HOUSE BILL REPORT

SHB 1405

BYHouse Committee on Capital Facilities & Financing (originally sponsored by Representatives Jacobsen, H. Sommers, Prince, Wood, Spanel, Locke, O'Brien, Heavey, Miller, Brekke, Basich, Sayan, Phillips and Crane; by request of Governor Gardner)

Regarding building fees for higher education.

House Committe on Capital Facilities & Financing

Majority Report:  The second substitute bill be substituted therefor and the second substitute bill do pass.  (14)

      Signed by Representatives H. Sommers, Chair; Rasmussen, Vice Chair; Schoon, Ranking Republican Member; Beck, Betrozoff, Bowman, Braddock, Fraser, Heavey, Jacobsen, Peery, Rector, Wang and Winsley.

House Staff:Sherie Story (786-7136)

AS REPORTED BY COMMITTEE ON CAPITAL FACILITIES & FINANCING

JANUARY 16, 1990

BACKGROUND:

Student tuition at the state colleges and universities is separated into two components: building fees and operating fees.  Building fees are deposited into the building account of the institution where the student is enrolled.  These fees are used to finance capital construction on that institution's campus.  Operating fees are deposited into the state treasury, becoming one of the sources of revenue for the state general fund.  The institutions receive the monies they need for operating from the general fund, through the appropriations process. Students also pay an additional fee, called a services and activities fee.  The services and activities fee is retained in a local fund at the institution, and is used to support various student activities, such as student government and athletics.

Historically, building fees, along with timber sales and other institutional revenue, were sufficient to finance facility remodeling and construction projects on most campuses.  Today, however, building fees are no longer a significant source of money for new capital projects.  Institutions must request state tax dollars (general obligation bonds) for their building programs.  The major reason for this change: the operating component of student tuition has taken up an ever increasing share of total tuition.  Although tuition has been increasing as education costs rise, the building fee component of tuition has remained static because it is determined, by statute, as a set dollar amount.  That amount has not increased since 1981.

In the 1950's, at the research universities, building fees represented about 55 percent of tuition.  By 1988, building fees represented 7 percent of tuition payments.  For example, during the 28 year period from 1960 to 1988, building fees increased from $105 per year to $120 per year.  Operating fees increased from $187 per year to $1,482 per year during the same period.

SUMMARY:

SECOND SUBSTITUTE BILL:  Beginning on July 1, 1991, the building fee portion of tuition will be determined as a percentage of total tuition, rather than by a dollar amount set in statute.

At the four-year universities and college, the statutorily determined percentage will increase yearly, in phased amounts, through July 1, 1994.  At the community colleges, beginning on July 1, 1991, building fees will comprise 20 percent of tuition.  At the University of Washington and Washington State University branch campuses, building fees will be 100 percent of tuition beginning July 1, 1990.

At the research universities, the percentage established for undergraduate students in 1991 will be ten and two-tenths percent.  That percentage will increase, in equal increments, to 20 percent in 1994.  The percentages established for graduate and professional students at the research universities will increase from ten and two-tenths percent in 1991 to 28 percent in 1994.

At the regional universities and The Evergreen State College, building fees will increase from nine and three-tenths percent in 1991, to 20 percent in 1994 for undergraduate students.  Building fees will increase from nine and five-tenths percent to 28 percent for graduate students during those same years.

SECOND SUBSTITUTE COMPARED TO FIRST SUBSTITUTE:  Beginning on July 1, 1991, rather than July 1, 1989, the building fee portion of tuition will be expressed as a percentage of total tuition.  At the University of Washington and Washington State University branch campuses, building fees will be 100 percent of tuition beginning July 1, 1990.

Revenue:    The bill has a revenue impact.

Fiscal Note:      Available.

House Committee ‑ Testified For:    Bob Edie and Tallman Trask III, University of Washington; Terry Teale, Council of Presidents, testified for the second substitute bill.

House Committee - Testified Against:      No one.

House Committee - Testimony For:    The building fee portion of tuition has declined in the last 40 years from approximately 67 percent of tuition to about seven and one-half percent.  This decline has prevented state supported universities from having sufficient money to fulfill their facilities' needs without using the state's bonding authority for supplementation.  Increasing the proportion of a student's tuition that is devoted to building and repairing facilities will decrease the pressure that higher education is placing on the state's bonding capacity. Five of the six public four-year institutions support the changes made in the second substitute bill.

House Committee - Testimony Against:      None.