Federal funds could forestall deep cuts

The federal stimulus bill President Barack Obama signed into law Tuesday carries welcome news for Washington's colleges and universities, which have been targeted for deep cuts over the next two years as the state struggles to address a $6 billion revenue shortfall.

Washington will get $1 billion of state "budget stabilization" funds, money it can use to backfill shortfalls in state support for higher education so funding doesn't drop below 2008 levels.

Former state budget director Dick Thompson, Gov. Chris Gregoire's point man on the federal stimulus package and what it will mean to Washington, said the final bill includes two pots of money that will allow the state to stabilize funding for higher education and other hard-hit programs.

Under the stimulus bill, the first pot of $818 million is specifically targeted "to backfill shortfalls in K-12 and higher ed that drop them below 2008 levels," Thompson said.

But because funding for K-12 basic education is guaranteed in Washington's constitution, the governor can't legally cut it. For that reason, "There is unlikely to be backfill" in K-12 education, Thompson said.

That means a good share of the money — no one knows how much yet — will be available to support higher education, he said.

A second pot of $182 million comes with broad discretion allowing the state to spend it on "education, public safety and other purposes," Thompson said.

That is welcome news, because higher education stands to take a big hit under Gov. Chris Gregoire's 2009-11 budget. In her spending plan, released in December, Gregoire proposed cutting $216 million, or 13 percent, from the budgets of four-year public universities, and $410 million, or 6 percent, from the budgets of two-year community colleges. Without an infusion of federal money, the cuts were expected to result in larger class sizes, faculty layoffs or both.

Community colleges were spared the deepest cuts because of the critical role they play in retraining laid-off workers.

Higher education is one of the few areas of the budget where deep cuts can be made because, unlike K-12 education, state spending for colleges and universities is largely discretionary.

Under the governor's budget, universities could increase tuition by 7 percent, which would allow them to raise $128 million to help offset the cuts. Community colleges could increase tuition by 5 percent, allowing them to raise $35 million.

No decisions have been made about tuition hikes. If they are approved, the stimulus bill will provide relief. According to the White House, it will increase college affordability for more than 7 million students nationwide by boosting funding for Pell Grants and increasing the maximum award level by $500.

The stimulus also creates a $2,500 American Opportunity Tax Credit that will help nearly 4 million students pay for college.

On Tuesday in Olympia, House and Senate Democrats announced a slate of bills designed to help the state's colleges and universities meet the challenges posed by the economic recession during a time of dwindling resources.

Lawmakers are proposing several measures designed to increase access to college through financial aid, to boost the economy by focusing on degree and education programs needed in today's job market, and to help more people tap into the system by streamlining courses online.

"This might be the silver lining on an otherwise somber economic situation," said Rep. Deb Wallace, D-Vancouver, who chairs the House Higher Education Committee. "Washington state colleges have a real opportunity here to prepare our students to compete in a global marketplace."

Wallace and Sen. Derek Kilmer, D-Gig Harbor, who chairs the Senate Higher Education and Workforce Development Committee, began meeting with legislators and members of the business community last summer to put together a joint higher education agenda for the 2009 session.

Even then, they knew budget cuts were likely. "We have met with the presidents of the four-year institutions and some community college presidents to discuss how we might make strategic reductions but still educate more students to higher levels," Wallace said. "Given the budget cuts, how do we do that?"

She's working with a bipartisan group of House members on the first draft of a higher education budget, due Friday, that would cut spending by up to 20 percent, or $680 million. That might not be necessary.

But even if higher education escapes deep cuts, there's an urgent need to improve access, make college more affordable and build an efficient system that is more closely attuned to today's economy, Wallace said.

For example, she's proposing a bill to strengthen partnerships with companies in such high-demand fields as computer science by inviting them to contribute a dollar in work-study grants for each two dollars contributed by the state.

"They would get work-study students, and it would expand our financial aid dollars," Wallace said. "It's common sense."

In other proposed legislation:

-- Rep. Phyllis Gutiérrez Kenney, D-Seattle, has introduced a bill that would coordinate state grant and scholarship programs under the single brand of Opportunity Grant.

-- Wallace and Kenney plan to introduce bills to give more students a jump on college through Running Start, College in the High School and similar programs.

-- Rep. Reuven Carlyle, D-Seattle, is proposing legislation to improve the use of shared technology including online eLearning, financial aid portals, library resources and Web conferencing.

-- Sen. Fred Jarrett, D-Mercer Island, has introduced a bill to improve coordination between the Legislature and the state's colleges and universities by tying the state's higher education master plan to the needs of the state's economy.