Date: Mon, 24 May 2004
From: "Jo Ann Fitzgerald" JFITZGERALD@massteacher.org
Subject: Senate Budget

Senate Passes FY05 Budget

The Senate completed its version of the FY05 budget very late in the evening of May 20. The budget calls for spending of approximately $22.5 billion. The budget includes small increases for both preK-12 and higher education over last year's budget. However, despite some increases in public education funding, the total amount is still below what it had been in FY01 and FY02 even without taking inflation into account. The budget deficit of roughly $1.5 billion is closed mostly by using one-time revenues. This structural deficit will continue into the next budget cycle since neither the House nor the Senate supported significant increases in revenues.

Public Higher Education
Notably, the Senate passed budget like the House budget includes the on going funding for the previously unfunded higher education contracts. A commitment also was made by the legislative leadership to pay a portion of the retro-payments in a supplemental appropriation before June 30. When the contract funding and tuition retention are factored in, the UMass budget increased by 7 percent over FY04, the state colleges' budget went up 3.2 percent and the community colleges increased 1.4 percent over FY04. UMass and the state colleges budgets are slightly higher in the Senate budget than in the House budget

Employee Rights and Benefits
None of the governor's proposals to undo the current pension system erode collective bargaining rights or change the state employees health insurance plan were adopted by either the Senate or the House.

Next Steps
The next step in the FY05 budget process is the Senate and House will appoint conferees probably this week to begin to iron out differences in the two versions of the FY05 budget. Once that is completed, the budget will go to the House and Senate for approval and then to the governor. Legislative leaders have announced their plan to send the bill to the governor by June 21.

The governor has ten days to sign or veto provisions in the budget. The Legislature will then attempt to override the vetoes. The Legislature intends to complete the FY05 budget process in time for the Democratic Convention at the end of July.

Below is a more detailed summary of the Senate passed budget. To see what was included in the Senate Ways and Means version and how the Senate bill compares with the House version, please go to www.massteacher.org.

Public Higher Education
Included on-going funding for the previously unfunded higher education contracts. A commitment was also made by legislative leadership to pay a portion of the retro payments in a supplemental appropriation before June 30.

Operating Budgets - Increases over FY04 *

University of Massachusetts 7%
State Colleges 3.2%
Community Colleges 1.4%

* Contract funding and tuition retention are factored into these increases. Actual figures can be viewed on the attached chart.

Other Amendments
Pacheco law - On a vote of 8 to 31, rejected an amendment that would have allowed UMass to outsource some public employee jobs.

In-State Tuition for Immigrants - rejected an amendment that would have struck language in the budget that provides in-state tuition to undocumented students.

Employee Rights and Benefits
The Senate like the House rejected Governor Romney's proposals for " reforming" the public employee pension system as well as his various proposals to erode employee rights and benefits.

The Senate took the following actions:

Passed an amendment to strike a Senate Ways and Means provision that would have imposed a $120,000 cap on public employee pensions.

Rejected a Senate Ways and Means provision to raise the interest rate assessed on those purchasing creditable service to 8.25 percent. An MTA amendment cut that rate in half and only those hired after July 1, 2005 would be affected.

Created special commission to study the pension system and to make recommendations. The Senate added Massachusetts Teachers Association and the Massachusetts AFL-CIO to the commission.

Required the Public Employee Retirement Administration Commission (PERAC) to conduct an impact study on the cost of increasing the base to $22,000 on which retiree COLAs are calculated. The language is the same as passed by the House.

Directed that state employees, including those in higher education, whose job functions have been transferred from one department or agency to another, will retain their employee rights upon being transferred to the new employing department or agency. (Implementation guidelines are not spelled out in the proposed language so additional analysis needs to take place). Similar language passed in the House.

Passed a provision that requires the governor to request a federal waiver to allow for the importation of safe, affordable drugs from Canada.

Taxes
The Senate rejected an amendment to further reduce the state income tax rate from 5.3 percent to 5 percent that would have reduced state revenues by approximately $700 million and resulted in further cuts to public education.