Schmudget Blog


College Unaffordability Is Hurting the “Public” in Public Universities

Posted by kimj at May 13, 2015 11:05 PM |
Filed under: State Budget, Education
By Kim Justice, Senior Budget Analyst, and Elena Hernandez, Policy Analyst
 

Cuts to funding for public colleges and universities since the recession have led to huge jumps in tuition nationwide. Washington state, unfortunately, ranks third in the nation for the largest average tuition increase, according to a new report from the Center on Budget and Policy Priorities. Average tuition has ballooned by nearly 60 percent – or about $4,000 since 2008, adjusted for inflation.    

College affordability is essential for our state to develop a skilled workforce for Washington’s businesses. To get the price of college back within reach for more Washingtonians, significant investments need to be made in the yet-to-be approved budget.

Washington state has begun to take small steps to restore funding to its universities and colleges (0.3 percent over the last school year), but funding nevertheless remains 28.4 percent below pre-recession levels. As a result, the majority of the cost of college has shifted from states to students and, in many cases, their families (see figure below). 

(select image to enlarge)

2015_highered_funding_tuition

Meanwhile, family incomes have stagnated or fallen. Rising tuition combined with falling incomes make it less likely that students will attend college or complete a degree. While the rise in tuition has impacted all Washingtonians, it has been particularly burdensome for students of color, who are disproportionately lower income. Currently, tuition at a public, four-year university in Washington can be as much as 26 percent of household income for Black, American Indian/Alaska Native, and Latino students (see figure below).

(select image to enlarge)

2015_tuition_inc_race_2

The choices our legislators make in the state budget will determine whether or not college remains within reach for Washington’s students. The House and Senate both propose investing more into higher education, but they have different approaches for how to use the resources. The House would use state investments to hold the tide on further increases in tuition over the next two years while also expanding student financial aid through the State Need Grant (SNG). 

The Senate proposes to decrease college costs by pegging tuition to a percent of the state’s average wage. For example, the average wage for fiscal year 2016 is projected to be $52,635. For the University of Washington, tuition for resident undergraduate students in that academic year would be set at $7,369, or 14 percent of the average wage (1). However, there’s a huge flaw in how the Senate would pay for the tuition decreases – it would do this, in part, by cutting financial aid. This proposal would  benefit middle- to higher-income families, as it would trim costs at the most expensive schools. But it would make it harder for many students who rely on financial aid.

Despite the contrasting proposals, it’s certainly a good thing that legislators are debating the best ways to make college more affordable. It’s the right conversation to be having. But when addressing cost, lawmakers must make sure that college is accessible for students with a range of income levels, especially for those with lower incomes who face the biggest hurdles. As such, freezes or reductions in tuition need to be paired with investments in the State Need Grant, our primary tool to open the door to college for students with lower incomes. Currently, about one third of students who qualify for the SNG (over 30,000 people) are unable to receive aid because of a lack of funding. Expanding the SNG, as the House proposes, is the right thing to do for thousands of aspiring students.

State investments in higher education are needed to build a strong middle class and an economy that is fueled by skilled workers. But the resources to make these investments don’t exist under our current revenue system. Raising new revenue through a capital gains tax and closure of unproductive tax breaks, as the House proposes, need to be part of the final budget. 

To read the full Center on Budget and Policy Priorities report and see how our state compares to other states with better revenue systems, click here.

1. Senate Bill 5954 fiscal note

 

During Special Session, Lawmakers Must Take Long View in Budget Talks

Posted by kimj at Apr 24, 2015 09:45 PM |
Filed under: State Budget

With lawmakers set to begin special session on April 29th, they must set their sights on reaching a compromise on the budget without compromising the things that Washingtonians value – like high-quality education, good jobs, economic opportunities, and a clean environment. Our state has cut investments in these areas for far too long – which has resulted in significant stalling in many key measures of progress

Investing in the values that are critical to the well-being of all Washingtonians is the key to ensuring that our state can get back on track. It can help us make progress individually and collectively. 

The big question facing budget negotiators is how to make and sustain needed investments in our shared values. The answer? It will require additional revenue sources. Raising new revenue – through proposals such as taxing capital gains and closing tax breaks – will ensure that we can sustain our investments in essential public services while also making our tax system more equitable

Responsible budgeting requires that lawmakers take a more expansive, big-picture view of state investments. They have the opportunity to lay the groundwork for our state and its residents to thrive for years to come. If our elected officials fail to take the long view, Washingtonians are likely to continue falling behind in key measures of progress.  

 

Senate Budget Falls Short

Posted by kimj at Apr 01, 2015 10:55 PM |
Filed under: State Budget
Updated 5/04/2015- Education table updated to reflect only k-12 teacher compensation rather than including higher education employees, which was shifted to the Good Jobs table to be included in collectively bargained employee compensation

The budget proposal released by the Senate yesterday invests $1 billion less than the House proposal. It shortchanges critical investments in our state's children, workers, and families.  

The House proposal released last week raised new revenue to meet Washington state's obligation to fund K-12 education, as well as other essential investments in early learning, mental health, social programs, and environmental protections. The Senate does not raise new revenue. Instead, it relies on fund transfers and reductions to balance the budget, and it gives away more money in wasteful tax breaks. 

The biggest areas of difference between the House and Senate proposed budgets include:

  • Revenue: The House proposes to raise an additional $1.5 billion in equitable and stable revenue to support investments in education, health, and well-being for Washingtonians. Rather than raising new revenue the Senate proposes to waste $114 million in state funds on new or re-enacted tax breaks, including the re-enactment of a tax break for business research and development activities that was recommended for expiration by a citizen commission charged with reviewing tax breaks.
  • Transfers from other accounts: The Senate budget relies on $671 million in transfers from other accounts, including using $296 million in marijuana revenues to fund education, and raiding $200 million from the Public Works Assistance Account which funds local infrastructure like sewer and water projects. The House budget also transfers funding from other accounts, but a much more modest amount of $97 million.
  • Investments: The House makes much-needed investments in our workforce, mental health services, early learning, and support for families experiencing difficult financial times. The Senate budget neglects to address many of the pressing needs of Washingtonians and our economy, either failing to invest in these services or doing so at a much lower amount. The Senate also relies on $50 million in reductions through unspecified cuts intended to be achieved through LEAN management, a strategy that has not yielded the level of anticipated savings in the past.  

The tables below detail some of the largest programmatic differences between the House and Senate budget proposals. 

Education*

While the House and Senate budgets are largely aligned on their investment in K-12 public schools to meet McCleary obligations, the House invests more in teachers and early learning. The Senate proposes to enact a new tuition policy at our public colleges and universities that aims to reduce tuition while also reducing student financial aid.

 updated ed table

Economic Security*

The House makes modest investments in economic security, such as food assistance and support to help parents find and keep a job. The Senate takes the opposite approach, making cuts to vital services that support Washingtonians struggling through difficult financial times. 

 econ2

Healthy People & Environment*

Overall, both the House and Senate invest more in the health of Washington state’s people and environment, but the House investments are much more robust. When it comes to protecting our air, water, and land, however, both budgets fall short.

 Healthy2

Good Jobs*

Workers get a bad deal in the Senate budget. The agreements reached between workers and the state during collective bargaining are rejected in the Senate budget and replaced with a flat across-the-board wage increase. This approach undermines workers and the collective bargaining process. It would force workers back to the table to renegotiate with the state. 

good jobs updated

Revenue 

When it comes to raising the resources needed to maintain investments in schools, health care, and safety, the budgets could not be further apart. The House proposes to raise stable, equitable revenue to ensure the future prosperity of our state. The Senate takes the opposite approach, spending $114 million on wasteful tax breaks. 

 rev2

In raising new revenue, the House budget proposal takes a big step in the right direction by beginning to address our broken revenue system. The additional resources would allow our state to meet the obligation to adequately fund K-12 education. And it would not do so at the expense of other critical investments, like those for high-quality early learning, affordable higher education, and clean air. The Senate’s decision to ignore our broken revenue system puts Washingtonians and the economy at risk by further hindering the state’s ability to invest in our future.  

*The titles of each section link you to the corresponding section of our new Progress Index. Each section of our Index provides detailed analysis about how the state budget should invest in these critical areas.

 

A Statement About the Senate Budget

Posted by kimj at Mar 31, 2015 08:35 PM |
Filed under: State Budget

While the Senate’s budget proposal released today invests heavily in education for our children, it relies on unsustainable and unworkable funding sources to pay for it. Instead of raising new revenue, like the Governor and House propose, the Senate lowers the bar on important investments in our workforce, early learning, and safety net programs. It balances the budget on unspecified savings and transfers from other funds. Further, Senate leaders propose to waste $114 million in state funds on new or re-enacted tax breaks rather than invest those scarce resources into services and programs that benefit all Washingtonians.

As budget negotiations continue, the Budget & Policy Center urges lawmakers to work toward a budget that invests in equal opportunities for our children, families, businesses, and communities by supporting a dependable and equitable tax system.

Stay tuned to schmudget for a more-detailed analysis on the budget.

 

House Budget Proposal Prioritizes Funding for Education

Posted by kimj at Mar 27, 2015 10:20 PM |
Filed under: State Budget, Education

The House budget released this morning recognizes that fixing our broken revenue system is necessary to make progress toward creating shared prosperity in Washington state (a message that was also detailed in the Progress Index we released earlier this week). The two-year spending proposal prioritizes investments for kids and students using $1.5 billion in new revenue. The House proposal makes sizable investments in early learning, makes college more affordable, and keeps the state on track to fully fund basic education for all children by 2018 (required in the McCleary court case). It does this while also protecting the health, safety, and well-being of Washingtonians. Investment highlights in the budget include:

Education* (see graphic for breakdown)

  • Adding over 6,000 subsidized child care slots ($72 million)
  • Improving the quality and stability of child care ($114 million for Early Achievers and Early Start Act)
  • Making the next installment toward fulfilling the constitutional and court-mandated obligation to fully fund basic education ($1.4 billion)
  • Providing cost-of-living adjustments and increased health benefits to teachers ($588 million)
  • Freezing tuition and increasing financial aid at public colleges and universities ($220 million)
House budget

Economic Security**

  • Fully restoring the funding that was previously cut for food assistance ($10 million)
  • Allowing parents receiving Temporary Assistance to Needy Families to keep a portion of their child support payments ($8 million)

Healthy People & Environment***

  • Increasing investments in mental health services ($130 million)
  • Adding staff to respond to reports of child abuse and neglect ($16 million)

To make these important investments, lawmakers outlined the steps they intend to take to raise additional resources while also addressing our upside-down tax system. These include:

  • Taxing high-end capital gains ($570 million): The House plan would apply a new 5 percent tax on profits from the sale of corporate stocks and other financial assets above $50,000 per year for a married couple ($25,000 for singles). Check out our capital gains tax website for more information on why this is a sensible improvement to Washington state’s upside-down tax system.
  • Eliminating seven wasteful tax breaks ($300 million): Tax breaks for the following would be eliminated to help fund improvements to schools: travel agents; prescription drug wholesalers; royalties from licensing software, trademarks, and other “intangible” property; oil refineries; bottled water; nonresident shoppers; and banks.
  • Ensuring out-of-state retailers play by the rules ($85 million): Due to federal law, most large, out-of-state retailers get a huge advantage over small “brick and mortar” stores located in Washington state: they don’t have to charge sales taxes. The House plan would help level the playing field by requiring out-of-state retailers who have agreements with businesses located in Washington state to apply sales taxes to goods sold here. 
  • Increasing the Business & Occupation (B&O) tax applied to personal and professional services and reducing taxes for small businesses ($532 million): During the Great Recession, policymakers temporarily increased the B&O tax applied to service businesses – ranging from doctors and lawyers to plumbers and hair stylists – to 1.8 percent from 1.5 percent. That 0.3 percent surcharge expired in 2013. The House plan would reinstate it, but would also increase a tax credit for small businesses. The credit would eliminate B&O taxes for businesses with gross incomes below $100,000 per year. Businesses with gross incomes as high as $200,000 per year would benefit from the expanded credit.

While no revenue is included in the budget proposal for capping and pricing carbon pollution, lawmakers have expressed interest in pursuing a proposal that would yield even more revenue.

Stay tuned to schmudget for more-detailed analysis on the budget and revenue proposals in the coming days.

To learn more about what state lawmakers can do to make progress in Washington state, read our Progress Index. And specifically, read more analysis on:

*how state investments are impacting education

**how state investments are impacting economic security

***how state investments are impacting healthy people and environment

 

 

 

Support Grows for the Working Families Tax Rebate

Posted by kimj at Mar 25, 2015 07:05 PM |

Nearly 25 community and faith leaders, service providers, individuals, and advocates have registered their support for full funding of the Working Families Tax Rebate (WFTR), an important tool that would boost the incomes of nearly 1.4 million Washingtonians, including 624,000 children. 

In a letter to House budget writers, supporters outline the ways the WFTR is a great complement to a wide array of policies and an important tool to:

Reduce taxes for 400,000 hardworking households: Washington state has the most upside-down tax system in the nation. People with low incomes pay seven times more taxes as a share of income than the richest 1 percent. Funding the WFTR would reduce taxes for over 400,000 hardworking households in Washington state. 

Improve the equity of our tax system: The WFTR would help to offset the regressivity of the state sales tax and is an essential component of any revenue system. It would be an especially useful tool to mitigate the impact of an increase in the gas tax or ensure communities with low incomes are not disproportionately affected by a carbon-pricing program – two revenue options currently being considered by the Legislature.

Keep children and families out of poverty: Washington state is one of three states where poverty is increasing. In 2011, the federal EITC kept more than 116,000 children and families out of poverty in Washington state and is the most effective anti-poverty tool we have for kids and families. Funding the WFTR could build on these benefits.

Help families transition to a low-carbon economy: Transitioning to a low-carbon economy is essential for the future well-being of all Washingtonians, but the effects of this transition will not be felt equally. Communities with lower incomes – a disproportionate number of whom are people of color – are the first and worst hit by both the health and economic effects of carbon pollution. They are also the least equipped to adapt to the negative impacts of climate disruption. Fully funding the WFTR would ensure that in our efforts to confront climate change, we are also creating an inclusive 21st century economy.

Help families meet needs while boosting local economies: Studies show that every dollar in EITC results in $1.50 in local economic activity as recipients tend to spend the funds on immediate needs such as home and car repairs, clothing for children, appliances, and catching up on past-due bills. Funding the WFTR would add $100 million to local economies.

As lawmakers prepare to propose their investment priorities for the next two years, they should include full funding for the Working Families Tax Rebate.
 
Read more about the WFTR here. 
 
Click here to read the letter to House budget writers.

Revenue Is Projected to Increase, But Not by Enough

Posted by kimj at Feb 20, 2015 09:10 PM |

Washington state revenues are continuing their recovery from the depths of the Great Recession, growing by $274 million ($134 million in the 2013-15 biennium and $140 million in the 2015-17 biennium) from the previous forecast, according to new data from the State Economic and Revenue Forecast Council. Even still, the increase in revenue falls woefully short of what is needed to meet the state’s funding obligations in the next two years.

In addition to the revised revenue forecast, lawmakers recently passed a 2015 Supplemental Budget, which included revisions that increase the ending fund balance by $200 million. As the graph shows, even with the increase in the fund balance plus an increase in revenue, resources will still fall $2.5 billion short of what is needed just to fund these required costs:

  • Maintaining services ($2.6 billion): Simply maintaining the current level of services the state provides will cost more in the next two years due to inflation, increases in the population, demographic changes, and increased debt and pension costs. 
  • McCleary education investments (at least $1.2 billion):  The state is required by its own constitution to adequately fund K-12 basic education. The State Supreme Court’s McCleary ruling reinforced that obligation, requiring lawmakers to fully fund basic education by 2018. To meet that deadline, at least $1.2 billion is needed in the next budget cycle to pay for school maintenance and curriculum costs as well as to phase in full-day kindergarten and smaller class sizes in kindergarten through third grade. 
  • Voter initiatives ($1.8 billion): In 2000, voters approved Initiative 732 to provide cost-of-living adjustments (COLAs) for teachers. Lawmakers have voted to suspend this initiative in previous years, including during the current 2013-15 biennium. The suspension is set to expire, making I-732 a legal obligation for the 2015-17 budget cycle. Additionally, Initiative 1351, which passed in November 2014, requires lawmakers to fund smaller class sizes in kindergarten through 12th grade. Within the first two years of passage, lawmakers can only amend or suspend an initiative with a two-thirds vote in both chambers.

 Feb forecast2

On top of these required spending obligations, there are other investments that the state needs to make in order to strengthen our economy and support the health and well-being of Washingtonians:

  • Invest in the state’s workforce ($580 million): Lawmakers should approve the collective bargaining agreements that have been reached between workers and the Governor, providing the first general wage increase in seven years for middle-class employees. The Governor has also proposed to align the wage increase for state employees with that of teachers. These are important investments to help retain and attract talented workers who teach our children, protect our safety, and care for seniors and people with disabilities.
  • Invest in mental health services (at least $65 million): In August 2014, the State Supreme Court ruled that our mental health system is failing to appropriately treat people with mental illness. A shortage of space in treatment facilities has led to the warehousing of patients in hospital emergency rooms – a practice that cannot continue, according to the court. Increased investments are needed to provide proper care to people with mental illness.
  • Restore cuts from recent years: Since 2009, lawmakers have enacted over $10 billion in cuts to health care, food access programs, tuition assistance, child care, services for seniors, and other important investments that support our economy and the well-being of all Washingtonians. Now is the time to rebuild investments that help people find work, make college affordable, and strengthen supports that allow people to live in safe homes and put food on the table.

Solutions exist to increase our resources so that we can invest in education and the quality of life in our state. Enacting a capital gains tax, as the Governor has proposed, is one important tool to significantly boost revenues. 

 

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