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Board Report #99-5

1999-2001 Biennial Budget Issues for Action


Board Report #98-7, discussed in February, presented the rationale and policy framework for Wisconsin's Student Financial Aid Structure. Board Report #98-11, discussed in April, outlined the various Biennial Budget Issues. Two other documents you were given to review included the final 28th Annual Survey Report for the 1996-97 Academic Year provided by the National Association of State Student Grant and Aid Programs and the report on Trends in Student Aid: 1987 to 1997 collected and written by The College Board. The presentation given by Sr. Mary Beth Komely, Mary Jo Green, and Steve Van Ess provided a basic understanding of how financial aid works. An additional piece of information that I have attached to this report as Appendix A are the 1999-2001 Biennial Budget Instructions and the Timetable for Budget Development. All of this information along with this report and the discussion that will take place at the July meeting should provide a basis to act on the budget issues presented.

I met with Administration along with the Chairs of the Assembly's Colleges and Universities Committee, the Assembly's Education Committee, and the Senate's Education Committee to discuss the State's fiscal future and priorities. I also received feedback from each system along with a response from the United Council of University of Wisconsin Students. I will incorporate the feedback that I received within this report.

Funding Requests for All Programs
What should funding requests be tied to? What is the role of state funded higher education financial assistance programs in meeting the need of its residents?

Per the Budget Instructions in Appendix A, for 1999-2000 the General Purpose Revenue (GPR) funding should not exceed 100% of the 1998-99 appropriation. For 2000-01, GPR requests should not exceed 101% of the 1998-99 appropriation. These instructions apply to all Agencies. Appendix B reflects the 0% increase for 1999-2000 and the 1% increase for 2000-01. It has also been requested that each agency submit a reduced base budgeting plan which reflects a 5% reduction of the base for each year. Appendix C shows the 5% reduction for each year across the board. It is clear that, in terms of requesting additional funds for the next biennial period, the opportunities are limited.

Based on the discussion that took place at the April Board meeting and based on feedback, funding requests should be made in the future with the following in mind:

  1. Whatever the request, similar percentage increases should be experienced by all four of the largest programs rather than by just one or two.

  2. Requests can be tied to either tuition increases or unmet need. However, in either case an analysis is needed of how umnet need has impacted, or could impact in the future, the students' ability to access post-secondary education.

  3. Currently, Legislators and Administration do not see post-secondary education in Wisconsin in a crisis situation or for that matter heading towards one. Some believe that a post-secondary education is not "an essential" as K-12 is. Some legislators believe that the current level of student loan debt is manageable, especially given the current economy.

Essentially, before a case can be brought forward to request substantial funding, an analysis is needed to determine whether or not post-secondary education in Wisconsin is financially accessible to the extent that it should be.

Continuing Appropriation for the Wisconsin Higher Education Grant (WHEG), the Wisconsin Tuition Grant (WTG), and the Talent Incentive Program Grant (TIP)
Should a continuing type appropriation be sought for the WHEG, WTG, and TIP Grant Programs?

There are four types of appropriations. Following are the definitions of each type per s.20.001(3):

Currently WHEG, WTG, and TIP Grant Programs are under the biennial appropriation type. This allows funds to be carried forward and back between the two biennial years only. In 1997-98 funds were carried back from 1998-99 for one of the programs to fund awards made in 1997-98. Also, funds will be carried forward from 1997-98 to 1998-99 for several of the programs. Funds cannot be carried forward from 1998-99 to 1999-2000 or carried back from 1999-2000 to 1998-99 since this would require carrying funds between biennial periods.

A continuing appropriation would allow funds to be carried forward each year (even outside a biennial period). However, funds could never be carried back. So, for example, what occurred in 1997-98 where funds were carried back from 1998-99 could not have occurred under a continuing appropriation. A continuing appropriation could provide more consistency from year to year and reduce the probability of adjusting formulas or reducing awards mid year if the formulas are set very conservatively always allowing funds to be carried forward. However, funds always being carried forward may appear to some that the programs are overfunded.

A sum sufficient appropriation type is the most attractive since this would provide funds necessary to accomplish the purpose of the programs. However, this issue relates directly to the Funding Requests for All Programs issue.

The Future of State Student Incentive Grant (SSIG) Funding
Are there steps that can be taken now to prepare for the possible future? Should steps be taken?

A 1998-99 SSIG allocation statement was received in the amount of $532,654. This is just more than half of the 1997-98 allocation. The SSIG Program appears to be gaining momentum under the Leveraging Educational Assistance Partnership (LEAP) initiative. There is a distinct possibility that SSIG will once again survive. Given the many unknowns, there is not much that can be done in regards to this issue except to continue to support the continuing existence of the federally funded SSIG and be mindful of the fact that the funds may cease to exist at some point in time.

Wisconsin Higher Education Grant (WHEG) and Wisconsin Tuition Grant (WTG) Formulas
Should the WHEG formulas be collapsed into one formula?

Appendices D and E reflect the simulation data that was prepared for the UW and WTC Systems. Simulation one indicated in both D and E is the baseline simulation. The baseline is the best estimate of what 1998-99 awards will look like.

The closest overaward percentage to the baseline's percentage for the UW WHEG is simulation six with 146.58%. If you compare the number of awards and the average award in simulation one to six, you will see an increase in the number of awards but a decrease in the average award for dependent students. Independent students would see fewer awards, but larger average awards.

The closest overaward percentage to the baseline's percentage for the WTC WHEG is simulation two with 178.59%. If you compare the number of awards and the average award in simulation one to two, you will see a substantial increase in awards but a decrease in the average award for dependent students. Independent students would see more awards and smaller average awards too.

UW System Administration does not have a recommendation to date as to whether or not the formulas should be collapsed. Their WHEG Advisory Council is currently examining the different possibilities. The United Council of University of Wisconsin Students believes that the two formulas should stay intact. However, The United Council believes that both independent and dependent students should have the same opportunity to be eligible for the same maximum award.

The WTC System Administration recommends that the current dependent student formula be eliminated. Keep in mind that the great majority of the students projected to be eligible for a WTC WHEG in 1998-99 are independent. It is projected that 3,176 dependent students will be eligible under the current formula compared to 19,063 independent students. This is very different than the breakdown between dependent and independent awards for the UW WHEG.

Collapsing the WHEG formula would require a statutory change. Collapsing the formula for one system and not the other would require distinguishing the UW WHEG from the WTC WHEG statutorily.

It has been recommended by Legislators and by Administration that changes should not be made that would severely impact current recipients' eligibility if at all possible. This has also been HEAB's past practice.

Should and can the WTG formula be simplified?

Even though the current formula is complicated and cumbersome, it does include all the factors that the WTG was built on. There currently are no alternatives available that would include all of the necessary components yet simplify the formula.

Inclusion of Tribal Colleges in the Wisconsin Tuition Grant Formula
Does the inclusion of schools with tuition rates lower than public schools in the WTG Program change the intent of the WTG Program? Should separate funding be sought to meet the need of students attending Tribal Colleges rather than include them in the WTG Program as long as the tuition rate continues to be less than the public school rate?

The inclusion of schools with tuition rates lower than public schools in the WTG Program does change the intent of the program. It is for that reason other funding should be sought to meet the need of students attending Tribal Colleges. The key will be to locate sufficient funding. I have asked both Tribal Schools to respond to this issue. To date, I have not received a response. I will continue to seek their input.

Minimum Talent Incentive Program Grant Amount
Should an increase in the minimum TIP Grant be pursued?

By increasing the minimum more funds would be targeted to the neediest students. However, by increasing the minimum fewer students would receive the award and program flexibility would be lost. Recommendations on this issue have been split. HEAB's past practice has been for the most part to provide more awards that are smaller rather than fewer large awards.

Modifications in Statutory Language
What are all of the necessary changes? - Please see Board Report #99-4.

Appendix A     Appendices B and C     Appendices D and E


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