Final bonding bill; Supplemental budget moves; Higher education cost savings; System budget considered; Congress works toward student loan reform

Legislative Update
March 19, 2010

Governor reduces bonding bill by more than $300 million

Gov. Tim Pawlenty line-item vetoed the bonding bill this week from a $999 million bill that passed the Legislature, down to $680 million. In his veto letter to legislative leadership, the governor told lawmakers that "like any family or business, state government needs to live within its means and follow a budget," and that he had said earlier he would not sign a bill as large as what was presented to him. The final bill the governor signed however; was smaller than his initial bonding recommendation.

Chief authors of the capital investment bill, Rep. Alice Hausman, DFL-St. Paul, and Sen. Keith Langseth, DFL-Glyndon, said the line-item vetoes will mean about 7,000 fewer jobs created. Among the areas hit hardest by the governor’s veto is the Minnesota State Colleges and Universities system, which had reductions of more than $130 million and saw its bonding funding going from $239 million down to $106 million (numbers include user financing). Hausman noted that the system has three times as many students as the University of Minnesota but receives less in the law. Langseth said that Minnesota has lost an opportunity because interest rates are favorable now and construction bids are lower.

The 16 projects cut by the governor are the fine arts building renovation and the bioscience and allied health addition at Anoka-Ramsey Community College; the learning resource center at Hennepin Technical College; the workforce program renovation at Minneapolis Community and Technical College; lab construction and renovation at Ridgewater College; the classroom renovation and addition at South Central College, Faribault; the bioscience and health careers center addition at North Hennepin Community College; the Livingston Lord library and information technology renovation at Minnesota State University Moorhead; the science lab renovation at Southwest Minnesota State University; the integrated science and engineering laboratory facility at St. Cloud State University; transportation and emerging technologies lab renovation at Dakota County Technical College; the workforce center co-location at Rochester Community and Technical College; the systemwide initiative for renovation of STEM classrooms at nine campuses; the clinical science building design for Minnesota State University, Mankato; the wind turbine training facility at Minnesota West Community and Technical College, Canby; and the engineering program at Mesabi Range Community and Technical College.

Here is the link to the letter from the governor that explains his line-item vetoes. Here is the link to the final spreadsheet for the bonding bill that includes the governor’s vetoes.

Supplemental budget bill heads to the floor Monday
The supplemental budget bill in the House and Senate worked its way through the committee process this week and is headed to the floor for debate Monday in both bodies. HF 1671/SF 3223, includes all the finance division's supplemental budget bills with the exception of K-12 education and health and human services, which will be addressed at a later time. The reductions to state agencies and programs in the bill, including the $10.5 million reduction to the Minnesota State Colleges and Universities system, total $209 million. The budget bill also includes tax provisions that cut $105 million in state spending from county program aid, local government aid and the market-value homestead credit. Finance Committee Chair Rep. Lyndon Carlson, DFL-Crystal, said the bill is loaded with some very difficult decisions.

Legislative leaders are working to resolve the $1 billion budget deficit in three phases, of which the supplemental budget bill is considered the first phase. Speaker of the House, Margaret Anderson Kelliher, DFL-Minneapolis, in a media availability today said the House is running three weeks ahead of schedule. Kelliher said a forthcoming health and human services finance bill is on hold until Congress takes action on legislation that could provide more than $408 million in one-time federal stimulus funds. If the federal funding comes through, legislators might not have to cut too much beyond this first phase of cuts. Senate Tax Committee Chair Tom Bakk, DFL-Cook, said, "There's no point in passing a huge reduction bill if, at the end of the day, we get some federal money that would have back-filled some of the cuts." However, Senate Minority Leader Dave Senjem, R-Rochester, said lawmakers need to see the whole budget. "Until we see their budget in its entirety, we are not going to agree to participate in this solution."

Senate hears about cost savings mechanisms for higher education

The Senate Higher Education Budget and Policy Division heard from Larry Isaak with the Midwestern Higher Education Compact this week regarding services provided, including cooperative purchasing. Isaak, the president of MHEC, told committee members that each of the 12 states that are part of the compact pay $95,000 a year in dues; however, the return on that investment for Minnesota in fiscal year 2009 was 26:1. Minnesota higher education institutions, school districts, state and local governments and students have achieved cost savings of $28.8 million since joining the compact in 1991 by using MHEC's cost savings and student exchange programs, including technology hardware and software purchases.

Minnesota State Colleges and Universities also work in collaboration to leverage the best value in purchasing. Steve Gednalske, system director of tax and financial services and Michael Noble-Olson, purchasing manager at Minneapolis Community and Technical College, explained to members about the system's collaborative sourcing team. The team’s mission is to collaborate to seek innovative strategic sourcing solutions to achieve sustainability and best value by leveraging the system's buying power. The team includes representation from system institutions and the Office of the Chancellor. Gednalske provided examples of benefits gained.
The team has been able to obtain quality mattresses at reduced prices through a contract that is used by all campuses with dorms; leveraged spending on office supplies to obtain lower prices; collaborated with the Department of Administration to leverage spending and reduce the pricing of travel management; and saved money on textbook delivery as well as other shipped items.

Lawmakers learn about system’s budget planning for upcoming biennium

Members of the Senate Higher Education Budget and Policy Division heard from the higher education systems this week about budget plans for fiscal years 2012-2013. Laura King, vice chancellor and CFO for the Minnesota State Colleges and Universities system, told committee members that with notice of the $50 million unallotment to the system occurring a year in advance, and the state's poor economic outlook, the system adjusted its budget planning framework early in the budgeting process and aimed for a $594 million base each year for planning purposes. The $594 million base reflects the governor's $50 million unallotment and the proposed $10.5 million reduction to the system in FY2011.

Jake Hite, a student at Winona State University, testified on the effects the appropriation cuts have had on students. Hite told committee members that the Minnesota State University Student Association listened to students at the seven state universities to learn more about how the reductions are affecting them. Hite said some of the trends include reduction of course offerings and increased class sizes; student service reductions in financial aid and childcare; fewer hours of operation at libraries and student centers; increased fees and charges for services; and reduced public safety.

Hite said that the initial picture of how recent cuts have affected the state universities and the students attending them raises concern as to how the quality, affordability, and accessibility of education will be affected as further steps are taken to balance the campus budgets. Sen. Sharon Erickson Ropes, DFL-Winona, said that this year higher education is seeing a 2 percent reduction. Next year, however, given the economic outlook, higher education could be looking at a 20 percent reduction. Erickson Ropes encouraged Hite to have conversations within the student organization regarding what has to change and what has to go away.

Next week, the House Higher Education and Workforce Development Finance and Policy Division is scheduled to learn more about the system’s 2012-13 budget planning Thursday. The system's 2012-13 budget planning report is here.

Reconciliation bill combines health care reform with student loan reform

Last week we reported that Congress was looking at merging the health care overhaul bill with the Student Aid and Fiscal Responsibility Act in a process called budget reconciliation. Late this week, Congress released the reconciliation bill that contains both the health care reform package and student loan reform legislation. The bill contains $500 million per year for fiscal years 2011-14 for the Community College and Career Training Grant Program to improve educational and career training programs. Grants will go to institutions in all 50 states on a competitive basis, but institutions in each state will receive at least $2.5 million each year.

The bill would end the Federal Family Education Loan Program and require all federal education loans to be originated through the Direct Lending Program beginning July 1, 2010. The impact of this change in policy is estimated to produce a savings of $61 billion. The reconciliation bill will also provide funds for the Pell Grant. The bill ensures a continued maximum grant of $5,550, as is scheduled to take effect this July 1. For 2014-2018, the bill provides for an automatic annual increase in the maximum Pell Grant by the rate of inflation. The legislation will also provide $13.6 billion to help address a large shortfall in the program that has developed due to booming enrollment increases that have resulted in more students qualifying for grants, and many qualifying for larger grants.

It is anticipated that the House will take up the bill Sunday. House Democrats need 216 votes to pass the bill. If passed, the bill will be considered by the Senate, where it will need a simple majority of 51 votes to pass.

Here's What's Happening at the Capitol:

This schedule shows all meetings that we are aware of at the time of publication that may have an impact on the system. This schedule may change. Please watch the House and Senate schedules posted on the Legislature Web site.

Monday, March 22

8:00 AM
House Finance
Room: 200 State Office Building
Chair: Rep. Lyndon Carlson
Agenda:
HF2899 (Pelowski) Administrative remedy provided for certain data practice law violations, civil penalty provided, and money appropriated.
HF2499 (Mullery) Minnesota State Colleges and Universities Board of Trustees required to study technical education credentials.
HF3274 (Obermueller) Benefit account requirements modified for unemployment benefits.
HF3048 (Norton) Construction codes and licensing provisions modified, and certain notice provisions modified.
HF2925 (Kath) Public facilities programs amended and technical changes made.

8:30 AM
Senate Finance
Room: 123 Capitol
Chair: Sen. Richard J. Cohen
Agenda:
S.F. 2598-Saxhaug: Collaborative urban educator grant program appropriation clarification.
S.F. 2533-Bakk: Lake Vermilion state park land acquisition authority and incorporation of existing park land.
S.F. 2564-Anderson: Outdoor heritage appropriations.
H.F. 2624/S.F. 2462-Anderson: Legislative-citizen commission on Minnesota resources (LCCMR) environment and natural resources appropriations.
S.F. 2364-Pappas: Higher education facilities authority revenue bond limit increase.
S.F. 2386-Metzen: Labor agreements and compensation plans ratification.
S.F. 364-Sparks: Drainage systems provisions modifications.

10:00 AM
House in Session
It is anticipated the House will come in to session, then recess to caucus.
HF1671 (Carlson) Omnibus supplemental budget

11:00 AM
Senate in Session

3:00 PM
Senate Economic Development and Housing Budget Division
Room: 107 Capitol
Chair: Sen. David J. Tomassoni
Agenda:
S.F. 1590-Sieben: Inflatable amusement equipment safety standards establishment.
S.F. 2895-Bonoff: Unemployment insurance administrative, benefit and tax provisions modifications; special state extended unemployment insurance program establishment.
S.F. 2310-Saltzman: Comparative study of state regulation affecting small business start-ups.
S.F. 3014-Saltzman: Minnesota Science and Technology Authority Act.

Tuesday, March 23
8:30 AM *Note time and room change*
Higher Education and Workforce Development Finance and Policy Division
Room: 500S State Office Building
Chair: Rep. Tom Rukavina
Agenda:
HF3076 (Juhnke) Elevator provisions modified.
HF3293 (Clark) State building Code amended, and licensing requirements modified.
HF3533 (Rukavina) Joint powers agreements may not circumvent or impinge upon the rights of employees covered by certain collective bargaining agreements.
HF3024 (Murdock) Manufactured Home Building Code requirements modified
Other bills may be added

8:30 AM
House K-12 Education Finance
Room: Basement State Office Building
Chair: Rep. Mindy Greiling
Agenda: HF2887 (Drazkowski) Independent School District No. 858, St. Charles, disaster aid funding and declining pupil unit aid appropriation used to help the city cover revenue losses.
HF3404 (Mariani) Aid payment schedule modified for certain charter schools.
HF3539 (Benson) Charter schools revised evaluation requirements and changes in sponsorship fees postponed.
HF2867 (Newton) Child with a disability definition clarified and obligations to children with disabilities specified.
HF3487 (Newton) Conciliation conference requirements clarified, and Minnesota Department of Education directed to amend two special education rules.
HF2885 (Davnie) Capital project referendum ballot language modified in cases where the same level of taxing authority is renewed.
HF3237 (Huntley) Health care provisions changed relating to education plan requirements, health access program, private nursing coverage, children's health insurance reauthorization act, long-term care, asset transfers, clinics, dental benefits, prior authorization, drug formulary and administrative committees, preferred drugs, multisource drugs, health plans, claims against the state, and eligibility standards. - Article 1 only

10:30 AM
House State Government Finance Division
Room: 300N State Office Building
Chair: Rep. Phyllis Kahn
Agenda:
HF2758 (Lillie) Labor agreements and compensation plans ratified.
HF2815 (Bly) Fiscal note requirements modified.
HF3205 (Mahoney) Preference created for community banks and credit unions for the state's general revenue account, state depository accounts required to be held in community banks or credit unions, and a study required of possible further use of community banks and credit unions by the state and municipalities.
HF3589 (Kath) Contracts for professional or technical services reporting threshold reduced.
HF1818 (Mariani) State commissioners required to provide a poverty impact statement on bills when requested by a legislator.
HF2613 (Hilstrom) Mediation provided prior to commencement of mortgage foreclosure proceedings on homestead property, and homestead-lender mediation account created.

12:30 PM
Senate Higher Education Budget and Policy Division
Room: 123 Capitol
Chair: Sen. Sandy Pappas
Agenda: S.F. 3180-Sparks: Malt liquor and spirits tasting authorization at exclusive liquor stores; University of Minnesota stadium liquor licensing conditions modification.

Wednesday, March 24

8:30 AM *Note time and room change*
House Higher Education and Workforce Development Finance and Policy Division
Room: 500S State Office Building
Chair: Rep. Tom Rukavina
Agenda: Higher Ed and Workforce Finance/Policy omnibus bill 2

10:00 AM
Senate State Government Budget Division
Room: 112 Capitol
Chair: Sen. Don Betzold
Agenda:
S.F. 2809-Higgins: State bond proceeds recipients requirements and electronic reporting requirement.
S.F. 2199-Olson, G.: Legislature size reduction and senate district division prevention.
S.F. 2471-Olseen: Declaration of trust and real property secretary of state filings modification.
S.F. 2644-Betzold: Minneapolis employees retirement fund (MERF) administrative functions transfer to the public employees retirement association (PERA); MERF consolidation account in PERA establishment and operation provisions.
S.F. 2573-Betzold: State, local, legislator, and hospital public employees retirement provisions modifications.
S.F. 3084-Carlson: Professional or technical services contract reporting threshold reduction.
Thursday, March 25

8:30 AM
House K-12 Finance Division
Room: Basement State Office Building
Chair: Rep. Mindy Greiling
Agenda: Governor's charter school property tax exemption proposal (see HF3306 article 6, section 2)
HF3421 (Mariani) High school assessments established to determine college and career readiness.

10:30 AM *Note time and room change*
House Higher Education and Workforce Development Finance and Policy Division
Room: 10 State Office Building
Chair: Rep. Tom Rukavina
Agenda: Higher Education Plans for FY2012-13 Budgets

12:30 PM
Senate Higher Education Budget and Policy Division
Room: 123 Capitol
Chair: Sen. Sandy Pappas
Agenda: TBA