No. 10, March 16, 2004

This Week's Legislative Calendar
Monday, March 15 - Day 32
Wednesday, March 17 - Day 33
Friday, March 19 - Day 34

Wednesday is Crossover Day

Friday, March 12, and Monday, March 15, saw an increase in activity at the Capitol, as lawmakers hastened to push their bills through at least one chamber of the General Assembly by Wednesday, March 17, Day 33 of the 40-day legislative session.

The process of moving legislation from one chamber to the other must be accomplished by the 33rd day, known as "Crossover Day," if it is to have a chance of passing both the House and Senate and being signed into law. Bills that do not meet this deadline are considered dead for the session.

The FY 2005 Budget and bills involving the HOPE Scholarship were among the legislation that moved forward during this last-minute rush.

FY '04 Amended Budget Negotiations Stalled

The Conference Committee charged with reconciling the House and Senate versions of the FY 2004 Amended Budget has not presented a report to date.

House FY '05 Budget Offsets USG's Budget Reductions by $6.5 M

Funds for Several SFI's, B-Unit Items and Public Service Institutes Also Restored

The House version of the Fiscal Year 2005 Budget, approved Monday afternoon (March 15), contained some welcome news for the University System of Georgia, but along with these glad tidings came a few disappointments and surprises.

The Good News

House members supported Gov. Sonny Perdue's recommendations to add nearly $123 million in new formula funding to the University System's budget. In addition, they added back $6.5 million to offset the $71.3 million in FY '05 reductions the System is facing.

The House also added back continuation funding for several of the University System's special funding initiatives, including:

• $1.77 million for the Intellectual Capital Partnership Program (ICAPP®);
• $96,000 to support an information technology program at Georgia Southern University;
• $560,000 for a Water Policy Research Center operated jointly by Georgia State University, Georgia Southern University and Albany State University; and
• $188,000 for the Liberty Center, a Georgia Southern facility that is part of the University System's Enhancing Access initiative.

The House added back funds for four public service institutes, including $556,000 for the University of Georgia's Georgia Center for Communications, $172,700 for Georgia State University's Center for Trade and Technology Transfer, $121,000 for the Institute of Higher Education and $53,700 for the Small Business Development Center, both located at UGA.

Three "B-Unit" budget items also had funds added back by the House, which allotted nearly $322,800 for the Georgia Tech Research Institute (GTRI) and close to $100,800 for the Agricultural Technology Research Program, which brought their budget reductions back to the 7.5 percent level. House members also restored $80,000 to the budget for the continuation of research on Formosan termites at the USG's agricultural experiment stations.

The House version of the budget also includes the following additions:

• $2 million for Fort Valley State University's land-grant mission, funds needed for a federal match;
• $256,600 in restored funding for the Center for Civic Renewal and Engagement at Georgia State University; and
• $85,600 for the Institute of Community Business Development, also at Georgia State.
• The House also added four minor capital projects to the 12 recommended for funding by Gov. Perdue. The additions include:
• $5 million for the renovation of the library building/learning resource center at Macon State College;
• $4.8 million for an academic services building at Darton College;
• $4.5 million for infrastructure improvements and the Student Success Leadership Center at Columbus State University; and
• More than $1 million for a classroom addition at Bainbridge College.

Also added to the capital budget was $840,000 for the construction of a public library in Bartow County, $277,000 for the planning and design of a Success and Retention Center for Gordon College, and more than $1 million for the design of a dining facility and renovation of existing structures at the University System's Rock Eagle 4-H facility.

House members included three projects that had been added originally to the FY '04 Amended Budget in their FY '05 Budget. They are:

• Construction of a public library in South Bibb County ($2.5 million);
• Expansion of a public library in Wheeler County ($500,000); and
• Construction of a student center at Georgia Perimeter College ($1.125 million).

The Not-So-Good News

Chief among the concerns of USG officials following the House vote on the FY '05 Budget Monday was the news that House budget writers had reduced the Governor's $60 million recommendation for major repairs and renovations (MRR) of the University System's aging facilities to $50 million.

"This is money desperately needed for the upkeep of the more than 3,000 state buildings in our care," said Linda Daniel, vice chancellor for facilities. "We simply cannot afford to lose it -- especially after the hard hit we took last year in MRR funding."

Two other major blows included the House's decisions to:

• Eliminate one of the Governor's recommended capital projects -- the $10 million Animal Health Research Center at UGA; and
• Reduce funding for the Medical College of Georgia's research initiative from the recommended $5 million to $3 million.

House members also eliminated the $1.25 million that had been recommended to fund Georgia Library PINES (Public Information Network for Electronic Services), choosing instead to add this amount back to the budget the Georgia Public Library Service (GPLS) uses to distribute grant money to the state's public libraries.

The House also cut approximately $10 million from the budget by delaying the effective date for the 2 percent salary increases recommended by the Governor until Jan. 1, 2005, for all USG employees. Previously, faculty raises were slated to take effect at the start of the Fall 2004 semester, and raises for all other employees were to be effective Oct. 1.

The House had a few surprises for USG officials in its version of the FY '05 Budget. For example, House budget writers transformed UGA's $3.3 million Forestry Department budget from the "A" or resident-instruction budget to the "B" budget, where funding for specific activities and functions is appropriated on a line-item basis. They also decided to make the University System responsible for covering certain health-insurance costs of the Cooperative Extension Service out of its current "A" budget funds.

In a memo to the Board of Regents, Chancellor Thomas C. Meredith indicated that he is seeking further details on these two items, as well as on the delay in salary increases.

The Senate now takes up consideration of the FY '05 Budget.

House and Senate Approve Separate HOPE Legislative Bills

Deep into a marathon of meeting the "Crossover Day" deadline, the House and Senate approved separate legislative proposals designed to protect the financial security of the HOPE Scholarship program. Some legislators have termed HOPE reforms the most pressing issue of the current legislative session.

Both chambers devised solutions that will allow scholarship recipients to continue getting money for books and fees for the time being. Effective May 1, 2003, both of the resulting bills also set 3.0 as the minimum grade-point average to qualify for a scholarship, a tougher standard than the 80-or-higher numerical average used currently. They also require institutions to check the grades of HOPE scholars more frequently than is done now to ensure they are maintaining the required grade-point average.

The House version of the HOPE bill -- sponsored by Rep. Louis McBee, chair of the House Higher Education Committee -- freezes HOPE reimbursements for mandatory student fees at their Jan. 1, 2004, level. Any future fee increases would not be covered by HOPE, under this bill.

In addition, in the event that the scholarship program's year-end balance drops from the previous year, the House bill would cut book payments by $100. Currently, scholarship recipients have a book allowance of $150 per semester or $300 per year. If the year-end balance falls a second time, another $100 would be trimmed from the allowance, while a third drop in the year-end balance would effectively eliminate this part of the program.

Under the Senate's HOPE bill -- sponsored by Sen. Bill Hamrick, chair of the Senate Higher Education Committee -- no changes would be made in book and fee payments unless the year-end balance drops. In that case, the Senate decided, HOPE reimbursements for student fees for the following school year would be capped at $500 per year. A second drop in the year-end balance would cause fee payments to be eliminated, and a third drop would bring the elimination of book payments.

McBee and Hamrick co-chaired the HOPE Scholarship Joint Study Commission that released a series of recommendations last fall after months of studying ways to tighten up the program. The HOPE Study Commission estimated that the cost of the HOPE program is due to outpace state lottery revenues within a few years. The number of HOPE scholars is climbing at a faster rate than revenue from the lottery that funds the program.

The commission recommended eliminating book and fee payments for the 2004-2005 academic year, and Gov. Sonny Perdue followed this recommendation in omitting the $125 million needed to fund these payments from his recommendations for the Fiscal Year 2005 Budget.

However, McBee says, the commission's recommendation was based on expectations that lottery revenue would show no growth. Since then, lottery officials have reported 3 percent growth so far in 2004, allowing lawmakers to reconsider the recommendation.

Another HOPE Study Commission recommendation was to restrict eligibility for the HOPE Grant program (for students attending public technical colleges) to those students who do not already have a bachelor's or master's degree. The Senate included this provision in its HOPE bill, but the House did not.