20% cuts may be ahead for state colleges, universities as bottom falls out of budget

Just a few months ago, the University of Washington was celebrating the end of a huge, successful fundraising campaign and was planning to double enrollment at its branch campuses.

But within the last two weeks, the outlook for the state's universities and community colleges has tanked so precipitously it has taken many by surprise. It also has exposed just how vulnerable those institutions remain to the vagaries of economic cycles.

Now, the UW and other institutions are trying to figure out ways to plug a yawning budget gap. Officials at several universities are already talking about raising tuition by 10 to 15 percent next year — perhaps $1,000 per student. That would require lawmakers to lift the current limit on schools of 7 percent in tuition increases annually.

At the UW, one option under consideration for the first time is differential tuition — in which juniors and seniors would be charged more than underclassmen. At Western Washington University, budget experts are running the numbers on how much they could save by having some full-time staff work 80 percent of their current schedules.

Class sizes are sure to grow, and students might find they spend an increasing amount of time learning from assistants, rather than professors, as faculty positions remain unfilled.

For thousands of people clamoring at the doors of higher education — often to get retrained or better educated because of the downturn — there may simply not be enough seats.

Community-college officials say they might need to shed 6,000 students or more from the 145,000 who attend the state's 34 community and technical colleges. That would mean some classes would be closed when filled, offered on limited schedules or shut down altogether, effectively ending the long-standing policy of allowing access to all eligible students.

Colleges across Washington have been warned that state budget cuts might reach 20 percent, or $600 million, over the next two years. The downturn seemed to hit so quickly that even the message from Olympia got garbled.

Representatives from the state's Office of Financial Management (OFM) contacted university and community-college budget officials by telephone or in person about the looming 20 percent cuts, but didn't formally write to institution presidents.

Glenn Kuper, spokesman for the state Office of Financial Management, said it was partly a "matter of expediency" that not everyone up the chain was told directly. To clarify, he said, his office is working with the assumption of the 20 percent cut. All the pieces of the governor's draft budget won't come together until mid-December, he added.

The news from Olympia, in fact, seems to keep getting worse. On Friday, Gov. Christine Gregoire said the ballooning state shortfall could reach $6 billion — higher even than previous gloomy estimates — leading to spending cuts she described as "truly ugly."

Several college officials interviewed for this story appeared resigned already to state cuts of up to 10 percent but hoped to hold the line there.

"In the end, 20 percent is far too big of a number to comprehend for higher education without having the state abandon its mission," said Paul Jenny, the UW's vice provost for planning and budgeting.

Within the next few days, the state will require even this year's spending at colleges — which was supposed to be locked in — to be pared back, thanks to the nose-diving revenue projections.

"The budget situation is extraordinarily serious," wrote WWU President Bruce Shepard to faculty and students Wednesday. The next day, UW President Mark Emmert said he wouldn't be taking a pay raise this year. The day after that, Washington State University President Elson Floyd went one better by volunteering for an annual pay cut of $100,000.

Yet, it is students who will likely feel the pinch the most.

Period of prosperity

The projected cuts come after a time of relative prosperity for universities. Philanthropy was breaking records. Gregoire ramped up spending on higher education during her first four years in office, and universities felt better equipped to compete with peers across the country.

At the UW, the state is handing over $77 million more each year than it was four years ago — an amount roughly equivalent to how much the state now wants back. About half the money has gone to raises for faculty and staff, while much of the rest has gone toward employing more faculty to cope with an 8.5 percent jump in enrollment.

UW officials say they can't just turn back the clock.

"We can adapt to changing spending environments, but we are not like a business," Jenny said. "We can't just cease degree programs that students have already enrolled in."

At WWU, Sherry Burkey, the acting vice president for external affairs, says officials are looking at every aspect of the budget. Tuition might go up significantly, she said, provided lower-income students get a break. Student numbers could be reduced, and temporary workers let go.

"Everybody is walking around in a fog," she said. "It's just such shocking news to all of us. Everyone is trying to figure out how to proceed."

For many universities, the cuts represent the last piece in a perfect storm of declining income and increased demand.

Take the UW. The university's endowment fell by 14 percent in the year ending September, to $1.9 billion. The UW spends about $95 million of that each year on professorships, scholarships and other programs — money which may now need to be trimmed back. That could mean fewer jobs.

Then there is the $1 billion a year in research funding, about three-quarters of which comes from the federal government. That funding has remained flat lately, and it may remain so under the incoming Obama administration, as the federal government concentrates on bailing out the economy.

"We've had a very difficult few years with the federal grant situation," said Mary Lidstrom, the UW's vice provost for research.

There is also student demand, which has been skyrocketing. Last week, the UW announced 1,100 more sophomores, juniors and seniors stayed in school this year than had been anticipated, probably because of the worsening economy. Emmert says applications for the 5,500 freshman slots could shatter records this year by reaching 25,000.

Finally there's the state budget. According to OFM officials, about three-quarters of the general fund is practically untouchable because it provides for mandated programs such as K-12 education and prisons. The biggest single discretionary item? Higher education.

"The Legislature needs to find a new financial model for the university if we are to be part of the solution," said Emmert.

Intense lobbying ahead

After the run of bad news, higher-education officials are beginning to regroup and to prepare strategies for an intense few months of lobbying in Olympia.

Take the plans for a rebuild of Husky Stadium.

Already, there's been a perceptible shift in the way UW officials are pitching the project. It has gone from a must-have sports stadium to a New Deal-type opportunity, in which the infrastructure project will help revive the state's economy by putting thousands to work.

Randy Hodgins, the UW's director of state relations, said part of what higher-education officials need to do is to explain to the public the opportunities that might be lost should higher education languish, and for Olympia to hear that message.

The problem is, lawmakers are going to be hearing lots of shouting from many constituents this session at the state Capitol.

Information from The Associated Press is included in this report.

Nick Perry: 206-515-5639 or nperry@seattletimes.com