Thank you to the students and advocates from all seven public universities who came to the Capitol on Thursday, February 11 to thank legislators for increased funding in 2015 and to urge for continued investments in Higher Education.
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A Brief Overview of the Short Session…so far
Legislators have now completed two weeks of the 2016 short session. Under Oregon’s constitution they are expected to adjourn in early March. Since Oregon’s birth on Valentine’s Day 157 years ago, the Beaver State managed with a legislature that met every other year. As Oregon entered the 21st century, legislators found themselves meeting frequently in special sessions aimed at balancing the state’s budget as state revenues whipsawed with economic booms and busts.
The legislature hasn’t been able to do anything about Oregon’s heavy reliance on state income taxes – which contributes to the instability, but in 2010, it did refer a constitutional measure to the voters that provided for annual sessions to enable mid-course corrections over the two-year budget cycle. After voters overwhelmingly approved the measure, the legislature now meets for 160 days in odd-numbered years to establish a biennial budget and consider policy matters. And, in even years, it has 35 days to make whatever adjustments might be needed to balance the budget. We are in the midst of the state’s third short session.
Lawmakers have yet to establish sideboards on what measures are appropriate for consideration during short sessions. For this session, leadership sought to reduce the load by allowing each legislator to introduce only two bills. (Sen. Arnie Roblan [D-Coos Bay] recently suggested that legislators be limited to half a bill for the short session, thus not only limiting the number of bills but also requiring legislators to join together in drafting them.) When the legislators convened two weeks ago they faced a wide range of well over 200 bills and a highly charged, divisive atmosphere. Few would disagree with New York lawyer, newspaper editor, and politician Gideon J. Tucker who said in 1866, “No man’s life, liberty, or property are safe while the legislature is in session.” Part of the divisiveness is because when the legislature is in session, there isn’t a successful advocate who will bypass the opportunity to engage lawmakers in a cause.
Another reason for the current divisiveness is the state’s initiative and referendum process, which gained national attention in the early 1900’s and has been modeled by many other states. This year, activists are circulating petitions for the November election that would create a state gross receipts tax and increase the minimum wage. Legislators have about three weeks to pass more thoughtful legislative alternatives designed to divert these initiatives.
The Minimum Wage (SB 1532)
A substitute for the new corporate tax has eluded legislative consideration so far this session, but Governor Brown and Democratic leaders have sought to devise a phased-in minimum wage proposal that would pre-empt the November ballot initiatives seeking to increase the state’s minimum wage from the current $9.25/hour rate.
After hours of debate and procedural wrangling on Thursday, by a vote of 16-12, the Senate approved SB 1532A, which would phase-in minimum wage increases across three different regions based on their level of economic activity – the Portland metro area, a middle tier which includes Benton County and OSU, and rural/economically stressed counties. Sen. Betsy Johnson (D-Scappoose) was the lone Democrat joining the chamber’s 11 Republicans in voting against the bill. (Two Senators – Sen. Floyd Prozanski [D-Lane/Douglas Counties] and Sen. Jackie Winters [R-Salem] were unable to vote due to family and health issues.)
On Friday, as the bill headed to the House for consideration, Speaker Tina Kotek (D-North Portland) announced a change in the make-up of the committee that is likely to consider the bill, replacing Democrat Brent Barton (D-Clackamas County) with Rep. Peter Buckley (D-Ashland). Buckley also co-chairs the Joint Ways & Means Committee which oversees the state’s spending. For coverage of the issue see The Oregonian.
Impact of the Minimum Wage Increase on Public Universities. The minimum wage hike will vary in how it affects universities, based on their locality, the number of workers at minimum wage, and the source of funds – tuition, student fees, or other funds such as housing and dining with employ a large number of minimum wage workers. Both EOU and OIT may be largely unaffected because they are headquartered in non-urban or “economically distressed” counties. (The bill does not directly address what to do about universities with employees across the multiple wage rate zones.)
In response to a legislative request, OSU calculated the potential impact under the assumption that university minimum wage employees would earn the “middle tier”, since the vast majority of minimum wage earners are in Corvallis. The fiscal impacts created by raising the minimum wage increase over time, not only because the wage rate increases over the next six years, but also because as the wage increases, more employees qualify for the increase. (The universities’ analysis did not address the impacts of “compression” – the pressure for increased wages from workers at the lower range of the pay scale but who earn more than the minimum rate.)
For the first year of the bill’s implementation, OSU identified 4,523 employees who would be affected by the bill if it were enacted. Of these, 4,417 (98%) are students. The proportion of students declines slightly over the years as the minimum wage is phased in, but the overall number of students seeing a wage increase would grow to 7,214 by the year 2023. A total of 7,745 employees would be expected to be paid the minimum wage by that year. Because many minimum wage employees are part-time, the number of “full time equivalent” (FTE) employees is significantly lower – approximately 620 FTE in 2017, growing to 1,087 in 2023. (All of these figures assume that the university would not respond to the wage increase by decreasing the number of positions earning the minimum wage.)
Funding Impacts. Implementing the bill in 2017 would involve a $1.3 million increase in costs across all seven universities for the remainder of the current biennium. Almost half – $602,000 – would apply to OSU across all of the university’s activities whether paid for by general funds, federal funds, fees, or room and board. Assuming that OSU would not decrease the number of employees as a result of the increase in minimum wage, the OSU figure would grow significantly each year over the next three biennia: $771,000 per year in 2017-19 biennium, to well over $1.5 million per year in future biennia.
Where the money needed to fund the increases will come from has yet to be determined. The preliminary analyses indicate that a quarter of the 2017 costs will accrue to state education and general (E&G) activities paid for either by tuition or general fund appropriations. A third of the costs will accrue to university housing and dining; and a quarter will accrue to activities supported by student fees. The latter two involve funding streams that are entirely paid for by students.
Since the bill may undergo a number of changes over the remainder of the session, it is far too early to project exactly how the minimum wage increase may affect OSU and OSU students. It is likely, however, that while OSU student workers will be the primary beneficiaries of a minimum wage increase under SB 1532, they may also bear the burden of the increased tuition, fees, and housing and dining costs needed to pay these wages. It is also possible that those who receive work-study funding may see their wages increase, but their hours reduced. State appropriations may help address the impacts to activities supported by “E&G”, but housing and dining and student fee supported activities cannot be supported by state appropriations.
Legislators are also facing pressures to resolve issues left unfinished during the 2015 session as well as emerging opportunities or concerns that hadn’t surfaced a year ago. Legislative rules require that all but the budget writing, revenue, and rules committees had to complete their work on “chamber of origin” bills by last Thursday. So, as of last week, House bills not reported out by House committees and Senate bills not reported out by Senate committees are for most practical purposes “dead.” Because provisions in “dead” bills can always be stuffed into a bill that is still alive, no bill is truly dead until the last gavel falls. So far, all of the university priorities remain alive and active.
University Venture Development Tax Credit: HB 4072 would extend the UVDF tax credit for six years enabling donors to receive tax benefits for contributions to a fund that supports the transition of university inventions from the laboratory to the marketplace. After two hearings, the bill is still alive and under active consideration by the House Revenue Committee, which is not constrained by the legislative calendar for approving bills. We anticipate action on this bill sometime in the coming week.
Increased Funding for Universities: Universities entered the session seeking at least a portion of the additional $55 million needed to bring them to the $755 million target sought during the 2015 legislative session. Given concerns over costs in future biennia, we continue to work for incremental increases to be included in the end-of-session omnibus budget bill. Additional funding would be targeted at reducing student debt and increasing persistence and graduation rates.
University Investments in Equities: HJR 203 is a constitutional amendment referred by the legislature for consideration on the November 2016 ballot. It would enable universities to invest funds in common stocks. A similar provision was included in the bill that established university governing boards during the 2013 session, but subsequent legal opinions indicate that a constitutional amendment will be needed. Last Thursday, the bill passed the House by a vote of 55-1 and it has now been referred to the Senate Rules Committee for consideration.
Marine Energy: Members of the bi-partisan Coastal Caucus have sent a letter to the Ways & Means Co-Chairs in support of $1.5 million for the research and development of marine energy on the Oregon coast. $1.25 million of this funding would enable OSU to compete for a $5 million federal grant. Over the next two biennia this grant could grow to $40 million. Action on this matter is expected to occur when the Joint Ways & Means Committee considers the end-of-session omnibus budget bill.
Lodging Tax: HB 4146 would double the statewide “transient lodging tax” from one to two percent. In the initial years the increase would support activities associated with 2021 international track and field championships to be held in Eugene. Because of OSU’s close proximity, our track & field facilities are likely to be involved as a potential venue, and may ultimately qualify for investments that will likely be under consideration during the 2017 legislative session. The bill is currently under consideration by the House Revenue Committee and is likely to move this week.
Other Bills of Note, etc.
SB 1540: Calls on the HECC and universities to determine the best method of increasing number of mathematics majors at Oregon universities. This bill was approved by the Senate Education Committee and is currently awaiting a vote on the floor of the Senate.
SB 1558: Limits disclosure of records of college or university student health center, mental health center or counseling center, or records of health professional retained by college or university. The seven public universities worked with the bill’s sponsor to clarify the requirements of this bill through an amendment. The bill passed the Senate Education Committee and is currently awaiting a vote on the Senate floor.
SB 1586: Requires universities to undertake a number of activities to encourage students to register to vote. The seven public universities submitted a statement in favor of the bill, with amendments. The bill is scheduled for a vote in the Rules Committee this week. (The Rules Committee is not subject to the legislative calendar for bills.)
HB 4019: Requires universities to provide instate tuition to dependents of Oregon residents who leave the state to serve in public service organizations. This bill passed the House Higher Education Committee and is awaiting floor consideration, pending a determination of its fiscal impact.
HB 4021: Directs the State Treasurer to study possible refinancing mechanisms for student loans. The seven public universities submitted a statement in favor of this bill, which was passed by the House Higher Education Committee and passed the floor on a 54-6 votes. It is awaiting consideration in the Senate Education Committee.
OSU-Cascades Informational Hearing: On Friday, the House Higher Education Committee devoted an entire hearing to the OSU-Cascades Campus, with a comprehensive report from local legislators, CEO Becky Johnson, two students, and local supporters. To view the hearing: http://oregon.granicus.com/MediaPlayer.php?clip_id=10668
Industrial Hemp: In the coming week we anticipate the House Agricultural and Natural Resources Committee will hear from Jay Noller, Head of OSU’s Crop and Soil Sciences Department, regarding a possible research program for industrial hemp.
If you have questions about this report or any state legislative issues, contact firstname.lastname@example.org.