Olympia
Update No. 5 • March 7, 2008
Performance Contracts
From: Larry Ganders,
Assistant to the President
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Legislature moves
into final week
Lawmakers are currently embroiled in traditional haggling between the Senate and
the House to resolve their respective differences on items including WSU
supplemental budgets. But new ways and structures for legislators to craft
higher education capital and operating budgets in future years appears to be a
likely outcome of the 2008 Legislature. Legislators are now beginning to work
into the final week of the scheduled 60-day session.
“Performance Agreements”
The long-sought effort to create
“performance contracts” or “compacts” or “agreements” between the state and
public higher education institutions has passed each house of the Legislature
for the first time.
Engrossed House Bill 2641 will pilot-test a concept in which six-year agreements
are developed between policymakers like the Legislature and governor and
individual institutions of higher education.
WSU supports
performance contracts because of the clarity it could bring to the outcomes
sought by the Governor and the Legislature. Early drafts of the 2008 bill
limited contracts to the University of Washington and Western Washington
University. But WSU requested to be included in the House Bill and eventually
the bill was amended to allow all six of the state’s higher education
institutions to enter into performance agreements.
The proposal was spearheaded in the
Legislature for years by Rep. Skip Priest, R-Federal Way, and Rep. Fred Jarrett
of Mercer Island.
Both were Republicans in a Legislature in which both houses and the
governor’s office are controlled by Democrats. While eventually drawing the
interest of the governor, they failed repeatedly to get the bill out of
committee or some years they failed even to get a hearing. Not true this year,
as Jarrett, a Boeing manager and WSU alum, left his Republican Party to become a
majority Democrat and he is considered a likely Democratic candidate for the
state Senate later this year. Working from the majority party, Rep. Jarrett
shepherded the 2008 bill through the process, passing the House of
Representatives 95-1 on Feb. 13 and the state Senate 48-0 Thursday (after a
brief detour to the Senate Ways and Means Committee for further scrutiny). The
bill has now passed the houses in different forms but Rep. Jarrett is expected
to urge his fellow House members to concur with the relatively minor Senate
amendments and send the bill to the governor.
Under the program, higher education
institutions could seek agreement from the state for innovative six-year plans
that would result in specific research, educational or public service outcomes.
The
agreements could break the traditional state pattern of providing most money for
higher education based exclusively on a set funding level for each additional
undergraduate full-time student for a single academic year.
In agreeing
to desired outcomes from WSU, the state may commit to waivers from state rules
and try to deliver certain state funding levels.
If successful, it could create whole new patterns for state funding and
a new system for accountability.
The
agreements would contain written accountability measures that could actually be
negotiated between legislators and institutions and could be referenced over the
six-year period. As legislative committee chairs change, there would still be a
written agreement of the original direction that the state and the institution
chose.
Rather than
directed to increase a number of enrolled students for a given year, an
institution could agree to a minimum number of graduates in a program in the
future. For instance, an institution could agree to provide a certain number of
engineering graduates at the end of a six-year period provided there is a
corresponding increase in funding in each of the six years. Sufficient funding
levels could be agreed to expand programs, build the necessary facilities, and
provide the supports interested students need to succeed. The contracts are
useful for a research institution in that it might allow for seemingly unrelated
issues to be connected. For instance, it is unlikely the Legislature would
ordinarily create a new research program or tutoring program to get more
engineering graduates. Yet, it is quite true that a newly-created state research
program could generate federal grants and contracts, attract a specialized group
of faculty and graduate students, and therefore create new graduates in a
high-demand engineering field. A special
tutoring program that helps students through difficult freshmen math and science
courses may result in many more students pursuing study in engineering. The
proposed performance contract allowed under Engrossed House Bill 2641 could make
those kinds of links that state budgets rarely attempt.
It could give both the state and the
institutions a clear understanding of their role in accomplishing specific
higher education goals.
With
difficult financial times apparently ahead, institutions and the state may seek
clauses to their agreements that allow for reduced outcomes if funding is
reduced. There could be escalator clauses that provide better results with
enhanced funding.
Under the
terms of the bill, negotiators for state government would include
representatives from the governor’s budget office, the Higher Education
Coordinating Board, the Office of the Superintendent of Public Instruction, two
members of the Senate, and two members of the House of Representatives.
Pilot institutions appoint members to their respective performance agreement
negotiating
teams with faculty representatives.
The state committee and institutions collaboratively develop revised drafts and
submit them by September 1, 2008. The state committee and institutions develop
final agreements that are submitted to the Governor by November 1, 2008, for
consideration in the 2009-11 budget. If the Legislature affirms a budget proviso
in alignment with the agreements, the agreements are in effect from July 1,
2009, through June 30, 2015.
Capital Budgets – “The End of The List”
For the past two biennial budget cycles, beginning in 2005-07, state law has
required the six
public institutions to work together to prepare a unified budget proposal that
ranks all of the
six institutions' individual project proposals into a single prioritized list.
That would change under Engrossed
Substitute House Bill 3329, which has passed the House 94-0 and is currently in
the Senate Rules Committee. The bill would require each institution to submit
four or more lists of construction projects to be scored by the governor’s
budget office: The project categories are: (1) enrollment growth; (2)
replacement and renovation; (3) major campus infrastructure; (4) research
projects that promote economic growth and innovation; and (5) other categories
as determined by the OFM and the legislative fiscal committees.
Actually, under the terms of the House bill, WSU and UW will submit a separate
set of four or more lists for the branch campuses. WSU has been supportive of
the original House Bill but UW has opposed that effort. The outcome of whether
it will be four lists or eight lists will be up to negotiations between the
House and the Senate. Under one scheme, just one of the research institution
would be selected for the separate list.
Still Ahead
There are plenty of issues ahead for resolution in the final days of the
Legislative session. Most bills must pass both houses in some form to be live
for the balance of the session. But there is still no final budget outcome on
funding for WSU’s core computer study or design funds for the Veterinary Medical
Research Building. The House Appropriations Committee will hold a hearing
tonight on how to handle the limitations of Initiative 960. WSU needs
legislation passed to do the anticipated fees increases such as for
student Service & Activities Fees and course fees.
WSU’s impact will be about $1.5 million. Other institutions will need authority
just to set tuition rates for the coming year. UW’s impact, for example, is
about $45 million. Watch for House Bill 3381 to be the
vehicle for any action in the House.
Stay tuned.
Olympia
Update is produced for persons interested in state government developments
affecting Washington State University. For more information, go to
www.olympia.wsu.edu.
Contacts: Larry Ganders, Assistant to the President, 360-956-2165. From WSU
campuses, dial 8-2165.
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