FISCAL NOTE

Date Requested: March 07, 2017
Time Requested: 01:32 PM
Agency: Higher Education Policy Commission
CBD Number: Version: Bill Number: Resolution Number:
2713 Introduced HB2815
CBD Subject: Governor -- Bills Requested By


FUND(S):

0589

Sources of Revenue:

General Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    House Bill 2815 exempts Marshall University, the West Virginia School of Osteopathic Medicine and West Virginia University, including Potomac State College and West Virginia University Institute of Technology, from multiple provisions of the West Virginia Code. It also requires the Higher Education Policy Commission to be responsible for shared services among all of the public higher education institutions except for the exempted schools. If enacted, the Commission would not approve exempted school’s compacts and hold them accountable for accomplishing their missions. For the exempted schools, the Commission would not have oversight authority over budgets, capital plans, debt financing, tuition and fee rules, purchasing activities, and reporting. The proposed legislation allows the exempted institutions to convey their real property to a foundation they control and then sell, transfer or convey it. The bill does not identify the need for rules regarding the conveyance of the property or the use of proceeds. The bill removes the current requirement of the institutions to obtain approval of capital projects from the Joint Committee on Government and Finance. As of July 1, 2018, the proposed legislation would also eliminate the Commission’s authority to assess institutions for the payment of expenses of the Commission or for the funding of statewide higher education services, obligations or initiatives related to the goals set forth for the provision of public higher education in the state.
    
    The bill does not create an oversight structure that replaces the current configuration. The exempted institutions receive approximately $217.3 million from State appropriations along with $47 million in financial aid and the insured value of their facilities is $4.02 billion according to the Board of Risk and Insurance Management. No significant oversight function would exist to ensure that expenditures of State appropriations or property sale proceeds by the exempted institutions are made in accordance with the State’s needs. Estimated losses to the State from the conveyance of property cannot be determined. In addition, the costs of future activities that do not align with State goals and needs cannot be estimated.
    
    In addition to physical property, the bill does not provide for oversight of presidential compensation or comparison with peers in order to establish compensation. The current range for the three exempted schools is $317,280 in salary at the School of Osteopathic Medicine to $1,000,000 at WVU with entertainment stipends, cars, homes and other perks added to their compensation packages. Without oversight, these figures would not come under public review and could continue to spiral unchecked.
    
    The bill would not eliminate many activities required by the existing legislation including budget and capital planning, tuition and fee collection management, procurement management and reporting. These activities are required by the federal government and the Higher learning Commission and best practices. Consequently, it is not possible to estimate any savings the legislation would produce from the reduction in oversight.
    
    The requirement that the Higher Education Policy Commission be responsible for shared services is not defined, consequently the magnitude of the expenditures related to this responsibility cannot be determined.
    
    For FY 2017, institutions were assessed about $5.7 million for statewide higher education services and the expenses of the Commission. This is about 0.73 percent of the $782.9 million FY 2016 gross tuition and fee revenues reported by the institutions for FY 2016. This funding supports vital programs such as low income student scholarships, minority doctoral scholars, science and research, technology, and the Higher Education Grant Program. Without the authority to assess fees, the Commission could not administer shared services among the institutions. If general fund appropriation replaced this funding in FY 2018, the cost would be about $5.7 million.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2017
Increase/Decrease
(use"-")
2018
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 5,700,000
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


    



Memorandum


    



    Person submitting Fiscal Note: Ed Magee
    Email Address: edward.magee@wvhepc.edu