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WSU Government Relations Newsbeat

State budget shortfall narrows again

The Economic and Revenue Forecast Council adopted an updated state economic and revenue forecast this morning, which the governor will use to write his 2021-23 operating budget proposal in mid-December.

The revenue report improved the bottom line by $634 million in the current biennium and $328 million in the next biennium. A press release from the state Office of Financial Management can be found here. When combined with last week’s caseload forecast showing reduced demand for state services, the state’s three-year budget shortfall – in June thought to be $9 billion — could be as low as $3 billion.

However, optimism is dampened by high levels of uncertainty, with more than five months still to go before the Legislature sends a budget to the governor.

The economic forecast takes into account the projected impacts of Boeing’s decision to relocate 787 assembly out of Washington and their plans to make significant employee reductions. It does not account for the new restrictions on some businesses announced by Governor Inslee on November 16th in response to spiking COVID-19 infections. The forecast assumes a COVID vaccine will become available by mid-2021.

Following the governor’s budget proposal in December, the Legislature will convene its 105-day session on Jan. 11 to begin crafting its proposals.

Actions on Duration of Stay

We recognize many of you are monitoring the recent Notice of Proposed Rule Making out on the Duration of Stay for international students.

The deadline for comments was October 26th and we know that WSU sent comments in via International Programs. As background there are many letters circulating form Capitol Hill signed by the Washington Delegation and sent to the Administration on this proposed rule:

Rep. Jamie Herrera Beutler (R-WA) was joined by 19 other GOP members of the House in a sign-on letter to express concerns with the Department of Homeland Security’s recent notice of proposed rulemaking on “Establishing a Fixed Time Period of Admission and an Extension of Stay Procedure for Nonimmigrant Academic Students, Exchange Visitors, and Representatives of Foreign Information Media.” The letter says that the proposed rule would “be detrimental to the United States’ ability to attract the best and brightest international students and exchange visitors from around the world.”  The rule would modify the department’s longstanding duration of status policy to a fixed duration policy which would allow F, and J, and I visa holders two or four years to complete their degree, depending on several factors. Under the proposal, a student who needs additional time to complete their degree would need to petition DHS for an extension of stay.

The final letter was signed by twenty Republicans including Washington’s Republican members Congresswoman McMorris Rodgers and Congressman Dan Newhouse. The strategy behind this was to have the Administration hear from Members of their own party with concerns on these changes.  We led the efforts with the office but worked with APLU who coordinated the association work and with UW on this letter.

PAC12 also sent a letter expanding on how the proposed rule would impact international student athletes. They note the proposed rule is “deeply flawed and would undermine the ability of colleges and universities to recruit the best students from around the world”. They also expanded on the financial implications of the ruling for the students and highlighted how the uncertainty would detrimentally impact athlete’s choices before strongly opposing it.

Democrats Rep Debbie Dingell (MI) & Rep Mark Pocan (WI) also sent a letter signed by 106 Democrats expressing concern as the proposed rule “would arbitrarily limit international student visa lengths and place additional restrictions on student visas based on an individual’s country of origin.” They continued to state the proposed rule would increase “burdens on students and universities, further disincentivizing prospective international students from attending U.S. institutions of higher education” They further expanded on the value that international students bring to the US and further expand on the detrimental effect of the proposed rule.

Senator Murray also sent a letter late in October with 28 other Senators with extensive comments on this proposed rule dissecting the language of the mandate and noting five major areas of concern with the proposed rule;

1 – Massive disruption for the healthcare workforce (J-1 physicians)

2 – It would devastate institutions of higher education’s ability to serve

3 – Limiting without adequate rationale

4 – Unnecessary given the current reporting systems

5 – It would further strain United States Citizenship and Immigration resources.

House Democrats sent a letter early in October including Congressman Smith, Congresswoman DelBene, Congresswoman Jayapal and Congressman Derek Kilmer with extensive comments on this proposed rule.

 

Senate committee briefed on COVID impacts to students

“I’ve been waiting for this moment my entire 25 year career in higher education” remarked Jaime Nolan in response to the inequities the COVID pandemic has brought to light among students in higher education. Nolan, WSU Associate Vice President of Human Relations and Diversity, presented yesterday in a virtual work session for the Senate Higher Education Committee which tackled the various impacts COVID-19 has had on student services.

Panelists from the state’s community college system and public baccalaureate institutions spoke to how COVID has impacted all facets of their universities including admissions, enrollment, instruction, and student success. Nolan shared efforts that WSU has made across its system to continue connecting students to resources in order to address challenges they face and that the pandemic has amplified. Among these efforts was a virtual event last week organized by the Undocumented Initiatives Program in the Division of Student Affairs, where university administrators from throughout the WSU campuses showcased resources for students in attendance.

As the university learns about the inequities exposed by the pandemic and recession, Nolan noted that “We’re looking to do things differently, and as we do, we’re learning about how this moment can inform better practices into the future – even as we are one day face to face again.”

You can watch Nolan’s presentation below. The entire two-hour work session can be found here.

House Vote on Covid Bill (HEROES 2)

We are anticipating that the House, with an agreement or not, will vote on a version of the HEROES 2 Bill today. Unless the White House and Senate Republicans reach an agreement with House Democrats, it is very likely that any resolution of this will be punted to post election and potentially next year.

The $2.2 trillion package (more than $1 trillion below the original HEROES Act passed this past May) would provide relief for state and local governments, healthcare workers, K-12 and institutions of higher education, small businesses, federal agencies, and other critical segments of the economy impacted by the COVID-19 pandemic.

HEROES 2.0 would provide $39 billion to institutions of higher education, approximately $2 billion above what is included in the May passed HEROES Act.  The Associations representing higher education submitted an updated request to House leadership of $120 billion to cover reopening costs, address substantial losses and expenses of institutions, and provide support to students. While this is appreciated, it was a huge increase in funding from the original $39 billion included in the HEROES Act and it is not a surprise this was not included.

The bill includes $3 billion in research relief funding for the National Institutes of Health (NIH) and an additional $1 billion for NIH to expand COVID-19 research. It also provides $2.9 billion to the National Science Foundation to prevent, prepare for, and respond to coronavirus including to fund research grants, extensions of existing research grants, cooperative agreements, scholarships, and fellowships. Unfortunately, the bill does not include research relief funding for other federal science agencies.

Specific to higher education, the bill increases the state stabilization fund for education from $90 billion to $208 billion, with most of the increased funding going to K-12 education. The bill allocates 13 percent of funds, or approximately $27 billion, for the Higher Education Emergency Relief Fund (HEERF). HEERF dollars would continue to be given to governors to be disbursed, as opposed to flowing through the U.S. Department of Education (ED). HEROES 2.0 also continues to distribute funds based on the relative proportion of Pell students enrolled at the institution (75 percent) and the relative proportion of total students enrolled (25 percent). The bill also maintains the use of total student enrollment numbers instead of a Full Time Equivalent measure. Finally, the bill includes an additional $11.9 billion to higher education to help alleviate burdens associated with the coronavirus for both colleges and students

In other policy provisions, the bill continues to allow public universities to claim the paid leave tax credits created in the Families First Coronavirus Response Act (FFCRA). Further, the bill would allow institutions to access the employee retention credit. The revised text of the HEROES Act includes funding of $300 million for the Animal Disease Prevention and Management Response program, which supports improved animal health and surveillance and laboratories including the National Animal Disease Preparedness and Response program and the National Animal Health Laboratory Network.

Finally, $120 Billion in relief for independent restaurants is included in the bill to help small and non-franchise restaurants around the country. This is something that will impact our communities and the non-franchise restaurants, food trucks, caterers serving our students, faculty and communities and we have been working with many of you on this provision to support our communities.

What’s next?

The House Leadership came down from a $3.2 trillion bill to a $2.2 trillion bill in the hopes of getting the White House to the table.  Secretary of the Treasury Mnuchin and Speaker Pelosi have been negotiating in good faith, but as of this morning they are still far apart on several policy issues, including a child tax credit, where Mnuchin has refused to approve even one dollar in new spending while Democrats have sought tens of billions for the initiative. Pelosi and Mnuchin have also been at odds over additional aid for state and local governments — a Democratic push — and Republican demands for liability protections for businesses and schools.

If they do not reach an agreement, in the next few hours, the House will likely go ahead and vote on HEROES 2 as drafted and with partisan support. It will then go to the Senate where McConnell has not been eager to move on a $2.2 trillion bill as that leads to the Senate Republicans negotiating with their own party in the White House or they roll the dice and wait for the election. It’s not looking good for an agreement, yet I can’t definitively say it won’t happen – weirder things have happened this time of year in years past. The House is then scheduled to adjourn until after the election putting this on hold until they return or possibly sliding into next year.

In good news, the President signed the Continuing Resolution funding the federal government through December 11, 2020 so the federal government won’t shut down.

Federal Relations Update: FY 2021 Funding; Continuing Resolution and status of COVID talks

Septmeber 22, 2020

As you know, we are reaching the end of the federal fiscal year in DC and in what seems to be a familiar story, we are heading toward a stopgap funding bill or a continuing resolution (“CR”) to fund the government.  The plan up until yesterday morning was that this funding package would be considered in the House on Tuesday September 22 to provide time to meet the September 30th deadline.  After much deliberation and drama, the bill passed last night–with the support of our entire Congressional delegation– to fund the federal government through December 11 and extend the current transportation authorization programs that expire at the end of September 30.

As expected, politics got in the way and a roadblock arose on the recently reached deal Tuesday morning.  The “agreed” upon deal included tens of billions of dollars in farmer payments that Republicans sought in exchange for $2 billion in pandemic-related nutritional assistance that Democrats wanted.  That agreement fell apart when some House Democrats expressed concern that the funding for farmers was politically motivated and urged leadership to remove those provisions and negotiators returned to the table in the House.  Some lawmakers and aides privately worry that Washington is coming perilously close to the September 30 deadline with no agreement to keep the government open.  However the House last night overwhelmingly voted to extend federal funding through December 11, while punting the threat of a government shutdown until after the presidential election.  Some contentious issues around border wall funding and renaming Confederate monuments at federal military institutions remain.

Bottom line is Congress will pass a temporary stopgap spending bill before September 30th.  It is now in the hands of the Senate and will require the President’s signature, but it will happen, and some are reporting it will be done in Congress by the end of the week.

This is all occurring while they are discussing the next potential COVID bill.  Stark differences remain over pandemic relief, coupled with an agreement to keep the CR “clean” of extraneous provisions. This means that another COVID-19 bill may have to wait for a lame duck session (after the election) — or as some are now predicting if the Administration changes, next year.  This will also impact extending the current CR, because it is likely Congress will wait until the lame duck session to move forward with a longer-term funding strategy, and what they do will be anyone’s guess dependent on what happens on (and around) election day.  If recent history is any guide, however, in presidential election years, final appropriations bills tend to get held over until the following calendar year: that’s what happened in 2008, 2012 and 2016.

So, the question is, what does this mean for WSU?   In regard to the CR, not much at this time since funding in any continuing resolution for any duration of time will remain at FY 2020 levels and any research funded under FY 2020 funding will not be impacted.  In addition, this should not change any language in the FY 2020 bills or impact programs like the USDA SCRI language waiting the 1:1 match requirement.

For WSU, the uncertainty is the big issue, especially around the next COVID package.  THERE WILL BE ANOTHER COVID PACKAGE.  The question is  will there be any reason for the House and Senate to reach agreement before the election or do they wait until after the election with  possible uncertainty around who wins the presidency,  what the Senate will do with a potential vote on the Supreme Court appointment and with the CR expiring on 12/11!

Speaker Pelosi recently indicated that the House Democrats would not agree to going any lower in funding than the $2.2 billion that they offered to the Senate last week. Pelosi told reporters that the need for relief — from restaurants to airlines —has “only grown” since the House passed a bill in May and she may be rolling the dice hoping the Senate flips to Democratic control and she can push for higher numbers in the next Congress.

For higher education (and more importantly WSU) that means $26.7 billion in the House passed bill (with formula changes that impact how much funding four-year publics receive) vs. $29 billion in the Senate passed “skinny bill” without formula changes – either way – are held up in negotiations.

 

WSU submits operating, capital budget proposals

Washington State University this month submitted operating and capital budget proposals to the state’s Office of Financial Management that reflect the onset of a recession.

The submission is highlighted by an operating budget decision package modeling the impact of a 15 percent reduction in overall appropriation required of all agencies.

With the onset of the COVID-19 pandemic, the state is wrestling with the associated economic fallout. Last week, the state’s Economic and Revenue Forecast Council produced a new report that set the state’s projected budget shortfall through June 2023 at nearly $4.5 billion. That estimate will be revised again in November and again next year before the Legislature writes a new two-year budget in the spring.

A 15 percent reduction would equate to roughly $37 million annually. To provide a sense of scale, that is equivalent to each of the following scenarios.

  • The colleges of nursing and medicine combined
  • The colleges of business, communication and education combined
  • The college of pharmacy, the graduate school and the entire student services budget at the Pullman campus

The decision package further notes that the university’s appropriation only last year reached levels last seen in 2008 and that many reductions from the Great Recession have not been reversed. It reports that this comes at a time when the university is witnessing fiscal trauma to auxiliary enterprises and makes the case for higher education’s importance to economic recovery by recession-proofing careers.

“As much as anything, economic recessions make the case for higher education’s value proposition,” the decision package reads.

The operating budget request includes two additional decision packages seeking new funding. One is a $3.6 million request for the 21-23 biennium to fund the third and fourth years of the 20-seat medical school expansion authorized in 2019 and a $931,000 request to fund maintenance and operation of the new academic building at WSU Tri-Cities.

The capital budget request reflects the recessionary times, too, with a package of requests that would support construction jobs to bolster the economy. The requests signal a shift in favor of efforts to better care for existing university facilities and reduce deferred maintenance backlogs. The request is as follows.

  • Minor Capital Preservation — $35 million
  • Minor Capital Program — $10 million
  • Johnson Hall Demolition — $8 million
  • Campus Fire Protection and Domestic Water Reservoir — $8 million
  • WSU Vancouver Life Sciences Building Construction — $52.6 million
  • WSU Spokane Phase One Building Renovation — $15 million
  • WSU Pullman Sciences Building predesign — $500,000
  • WSU Pullman STEM Teaching and Replacement Building predesign — $500,000
  • WSU Pullman STEM Teaching Labs — $4.9 million
  • Clark Hall Research Lab Renovation — $4.9 million

State revenue forecast improves

The state’s operating budget deficit was cut in half Wednesday when a new report improved the outlook for the rest of the current fiscal year and the two-year budget cycle set to begin July 1.

The Economic and Revenue Forecast Council improved the bottom line in the current biennium by $2.2 billion and by $2.4 billion in the 21-23 biennium. You can read its full report here and you can find the press release from the state budget office here.

While undoubtedly good news, there remains much downside risk in the economy and anticipated revenues could slide once more in future forecasts. Some unanticipated economic activity occurred as the result of federal stimulus efforts that are unlikely to be repeated. Further, any shift in aerospace production would have significant ripple effects throughout the state.

The Council will produce another forecast in November. The governor will use assumptions made in that forecast to write his 2021-23 operating budget proposal. The Legislature will draft its proposal based on the subsequent forecast that is likely to be issued in February.

WSU researchers present on cannabis study efforts

WSU faculty specializing in cannabis research this week told a legislative panel their wide-ranging portfolio is dependent upon collaboration with outside stakeholders.

In a virtual work session before the state House of Representative’s Commerce & Gaming Committee, researchers Michael McDonnell, Ryan McLaughlin, Dr. Celestina Barbosa-Leiker provided legislators just a sample of the university’s cannabis research that is funded by proceeds from 2012’s Initiative 502, which decriminalized cannabis in Washington.

McDonnell, Associate Professor at the WSU Elson S. Floyd College of Medicine and Chair of the Collaborative for Cannabis Policy, Research & Outreach shared that the research collaborative has conducted 73 projects, leveraging state funding to secure external funding to support  $4.1 million in research activity.

“We believe as a land grant institution that we are better together” shared McDonnell, referencing collaborations and close partnerships with the Liquor and Cannabis Board, Washington State Department of Agriculture, Washington Health Care Authority, the University of Washington Cannabis Research Center, the Tribal-Qwibil Consultation Research Center and the national Council on Government Research’s Cannabis Research group.

McLaughlin, Assistant Professor at the WSU College of Veterinarian Medicine, works in the Integrative Physiology and Neuroscience program at WSU. He presented his research in modeling cannabis use in rodents and how he has used that to subsequently model use of cannabis in human populations such as adolescents or pregnant women.

Barbosa-Leiker, Vice Chancellor for Research at WSU Spokane Health Sciences and Associate Professor in the College of Nursing, shared her research on cannabis use by pregnant and parenting women. One of the articles she has authored and presented studied the women’s perceptions of risks and benefits of cannabis use during pregnancy and postpartum, where she found that the overarching theme of pregnant and parenting women was taking care of the mother and the baby.

You can view the full presentation below (starts at 1:28:30):

State revenue projections fall by $8.8 billion

The state’s Economic and Revenue Forecast Council today produced its first official projection of state revenues since the onset of the COVID recession. An earlier unofficial projection of a decline in tax collections of $7 billion through June 30, 2023 has been revised to $8.8 billion in the quarterly revenue review. Of that, $4.5 billion is projected to be seen in the current biennium and $4.3 billion is projected for the two-year budget cycle that begins on July 1, 2021.

You can find the press release from the state budget office here.

During Washington state economist Steve Lerch’s presentation on the revenue review to the council, he presented a number of economic indicators – consumer confidence, small business optimism, and employment, noting they declined by historic proportions in March and April and then showed slight recovery in May. He also highlighted job openings in Seattle and statewide which lag behind national trends. While future growth is forecasted, it will take considerable time to return to previous levels for these economic indicators.

It should also be noted that the Workforce Education Investment Account, which funds the Washington College Grant and WSU’s College of Medicine in addition to a number of higher education programming, is forecasted to reduce for both the current biennium and 21-23 biennium.

The governor and legislative leaders are contemplating a special session of the Legislature to take actions to begin to close the budget shortfall. The revenue forecast provides fundamental details to inform that decision.

Governor signs operating, capital budgets

Gov. Jay Inslee today signed a supplemental capital budget that advanced a key project for WSU Vancouver but approved a series of vetoes in the operating budget that signaled the demise of a requested soil health research initiative.

The WSU Vancouver Life Sciences Building will be funded for design under the capital budget approved by the Legislature and signed by the governor. WSU had requested $4 million to design the project. If funded for construction, the facility will provide sorely needed capacity to support students seeking STEM degrees and space for research.

The governor vetoed $235 million in new spending in the operating budget in an attempt to reduce state obligations as the COVID-19 crisis significantly curbs economic activity and state tax collections. Some 147 different items were vetoed, including WSU’s request to fund the Soil Health Initiative, a collaboration with the state Department of Agriculture and Conservation Commission to develop and disseminate new strategies to improve soil health.

It is expected the Legislature will be convened for a special session to help address the financial crisis. The next forecast of state revenues is June 17.