HOUSE BILL REPORT

HB 1405

BYRepresentatives 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 Higher Education

Majority Report:  Do pass.  (12)

      Signed by Representatives Jacobsen, Chair; Spanel, Vice Chair; Van Luven, Ranking Republican Member; Basich, Heavey, Inslee, Jesernig, Miller, H. Myers, Prince, Rector and Wood.

House Staff:Susan Hosch (786-7120)

Rereferred House Committee on Capital Facilities & Financing

Majority Report:  The substitute bill be substituted therefor and the 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:      Bill Robinson (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 project 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 is that 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 only 7 percent of tuition payments.  An example: during the 28 year period from 1960 to 1988, buildings 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:

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 research universities, the percentage established for undergraduate students in 1991 will be 8 3/4 percent.  That percentage will increase, in phased amounts yearly, to 14 percent in 1994.  The percentages established for graduate and professional students at the research universities will increase from 7 3/4 percent in 1991 to 18 percent in 1994.

At the regional universities and The Evergreen State College, building fees will increase from 8 3/4 percent in 1991, to 14 percent in 1994 for undergraduate students.  Building fees will increase from 7 3/4 percent to 18 percent for graduate students during those same years.

CHANGES PROPOSED BY COMMITTEE ON CAPITAL FACILITIES & FINANCING:  The building fee portion of tuition is increased from 14 percent to 20 percent for undergraduate students and from 18 percent to 28 percent for graduate and professional students.  The starting date for beginning the phased implementation of the building fee increase is moved ahead two years from July, 1989 to July, 1991.

Revenue:    The bill has a revenue impact.

Fiscal Note:      Available.

House Committee ‑ Testified For:    (Higher Education)  Mike Bigelow, Office of Financial Management; Bob Edie and Bob Thompson, University of Washington; Bill Julius, State Board for Community College Education; Judy McNickle, Western Washington University.

(Capital Facilities & Financing)  Mike Bigelow, Office of Financial Management; Bob Edie and Bob Thompson, University of Washington; Judy McNickle, Western Washington University.

House Committee - Testified Against:      (Higher Education)  No one.

(Capital Facilities & Financing)  No one.

House Committee - Testimony For:    (Higher Education)  The building fee portion of tuition has declined in the last 40 years from approximately 67 percent of tuition to about 7 1/2 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.  This change will also help institutions begin to repair and replace facilities in time to meet the increased pressure that children of the baby boom generation will soon begin to place on the state's universities.

(Capital Facilities & Financing)  Same as Committee on Higher Education.

House Committee - Testimony Against:      (Higher Education)  None.

(Capital Facilities & Financing)  None.