploring interests and giving students the opportunity to find their passion—be it biochemistry or French.

This brings up the interesting question of the purpose of a university: Is it primarily to further education in all its multifaceted forms, or should its focus lie solely in career preparation? Presently, career preparation has taken hold as an important, if not primary, goal of a university as well as a measure of its success. However, it is critical that such focus and investment not be at the expense of the multiplicity of disciplines and inclinations that are an important part of the UW’s success and each student’s experience. In fact, new research shows that a high GPA and a good work ethic can be a better recommendation to future employers than a degree in a certain field.

US Higher Ed More Accessible Than Affordable?

Higher Education Strategy Associates, a Toronto based research firm, released a report last week that measures 17 nations on the affordability and accessibility of their higher education systems.

The report, Global Higher Education Rankings 2010: Affordability and Accessibility in Comparative Perspective, finds that while the United States ranks on the low end of affordability, it ranks 4th overall in accessibility. This counterintuitive finding is repeated across other nations in the study and suggests that these two goals are not as closely linked as some might assume. Overall, Finland scored highest on both measures.

If you don’t want to read the entire report, or scrutinize the research methodology, you can find a summary of the report and a table of the main results at the Chronicle.

APLU Releases Regional Meetings Report

In advance of the 123rd annual meeting in Dallas on November 14, The Association of Public and Land-Grant Universities (APLU) has released the final report resulting from five regional meetings to discuss key concerns about the future of public research universities, one of which took place at UW Seattle on April 26, 2010.

The report, Ensuring Public Research Universities Remain Vital, outlines the important contributions that public research institutions like the UW make to knowledge, society and the economy. The report also reaffirms the need for institutions to remain committed to their public mission of providing world class education that is affordable and accessible, and for the states to remain committed to facilitating that mission by restoring and protecting the public investment in higher education.

Additionally, the report addresses ways that the federal government can help keep US public research institutions vital. First, by reforming indirect cost reimbursement rate setting policies and regulations associated with federal research grants. Second, by exploring ways that the federal government can partner with institutions to provide operating support, including endowed faculty chairs, funding for doctoral trainees, and new targeted research funding.