SENATE 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 Higher Education

Rereferred House Committee on Capital Facilities & Financing

Senate Committee on Higher Education

Senate Hearing Date(s):March 23, 1989; March 27, 1989

Majority Report:  Do pass and be referred to Committee on Ways & Means.

      Signed by Senators Saling, Chairman; Patterson, Vice Chairman; Bauer, Cantu, Smitherman, Stratton, von Reichbauer.

Senate Staff:Scott Huntley (786-7421)

                  March 28, 1989

Senate Committee on Ways & Means

Senate Hearing Date(s):March 31, 1989; April 3, 1989

Majority Report:  Do pass as amended.

      Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Bailey, Bluechel, Cantu, Hayner, Johnson, Lee, Matson, Newhouse, Niemi, Saling, Smith.

Minority Report:  Do not pass as amended.

      Signed by Senators Moore, Owen, Talmadge, Warnke, Williams, Wojahn.

Senate Staff:Steve Jones (786-7715)

                  April 4, 1989

AS REPORTED BY COMMITTEE ON WAYS & MEANS, APRIL 3, 1989

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, 1989, 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, 1989, building fees will comprise 20 percent of tuition.

At the research universities, the percentage established for undergraduate students in 1989 will be 9 5/10 percent.  That percentage will increase, in phased amounts yearly, to 20 percent in 1994.  The percentages established for graduate and professional students at the research universities will increase from 8 8/10 percent in 1989 to 28 percent in 1994.

At the regional universities and The Evergreen State College, building fees will increase from 9 3/10 percent in 1989, to 20 percent in 1994 for undergraduate students.  Building fees will increase from 8 1/2 percent to 28 percent for graduate students during those same years.

Appropriation:    none

Revenue:    yes

Fiscal Note:      requested March 15, 1989

SUMMARY OF PROPOSED WAYS & MEANS AMENDMENT:

After July 1, 1991, the building fee portion of tuition will be expressed as a percentage.  The building fee will be 9 percent for four-year institutions and 20 percent for the community colleges.

After July 1, 1991, the board of trustees or regents at each institution may impose a building fee surcharge of up to 10 percent of tuition.  This amount, together with a matching amount of operating fee revenues, is dedicated to capital improvements at the institution, subject to legislative approval.  Consultation with the student government is required before the surcharge may be imposed or increased.

Senate Committee - Testified: HIGHER EDUCATION:  Mike Bigelow, Governor's Office (for); Dr. William Gerberding, President, University of Washington (for); Judy McNickle, Western Washington University (for); Jennifer Jaech, The Evergreen State College (for); Dick Page, Washington Roundtable (for); Dick Thompson, Central Washington University (for); Stephanie Adams, Washington Student Lobby (for); Paul Locke (against)

Senate Committee - Testified: WAYS & MEANS:  Bob Edie, University of Washington; Bill Julius, State Board for Community College Education; Stephanie Adams, Washington Student Lobby; Mike Bigelow, OFM