2016 State Session « OSU Government Relations Update

Lawmakers approached the February short session with a fundamental disagreement over what issues are appropriate for resolution in just 35 days. For this session, leadership sought to reduce the load by allowing each legislator to introduce only two bills. Nevertheless, legislators faced a wide range of well over 200 bills and a highly charged, divisive atmosphere. Although the deadlines for passing bills came quickly, the process by which bills were considered by the House and Senate slowed to a crawl when Republicans refused to vote for a “suspension of the rules” – resulting in the requirement that the entirety of all bills be read aloud when they were considered on the floor. (With the average reading time for bills at between three to four minutes per page, many bills took much longer to read than to debate and vote.)

One reason for the legislative divisiveness is the state’s initiative and referendum process, which this year presented legislators with two measures that were making their way to the November 2016 general election ballot. One, known as “IP 28”, would create a state gross receipts tax. The other would establish a statewide minimum wage. Legislative leaders had roughly four weeks to devise alternatives they believed would be preferable to the measures currently being circulated for signatures.

Opponents to the minimum wage increase contended that they would prefer to take the risk of losing at the ballot box, rather than accepting a more flexible alternative designed by legislators. On a generally party line vote legislators devised – and the Governor signed – a minimum wage compromise that ultimately caused petition backers to withdraw their proposal.

But given the state’s 3/5 majority requirement for passing revenue increases in the legislature, lawmakers faced little opportunity for forging a compromise tax package intended to head off IP 28. The corporate tax measure promises to be an expensive battle during the November general election.

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Here is a summary of the measures considered during the 2016 legislative session that affected Oregon’s seven public universities.

A. Unified Priorities across all Seven Universities

As with the 2015 legislative session, Oregon’s seven public universities worked together on a unified agenda. While additional funding was not forthcoming, the universities presented themselves as a unified force and generated one of the most active lobbying days during the short session.

College Completion Initiative: $15 Million to continue the education agenda. During the 2015 session, the legislature provided $700 million for Oregon’s public universities in response to a unified campaign for $755 million. The universities approached the 2016 session with hopes of additional funding targeted to address immediate and near term factors that impede student completion.

Result: The legislature did not provide any additional funding for university operating budgets.

Renewal of the University Venture Development Fund (UVDF) Tax Credit (HB 4072). First enacted in 2005, this tax credit encourages individuals to donate to Oregon’s public universities, including OHSU, to help convert university research into new companies and products. Over the last decade, universities have raised some $7 million, resulting in the formation of dozens of new companies that have created approximately 270 high wage jobs. Over the last five years, jobs created by UVDF support have generated a total of $4.35 million in income tax revenues.

The legislature did not renew the tax credit during the 2015 session and the credit expired at the end of 2015. In an effort to renew the credit so that donors could continue to participate in the program during the 2016 tax year, Reps. Andy Olson (R-Albany) and Dan Rayfield (D-Corvallis) worked with the seven public universities and OHSU to introduce legislation that renewed the program at the historic level – $8.4 million in tax credits. (The 2015 legislation sought to nearly double the credit cap to $15 million.) HB 4072 also included provisions that simplify and facilitate the timing and process by which donors can use the credits.

Result: With only one legislator voting “no” throughout the entire process, the legislature renewed the UVDF intact, enabling universities to use approximately $4 million in additional tax capacity – the full $8.4 million tax credit created in 2005.

Constitutional Ballot referral to enable universities to invest in equities (HJR 203). When the legislature passed the original bill that established university governing boards in 2013 it included a provision that enabled universities to invest their funds in equities (stocks). The intention was to provide universities with more investment options that could result in both higher yields and greater stability. Subsequent legal opinions indicated that the state constitution has to be amended to extend this opportunity to the universities, so they sought a legislative ballot referral to put the matter on the November 2016 ballot.

Result: HJR 203 passed the legislature and will be on the November 2016 General Election ballot. Passage of this measure will likely involve an effort to inform voters of the measure’s intent and impact.

An equitable approach for developing the 2017-19 Budget. Legislation that established universities as independent public entities resulted in state budget writers calculating future budgets that do not include an accurate calculation of Public Employees Retirement System (PERS) and public employee health insurance – Public Employee Benefit Board (PEBB) costs. This resulted in the determination during the 2015 legislative session that in order to provide the same level of services in the 2015-17 biennium – the “Continuing Service Level (CSL) –a 3.3% increase was all that would be needed. Because current statutes require the universities to cover these costs, an accurate calculation of PERS and PEBB costs for the current biennium would have involved at least an 8% CSL increase. The seven public universities sought budget note language during the 2016 session to direct the Governor to consider an appropriate CSL when compiling a budget for the 2017-19 biennium.

Result: In adopting SB 5701, the legislature adopted the following budget note:

The Subcommittee recognizes that the Current Service Level (CSL) is intended to estimate the cost of legislatively approved programs in the upcoming biennium. In 2009, the Joint Committee on Way and Means approved the adoption of a CSL model for the Community College Support Fund (CCSF) to reflect health benefit and retirement costs expected to exceed the Department of Administrative Services standard inflation rate.

To ensure consistency in post-secondary state support CSL calculations, the Department of Administrative Services (DAS) and the Legislative Fiscal Office (LFO) are directed to develop, in consultation with the Higher Education Coordinating Commission and the seven public universities, an estimated cost of applying the Community College Support Fund model to the Public University Support Fund, the Agricultural Experiment Station, the Extension Service, the Forest Research Laboratory, and Public University State Programs. The estimate will include data elements that the public universities will be required to submit to HECC in order to implement the model.

DAS and LFO will provide the estimated cost to implement the Community College Support Fund CSL model for Public University state support to the Emergency Board, through the Legislative Fiscal Office, by July 1, 2016

Universities will continue to seek provisions for state settlements on labor contracts to also be considered in the CSL. (Community Colleges are not subject to state labor negotiations.)

Individual University Capital Requests. A number of universities sought specific capital requests to address emergency or unanticipated needs or to shift already approved capital expenditures to other projects. (OSU had no projects on this list.)

Result: The legislature funded the five capital projects sought by OIT, PSU, and SOU.

B. OSU Specific Legislation

State Matching funds for a Federal Marine Energy Grant. In December Congress appropriated $5 million to the US Department of Energy to fund a competitive grant to further develop a wave energy test facility. This initial funding could grow over the next 3 to 5 years to a federal investment totaling of $40 million, with the expectation that successful competitors for the grant will provide at least a 25% match, or $10 million. The total project—federal and non-federal funds—is expected to be $50 million. Oregon will be competing with other states that are developing their own matching proposals for this long-term funding opportunity. The Coastal Caucus and other legislators sought an appropriation for the first installment of $1.25 million in state matching funds to enable OSU to compete for the initial $5 million in federal funding.

Result: With the passage of SB 5701, the legislature provided $800,000 to enable OSU to compete for the $5 million DOE grant. It is not clear whether or how OSU will address the additional $450,000 needed to fully meet the 25% match requirement.

Economic Development Investments for the 2021 International Track Championships (HB 4146). Last year Tracktown USA successfully bid to host the 2021 International Track Championships. The Governor worked with a coalition of supporters, including OSU to seek an increase in the statewide lodging tax to enable funding for the infrastructure needs for this event. OSU’s track facility is well positioned to serve as a training venue. It remains to be determined what funding may be available in 2017 to match philanthropic opportunities for the OSU track.

Result: After a process that considered alternative rate increases and implementation periods, the legislature approved a 0.8% increase in the statewide lodging tax.

C. Additional actions

ALS Endowment: Included in the final budget bill was a one-time $100,000 allocation that will enable the OSU Foundation to create and manage an endowment to provide scholarships for OSU students involved in research addressing amyotrophic lateral sclerosis (ALS). The funding is in honor of State Rep. Vic Gilliam (R-Silverton) who was recently diagnosed with ALS.

Endophyte Research: Endophytes are fungi found in grass stubble used as animal feed. The issue is important to the grass seed industry which, with the implementation of field burning bans, now exports grass stubble as animal feed. SB 5701 appropriated $100,000 for endophyte research to be matched by private dollars. “These funds are to be used only for endophyte research in support of Oregon’s fiber and straw export industry. A report to the Legislative Fiscal Office on how the funds were used in support of endophyte research and what was made possible by this additional influx of funds should be made by December 31, 2016.”

D. Other Higher Education Bills that Passed

SB 1540 Calls on the HECC and universities to determine the best method of increasing number of mathematics majors at Oregon universities.

SB 1586 Requires universities to undertake a number of activities to encourage students to register to vote.

HB 4019 Requires universities to provide in-state tuition to dependents of Oregon residents who leave the state to serve in public service organizations.

HB 4021 Directs the State Treasurer to study possible refinancing mechanisms for student loans.

E. Increasing the Minimum Wage (SB 1532)

Governor Brown and Democratic leaders devised 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. The Legislature eventually approved SB 1532, 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.

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 which employ a large number of minimum wage workers.

In short, 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.) Universities estimate that implementing the bill in 2017 will 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.

The source of funding 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; a quarter will accrue to activities supported by student fees. The latter two involve funding streams that are entirely paid for by students.

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.

Coverage of this issue can be found in the Oregonian.

The Governor’s statement following the legislature’s adjournment on Thursday, March 3 can be found here.

In our next update, we’ll look into the changes ahead for the Oregon legislature. With the March 8^th filing deadline, the House will see a significant turnover, particularly in the Democratic ranks with nearly a third of the caucus membership retiring or moving on to seek higher office. With only half of its membership up for election, the Senate will see fewer changes.

If you’re interested in supporting OSU in Salem, join the Beaver Caucus.

In its fourth week, legislative budget writers issued a final packet of allocations and redistributions that spread a portion of the state’s projected ending fund balance among a handful of special projects and activities.

Sine die – which in Latin means adjournment without specifying a date for further meeting – could be as early as Tuesday, though more likely on Wednesday, and possibly as late as Thursday, depending on how long it takes for legislators to churn through the bills that remain “in play.” Republicans in both chambers have slowed the process by not voting for routine motions to “suspend the rules.” Without a suspension of the rules, the entirety of all bills considered on the floor must be read aloud before legislators can conduct a floor debate and vote. For most measures considered last week, the majority of the time spent was in reading the bills, rather than in the debate and voting.

For an overall update on the session, see recent articles in the Oregonian and Statesmen Journal.

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Higher Education Initiatives

University Venture Development Fund 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. UPDATE: On Friday, by a 5-0 vote, the Senate Finance and Revenue Committee approved the bill and sent it the Senate floor with a “do pass” recommendation. The bill may be considered as soon as Monday.

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. UPDATE: The bill passed the House by a vote of 55-1 and last week was approved by the Senate Rules Committee and is now headed for a vote on the Senate floor.

Lodging Tax: HB 4146 as introduced 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. UPDATE: The House approved a revised proposal that reduced the rate. The bill is now under review by the Senate Finance and Revenue Committee which is considering a number of additional amendments. If the Senate adopts changes and passes the bill, it will need to return to the House for concurrence with the Senate amendments. Given the impending adjournment, bill supporters have little time to complete work on this bill.

Appropriations Actions

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. UPDATE: Adjustments to the biennial budget did not include any additional operating funds for Oregon’s public universities.

Marine Energy: Members of the bi-partisan Coastal Caucus sought $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. UPDATE: The Joint Ways & Means Committee approved $800,000 for this purpose included in SB 5701, the biennial budget rebalancing bill. How OSU will approach the US DoE will depend on the solicitation for proposals that is expected sometime this spring.

ALS Endowment: Included in the final budget bill is a one-time $100,000 allocation that will enable the OSU Foundation to create and manage an endowment to provide scholarships for students involved in research addressing amyotrophic lateral sclerosis (ALS). The funding is in honor of State Rep. Vic Gilliam (R-Silverton) who was recently diagnosed with ALS.

Endophyte Research: SB 5701 also appropriates $100,000 for endophyte research, to be matched by private dollars. “These funds are to be used only for endophyte research in support of Oregon’s fiber and straw export industry. A report to the Legislative Fiscal Office on how the funds were used in support of endophyte research and what was made possible by this additional influx of funds should be made by December 31, 2016.”

Continuing Service Level (CSL): The final budget also included a budget note that directs the Department of Administrative Services (DAS) and Legislative Fiscal Office (LFO) to develop, in consultation with the Higher Education Coordinating Commission and the seven public universities, an estimated cost of applying the Community College Support Fund model to the Public University Support Fund, the Agricultural Experiment Station, the Extension Service, the Forest Research Laboratory, and Public University State Programs. The estimate will include data elements that the public universities will be required to submit to HECC in order to implement the model. DAS and LFO will provide the estimated cost to implement the Community College Support Fund CSL model for Public University state support to the Emergency Board, through the Legislative Fiscal Office, by July 1, 2016.

If acted upon by the Governor and the legislature during the 2017 legislative session, Oregon’s public universities and the OSU Statewide Public Service Programs may face budgetary increases that more accurately reflect the true cost of increases associated with the Public Employees Retirement System (PERS) and other costs that were not included in the calculations that were used in the creation and adoption of the 2015-17 budget.

Industrial Hemp: Although budget writers did not approve funding for industrial hemp research to be conducted at OSU, the legislature approved HB 4060, which revises and clarifies state statutes involving the cultivation of industrial hemp.

Additional funding for Oregon Promise: The Ways & Means Committee approved an additional $1.7 million for Oregon’s “free community college” program to fund additional support services at Oregon’s 17 community colleges. The additional funding was taken from a prior, unused, appropriation for accelerated learning and will be distributed by the Higher Education Coordinating Commission. “Each community college will get one share of the funds, except Portland Community College will receive three additional shares given its size and operation of four major campuses.”

Capital bonding for Universities: The Ways & Means committee approved bonding for five capital projects sought by Portland State University, Southern Oregon University and Oregon Institute of Technology. The projects had been reviewed and approved by the Higher Education Coordinating Commission and include:

$5 million in XI-Q bonds for OIT to repair infrastructure failures in the North Utility Corridor Electrical Supply Feed and the College Union Building Storm Drainage System.
$5.1 million for Article XI-F bonds for PSU to purchase the Corbett Building in Portland, which PSU currently leases from its Foundation for use by its Business Accelerator program. (The legislature also reduced bonding for a housing project at PSU that is expected to be lower than projected when originally approved.)
$1.5 million in Article XI-F bonds for SOU to construct a new building for Jefferson Public Radio (JPR), adjacent to the university’s Center for the Arts facility in Ashland; and
$2 million in Article XI-Q bonds for SOU to expand the scope of the McNeal Pavilion project initially approved by the legislature in 2014 for deferred maintenance and seismic upgrades. The additional funding will allow the construction of a new competitive gym for intercollegiate basketball and volleyball programs.
$1.7 million in Article XI-F bonds for SOU to finance energy improvements to be included in the Science Building deferred maintenance project approved in 2011.

Establishment of a Legislative Policy and Research Committee: Budget writers approved SB 1569 which establishes a Legislative and Policy Research Committee which will oversee and direct an increased capacity in the legislature for conducting research and policy analyses. Under amendments adopted by the Senate Rules Committee, the Committee will consist of an equal number of House and Senate members and Democrats and Republicans. Given the interest in collaborating with the legislature on policy matters four universities (including OSU) wrote in support of the bill.

Other Higher Education Bills of Note

SB 1540 Calls on the HECC and universities to determine the best method of increasing number of mathematics majors at Oregon universities. UPDATE: After approval by the Senate (27-1), the House by a vote of 53-0 approved the bill and sent it to the Governor for her signature.

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. UPDATE: After the Senate passed the bill (28-0) the bill passed the House on a 53-0 vote. The bill now awaits the Governor’s signature.

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. UPDATE: The Joint Ways & Means Committee amended the bill and removed provisions that would have required the state to carry the cost of postage paid envelopes for future ballots. The bill is awaiting a vote on the Senate floor. It will then go to the House.

HB 4019 Requires universities to provide in-state tuition to dependents of Oregon residents who leave the state to serve in public service organizations. UPDATE: This bill passed the House (59-0) and was approved in the Senate on a 28-0 vote. It awaits the Governor’s signature.

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. UPDATE: This bill was passed by the House (54-6) and last week was approved by a vote of 29-0 in the Senate.

If you have questions about this report or any state legislative issues contact jock.mills@oregonstate.edu.

With three weeks completed, the Legislature is well on its way toward adjourning – possibly as early as next week. Both chambers are on “one hour notice” which means that the normal 24-hour notice requirement for committee work sessions has been shortened to just one hour.

On Thursday, amid a raucous protest from those who thought it should be higher, the House approved a milestone minimum wage increase that now goes to the Governor for her signature. Other major pieces of legislation aimed at housing affordability and carbon reduction are moving through the process.

A number of the items on the higher education agenda, including projects specific to Oregon State University, are also progressing. Here is a brief summary:

University Venture Development Fund 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. UPDATE: On Friday, without objection, the House Revenue Committee approved the bill and sent it the House floor with a “do pass” recommendation. The bill may be considered as soon as Monday. Reps. Andy Olson (R-Albany) and Dan Rayfield (D-Corvallis), chief sponsors of the bill, will carry the bill on the House floor. And then we turn to the Senate, and presumably the Committee on Finance and Revenue.

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. UPDATE: It appears there may be no additional funding available for the remainder of the 2015-17 biennium. We continue to work with the Oregon Student Association in seeking additional funding to 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. UPDATE: The bill passed the House by a vote of 55-1 and it has now awaiting a hearing and a work session in the Senate Rules Committee. It may take concerted advocacy aimed at the Senate to get this bill scheduled for a work session in order for it to reach the Senate floor.

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. UPDATE: It is likely we may not know the status of this effort until the final days of the session 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. UPDATE: The House Revenue Committee adopted a number of amendments to this bill designed to address a number of concerns regarding local implementation of the lodging tax. The committee approved the bill on a 7-1 vote and sent it to the floor for consideration. Because the bill raises revenues, it will require a 3/5 vote (36 ayes, vs. a simple majority of 31).

Bills of Note

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 (27-1), has been approved by the House Higher Education Committee and is awaiting a vote on the House floor.

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 bill passed the Senate (28-0) and was approved by the House Higher Education Committee and is awaiting a vote on the House 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 was approved on a party-line vote in the Senate Rules Committee and referred to the Joint Ways & Means Committee where it is awaiting consideration. Legislators have expressed concerns regarding provisions that require the state to carry the cost of postage paid envelopes for future ballots.

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 (59-0) and is scheduled for a hearing/work session in the Senate Education Committee.

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. This bill was passed by the House (54-6) and will be considered by the Senate Education Committee on Monday.

Industrial Hemp: Jay Noller, Head of OSU’s Crop and Soil Sciences Department participated in an informational hearing regarding a possible research program for industrial hemp. That program would involve approximately $150K in funding for the current biennium (as well as funding in the 2017-19 biennium in order to be completed). Funding for this study may be included in the end-of-session budget bill. To watch the hearing: http://oregon.granicus.com/MediaPlayer.php?clip_id=fe495f64-62b6-4740-971c-f2ad4248e43d&meta_id=3ca8ee9a-569f-4cb6-8603-e80f43935266

If you have questions about this report or any state legislative issues, contact jock.mills@oregonstate.edu.

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.

Interested in Supporting OSU in Salem? Join the Beaver Caucus!

http://thebeavercaucus.org/join/

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 21^st 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.

University Priorities

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.

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 jock.mills@oregonstate.edu.

On Wednesday, Governor Kate Brown issued an outline of her key objectives for 2016, including the short legislative session, which convenes on Monday, February 1. Under Oregon’s Constitution, legislators must adjourn by Saturday, March 5.

View the Governor’s Agenda for 2016 here.

One of the most significant items on the Governor’s list is her proposal to increase the minimum wage. The proposal includes a six-year phased-in $13.50/hour statewide wage, with a $15.52 wage for the Portland Urban Growth Boundary to address that area’s higher cost of living. (Oregon’s current minimum wage of $9.25/hour is the nation’s second highest.) Democratic legislative leaders are interested in enacting state minimum wage legislation in February to stave off a November ballot measure that would involve a two-year phase-in of a $15/hour wage.

Legislative budget writers have asked universities to identify the potential fiscal impact of the Governor’s proposal. Impacts will likely involve activities that are funded by tuition and state appropriations as well as activities that are funded by auxiliary funds (such as athletics and housing and dining). Student fees are also used to support some on campus minimum wage jobs.

See The Oregonian’s coverage of the minimum wage proposal here.

A number of the Governor’s other priorities may be of interest to various units at OSU, including:

An Executive Order establishing the Governor’s Council on Educator Advancement, charged with coordinating comprehensive support to deliver excellence in teaching through leadership development, mentorship and best practices (yet to be posted);
Establishment of a Governor-appointed Campus Safety Working Group (last month OSU provided suggestions for participants in this group);
Appointment of a State Resilience Officer to deal with earthquake preparedness;
A drought package funding proposal to help local communities plan for and address persistent drought; and
A wildfire funding proposal to cover costs incurred during the 2015 wildfire season.

House Republican Leader Mike McLane issued a response to the Governor’s priorities, which you can find here.

University Priorities for the 2016 session

Not included on the Governor’s list of priorities are a number of legislative initiatives supported by OSU and the other public universities in Oregon, including OHSU. Chief among them is the renewal of the University Venture Development Fund (UVDF) tax credit. Reps. Andy Olson (R-Albany) and Dan Rayfield (D-Corvallis) have joined to introduce HB 4072, which would renew the credit for a six-year term. For information on the bill, see our UVDF Fact Sheet.

Universities are also seeking $15 million in increased funding to continue progress made last session to increase student completion rates. While the legislature’s Ways & Means leadership appear to believe that additional funding will be scarce, universities and students contend additional funding is needed to maintain improvements attained during the 2015 session.

Other university priorities include support for a legislatively referred constitutional amendment to enable universities to invest in equities. The original bill that established university governing boards in 2013 included a provision that enabled universities to invest their funds in equities (stocks). The intention was to provide universities with more investment options that could result in both higher yields and greater stability. Subsequent legal opinions indicate that this change cannot be accomplished through statutory changes; the state constitution has to be amended. As a result, the universities are seeking a legislatively approved ballot referral to put the matter on the November 2016 ballot.

Universities are also seeking an equitable approach for developing the 2017-19 budget. Legislation that established universities as independent public entities resulted in state budget writers recommending future budgets that do not include an accurate calculation of Public Employees Retirement System (PERS) and public employee health insurance – Public Employees Benefit Board (PEBB) – costs. During the 2015 legislative session, budget writers determined that a 3.3% increase would be needed to provide the same level of services in the 2015-17 biennium – the “Continuing Service Level” (CSL). Universities claim an accurate calculation of the state-mandated PERS and PEBB costs for the current biennium would have involved at least an 8% CSL increase. Because uncompensated PERS and PEBB costs will be borne by students and will erode current state investments in student success, universities are seeking a legislatively endorsed process by which a more accurate and equitable methodology is used to calculate the CSL for 2017-19.

OSU-Specific Bills

State matching funds for a $5 million Federal Marine Energy Grant. In December, Congress appropriated $5 million to the US Department of Energy to fund a competitive grant to further develop a wave energy test facility. This initial funding could grow over the next three to five years to a federal investment totaling $40 million, with the expectation that successful competitors for the grant will provide at least a 25% match, or $10 million. The total project — including federal and non-federal funding — is expected to be $50 million. Oregon will be competing with other states that are developing their own matching proposals for this long-term funding opportunity. Coastal legislators are pursuing state legislation for 2016 that would appropriate the first installment of $1.25 million in state matching funds to enable OSU to compete for the initial $5 million grant. Last week, the House Energy & Environment Committee agreed to carry the proposal as a committee bill.

The Session Ahead

University Lobby Day: Mark your calendars! All seven universities will be holding a unified lobbying day on Thursday, February 11. Activities for the day will include individual meetings with legislators seeking support for the higher education agenda, as well as a reception. Register to participate here. More detailed information will be forthcoming in the next week. If you have questions, please contact Karli Olsen.

Bill Tracking: The OSU Government Relations Office will be tracking legislation throughout the month-long session. While the volume of bills will not be nearly as great as during the six-month session, timelines will be extremely fast. For example, legislative committees have about ten days to approve bills before the bills become ineligible for consideration. If you are aware of issues that you’d like us to track, please contact Karli Olsen.

Legislative town halls with local legislators:

Thursday, January 27, 3:30-5:30, Memorial Union, Journey Room, sponsored by ASOSU. State Sen. Sara Gelser (D-Corvallis/Albany) and State Rep. Dan Rayfield (D-Corvallis) will participate.
Saturday, January 30, 10:00-noon, Corvallis/Benton County Library, sponsored by the League of Women Voters. This forum will also include local state legislators.

If you have questions or would like additional information about any of the items above, don’t hesitate to contact us.

Jock Mills, Director, jock.mills@oregonstate.edu

Karli Olsen, Coordinator, karli.olsen@oregonstate.edu

For Federal matters: Gabrielle Serra, Federal Relations Director, gabrielle.serra@oregonstate.edu

OSU Government Relations Update

Category Archives: 2016 State Session

2016 Legislative Session: In Review

Legislature finalizes budget adjustments, seeks to adjourn this week

Legislature nears “sine die”

Short Session Update: #UniversityDay at the Capitol

Governor sets agenda for 2016, Legislature readies for February Short Session

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