State Legislative Update - March 1, 2009

STATE BUDGET & STIMULUS UPDATE

The following provides an overview of the budget negotiations through Friday, February 27th and the state’s implementation of the Stimulus Package.  On the state budget, this is not meant as a complete briefing with all possible nuances, but rather a look at the major issues with general statements as to where both the Senate and Assembly stand on these items.

Continued advocacy with the State Legislature is vitally important early this week with regard to the tuition shares, restoration of funding, the sweeping of IFR accounts and the use of the discretionary funds within the Stimulus Plan. 

STATE BUDGET

Both the Senate and Assembly are developing their one-house budget proposals which will set the stage for conference committee negotiations and ultimately the final negotiations between the two houses and the governor.  The one-house bills will be fully developed the week of March 2nd with passage anticipated the week of March 9th.  The state budget deadline is April 1st.

The following are the University’s priorities with a description of each Majority’s general position at this point in time:

·         permit the state-operated campuses to retain 100% of the proposed $310 Fall 2009 tuition increase resulting in revenue of $76.1 million, versus a state sweep of 80% ($53.5 million): Although they approved the Governor’s 90-10 percent share proposal in the 2008-09 DRP (Deficit Reduction Plan), both houses agree that student tuition should stay with SUNY as much as possible.  The Governor has proposed an 80-20 percent sharing and both houses of the Legislature appear to be moving towards a possible 50-50 percentage split.  The 100% share remains the high priority for SUNY.

·         prohibit the reallocation of $40 million in campus generate revenues which include items such as student fees, user fees and dormitory rentals: While both houses understand that these dollars are not readily available for general operating use, neither house appears totally committed to restoring these funds. 

·         restore the $25.4 million reduction assigned to the academic medical centers and further increase their appropriation by $38.3 million, thus meeting the state’s obligation for state negotiated contractual agreements: Both houses agree that a restoration for the academic medical centers is a priority.  The Assembly is also concerned about the changes to the Medicaid formula and Graduate Medical Education funding.  The Senate has not shown the same level of commitment to this issue.  Both houses have discussed the possible use of Stimulus FMAP dollars for these purposes.

·         reject the 10% tithe ($7.9 million) on federally sponsored research contracts by SUNY researchers: While the Assembly acknowledges the disadvantage the tithe would place on competitive research, the Senate seems unsympathetic.  The Senate has been very critical of the SUNY Research Foundation and the fear is they may use this issue to show their displeasure. 

·         restore the $34.7 million reduction to community college base aid, enabling base aid to remain at the 2008-09 levels: The Senate and Assembly are extremely sympathetic to the community colleges and although a reduction is expected, both houses will most likely reduce the size of the reduction proposed by the Governor and a full restoration is still not out of the question.

·         restore the $25.8 million reduction in University-wide programs which includes items such as student financial aid, research activities, public service, student governance, and child care: Depending on available revenue, conversations are ongoing with both houses on how to limit the cuts to University-wide programs. 

·         reject the proposed tuition increases of 21% for in-state graduate and first profession programs: Both houses know that SUNY increased these rates by 14% in the spring and that the additional revenue would not favorably impact campuses due to tuition waivers.

·         support the ability to differentiate out-of-state tuitions by campus and academic program: While the Senate has shown no real opinion on this issue, the Assembly does not support differential tuition in any capacity. 

·         reject the $75 million “dry appropriation” to create an account to help offset layoffs, which if implemented would be funded from student fees, user fees, dormitory revenues, etc..: This is high priority of the faculty union (UUP) and will most likely be included in both one houses budget bills.

·         favorable consideration to the Article VII management and operational flexibility initiatives recommended by the Governor: The Assembly has a far greater understanding of these issues than the Senate.  The Assembly is not supportive of taking full authority for pre-audit away from the Comptroller (a former State Assemblyman who was appointed to his position by the Legislature after the former Comptroller resigned).  However, SUNY has recently entered into discussions with the Comptroller on expanding our thresholds under current law, which seem to be somewhat positive.  They support the indemnification of students in clinical programs.  They support the access for campus affiliated corporations to the Office of General Services (OGS) state contract lists.  On the land use and construction flexibility, both houses will wait for the final report of the State Asset Maximization (SAM) Commission due later in March and take up these issues outside the budget process.

STIMULUS

Overview

NOTE: Earlier this past week, the following information was shared with both the Senate and Assembly leadership and the chairs of the Higher Education Committees in an effort to gain additional funding through the Stimulus Plan. 

The American Recovery and Reinvestment Act of 2009 (ARRA) includes a total of $53.6 billion for State Fiscal Stabilization Funds. Of that amount, approximately $39.5 billion is to be sent to the states explicitly for elementary, secondary, and public higher education. Of the $39.5 billion for education, the NYS share is $2.5 billion.  The State must divide the funds over two years to fill education cuts in K-12 and higher education (SUNY and CUNY).  Another $8.8 billion in the Stabilization Fund would be allocated for "other government services" and the NYS share would be $556 million.   NYS will also receive approximately $11 billion for FMAP-Medicaid funding from the $87 billion appropriated nationally.

Unfortunately, we have learned from the Division of the Budget (DOB) that of the $2.5 billion in Education Stimulus dollars, higher education will only be eligible for approximately $40 million.  The remainder will go to K-12 education.

This is caused by two items combined:

(1)   the large amount of the K-12 decrease (which actually includes a statutorily mandated increase), combined with

(2)   the fact that while SUNY's reductions in core instructional support (funds negotiated each year for operational support – approximately $1.4 billion annually) could total some $450.7 million over the two fiscal years, the inclusion of negotiated collective bargaining and fringe benefit costs (~$170 million each year for FY2008-09 and FY2009-10) in the SUNY budget negates more than half of the year to year reductions thus driving down our overall reduction.  Unfortunately, even though the collective bargaining salaries and fringe costs are a state obligation, they are counted in the SUNY budget and there is no way to separate them from the rest of the SUNY budget as it is reported to the federal government.

In order for SUNY to make up for these massive reductions, SUNY is proposing to receive funding from the state's discretionary pots of Stimulus money.  This money is generally unrestricted in use and not subject to a formula distribution as the education funds.  Those funds are the State Fiscal Stabilization Funds for "other government services" ($556 million) and the "FMAP - Medicaid" funds (approximately $11 billion).

The governor’s staff has stated that given the “education” funding situation, the governor will be working with the Legislative Leaders to try to access discretionary funding for higher education.  At SUNY Day (February 24th) Senate Majority Leader Smith specifically mentioned the $40 million problem and said they would do something to fix it.  The Assembly is aware as well and is also trying to help.  All that said these discretionary funds are the target of everyone in the state who needs or wants funding. 

Governor’s Economic Recovery Cabinet

Governor Paterson's Economic Recovery Cabinet had its organizational meeting February 18th and began with the formation of workgroups to help the state implement and disseminate the Stimulus programs.  

At least ten workgroups have been established to date, although only a few have held meetings.  The workgroups are generally for the state agencies who will be managing the Stimulus projects and funds with localities and other eligible parties.  SUNY’s participation in the workgroups is more guided from our need to better understand how the state will be managing the program funds for which SUNY campuses are eligible.  The State Fiscal Stabilization Funds will not be part of a workgroup effort, but rather funds within the control of the Division of the Budget.

To date, SUNY is participating in the following workgroups with staff assigned to each:

·         Legal/Procurement – a workgroup to examine necessary legal statutes and procurement laws relative to implementation of the Stimulus and to suggest necessary changes in statute in order to comply with the Stimulus programs.

·         Local Projects – a workgroup of state agencies who are collecting and managing project requests.  The actual review process for submitted projects has not been decided upon.

·         Higher Education – a centralized information sharing workgroup for the $16 billion in federal competitive award programs through NIH, NSF, DOE, etc...

·         Health and Human Services – a workgroup that will help move public health funding.  SUNY hospitals operate numerous public health clinics and should be eligible for funding.

·         Energy – a workgroup to look at greening and sustainable energy grants.  There should be many opportunities for SUNY campuses in this area.

·         Civil Service/Workforce Issues – to workgroup to help disseminate the workforce training and retraining funds.  This has a focus on community colleges.

·         Reporting – a workgroup to ensure proper reporting and compliance with the Stimulus.

SUNY has and will continue to share information on a regular basis with the campus presidents and vice presidents of research to make sure all SUNY campuses are aware of all opportunities available to them in the Stimulus.