Date: Thu, 19 Jun 2003
From: "Arline Isaacson"
Subject: State Budget Conference Committee

The House - Senate Conference Committee working on the FY'04 state budget released its budget report earlier this evening. Legislative leaders attending the press conference proudly announced that they had produced a budget 'on time' AND which included no tax increases. Senate Ways & Means Chair Terry Murray acknowledged that it was a 'painful' budget which cut deeply into many important programs.

The budget contains numerous outside sections dealing with higher ed issues regarding governance, formula funding, data collection and reporting requirements. Many of those sections will require detailed analysis over the next several days. The following is a preliminary overview of several important higher ed issues included in the conference committee's version of the budget:

1) Group Health Insurance Premiums
The conference committee used an approach which melded the House and Senate versions.

a) Employees earning more than $35K will have their health insurance premiums increased to 20%. Employees below that salary level will remain at 15%.
b) New employees hired after 7/1/03 will pay 25%.
c) New retirees will be held harmless at 15%.
d) All provisions dealing with current active and retired employees will sunset on June 30, 2005. (New employees will continue however to pay 25%.)

2) Campus Funding Levels
For the most part, the conferees went with the House funding levels, which were lower than the Senate's numbers (when tuition retention was factored in). The conferees announced that they had cut UMass by 18% and the state and community colleges by 13%. MTA's preliminary analysis indicates that the cuts might have been worse than that (20% for UMass and 15% for the state and community colleges). No money was expended for library and reference materials. A detailed spreadsheet is being drafted and will be sent to you tomorrow morning (Friday).

3) Early Retirement (Section 616)
The conferees version of the early retirement proposal for state employees includes the following provisions:

a) Eligible retirees can add 5 years of age or service (or a combination thereof not to exceed 5 years).
b) Retirement application window: 7/15/03 - 9/1/03
c) Retirement deadline : 12/31/03 for higher ed employees, unless the UMass President or Chancellor of Higher Ed determine that certain job titles can retire earlier than 12/31.
d) Backfills cannot exceed 20% of the total annualized cost of regular compensation.
e) Federal and trust fund employees are eligible for the incentive. There are no backfill requirements for such positions and qualified employees paid from regular operating funds are to be first in line to fill any such vacancies.
f) Payments due for unused sick and vacation leave shall be paid in equal installments of 25% over the next four years.

4) Tuition Retention (Sections 611, 633 & 634)
Only 2 campuses will receive tuition retention. The Mass College of Art will receive complete tuition retention. UMass Amherst will establish a two year pilot program for out of state tuition retention.

a) UMass Amherst must ensure that no Massachusetts resident is denied admission as a result of tuition retention.
b) Fringe benefits shall be funded as if employees paid from tuition retention were supported by state appropriations. (This section applies only for FY'04)
c) The Mass College of Art must ensure that the number of Massachusetts residents "shall be no less than 60% of the total number of undergrads...or the number of Massachusetts residents enrolled on Oct 1, 2002, whichever is greater." In state tuition rates for the college shall preserve affordability for Massachusetts residents.
d) The Board of Higher Ed shall evaluate tuition and fees and make recommendations regarding tuition waivers, fringe benefit costs and whether to alter, continue or expand tuition retention.

5) Composition of the Board of Higher Ed (Sections 683 and 693)
The conferees changed the composition of the BHE from the Senate language to the following:

a) There will be 11 voting members: - Commissioner of Education - 7 members appointed by the Governor - 3 members chosen to represent public institutions of higher ed
b) Of the appointed members one shall represent labor, one business and one undergraduate students.
c) The members representing the 3 segments shall be members of the Boards of Trustees and shall be chosen by the chairs of the BOTs.
d) Members shall serve 5 year terms (except for the student representative) and not be appointed for more than 2 consecutive terms.
e) The terms of the current BHE members will expire on 8/30/03. The new appointees will have staggered terms beginning on 9/1/03. The term of the chairperson of the BHE shall continue under the provisions of the current law.

6) Blue Ribbon Commission on State Colleges (Section 600)
The BHE shall establish (by 9/1/03) a commission to research, assess and make recommendations regarding the health, vitality and future direction of the state college system.

7) Closing Campuses (Section 684)
The Board of Higher Ed cannot close any college campuses without the authorization of the legislature.

8) Compensation Study (Section 603)
A commission will study public employee compensation including, but not limited to health insurance, dental insurance, life insurance, education assistance, disability insurance, voluntary savings programs and retirement benefits. The 15 member commission contains 2 labor seats: one for an MTA representative and one for an AFSCME representative.

9) Higher Education Efficiency Incentive Program
This new line item added only in the House version of the budget has been eliminated in the conference committee report.