2016 Legislative Session 52nd Legislature, 2st Regular Session Summary of the state budget, emerging issues and enactments relevant to Arizona’s public university enterprise Arizona Board of Regents 2020 North Central Avenue, #230 Phoenix, Arizona 85020 602-229-2500 www.azregents.edu REGENTS Chair Jay Heiler, Paradise Valley • Greg Patterson, Scottsdale • Ram Krishna, Yuma • LuAnn H. Leonard, Polacca • Rick Myers, Tucson Larry Penley, Phoenix • Bill Ridenour, Paradise Valley • Ron Shoopman, Tucson • STUDENT REGENTS: Mark Naufel, ASU • Jared Gorshe, NAU EX-OFFICIO: Governor Doug Ducey • Superintendent of Public Instruction Diane Douglas ENTERPRISE EXECUTIVE COMMITTEE Eileen I. Klein, Board President • Michael M. Crow, ASU President • Rita Cheng, NAU President • Ann Weaver Hart, UA President ArizonaBoardofRegents(ABOR) 2016EndofSessionReport The52ndLegislature,2ndRegularSession,convenedonJanuary11,2016,andadjourned117 dayslateronMay7,2016.UnlessapieceoflegislationcontainedanEmergencyClause(makingit effectiveuponsignatureoftheGovernor),thegeneraleffectivedateforallenactedbillsisAugust6, 2016. Summaryofthe52ndLegislature,2ndRegularSession BillsIntroduced 1,247 BillsSignedIntoLaw 374 Resolutions&MemorialsIntroduced 114 Resolutions&MemorialsFiledwithSecretaryofState 36 BillsVetoed 14 TableofContents Boardactionbills p.3 Outstandingmandates p.4 Statebudget p.5 Statebudget:ABOR&universities p.6 Proposition123 p.10 Nationallandscape p.12 Lookingforward p.18 Billsaffectingtheenterprise p.19 Vetoedlegislation p.28 2 BoardActionBills Bill Board Position Outcome HB2033post9/11veteran educationrelieffund Support Signed HB2088schools; assessments;surveys; information Opposed Signedw/favorable amendment HB2271universities; commercialpaper ABORBill Signed HB2338educational institutions;firearms; rights-of-way Oppose w/o amendment Signedw/favorable amendment HB2436regents;designees Oppose Held HB2479ABOR;terms Oppose Failed HB2547/SB1122 universities;in-statetuition; AmeriCorps Support Signed HB2548publicforums; activities;postsecondary campuses Oppose Signedw/amendment eliminatingspecificdollar penalties HB2615campuses;free speechzone;prohibition Oppose Signedw/amendment eliminating“freespeech zones” SB1267militaryservice; postsecondaryacademic credit Support Signed SB1389student,teacher datacollection;prohibitions Oppose Held SB1418fees;notice; posting;StateMuseum Oppose w/o amendment Signedw/amendment protectingABOR&UA authority 3 OutstandingLegislativeMandatesonABOR&Universities Bill HB2033 HB2240 (From2015) HB2271 HB2547/SB1122 HB2666 HB2695 HB2699 HB2707 SB1267 SB1418 RequiredAction Recommendamembertothepost9/11advisorycommittee. ABORPresidentmustcertifytoLegCouncilifenoughmoniesavailablein FY18tocovernationalguardtuitionwaivers;policyintendedtotake effectin2017-18academicyear. Establishcommercialpaperprogramandincludedetailsinannualdebt servicereport. ReviseABORpolicyforAmeriCorps&VISTAresidenttuitionrate ABORPresidentisamemberofWorkforceDataTaskForce. EnsureproceduresinplaceforABOR&universitiestoreceive unemploymentinsurancedata. ASU&UAreportsonfreedomcentersduebeforeOct.3,2016. Universitiesmustreportintendedusesof$19M1-timemoneybyAug.1, 2016.Ifmoniesusedforcapitalimprovements,universitymustfirst submittoJCCRthescope,purposeandestimatedcost. DeveloppoliciesandprocedurestofacilitateconsolidationofArizona GeologicalSurvey&Mining,MineralandNaturalResourcesEducational Museumasnecessary. DeveloplistofqualifyingexamsandscoresforCollegeCreditbyExam IncentiveProgrambySept.1,2016. ReviseABORpolicytoawardacademiccreditformilitaryservice. ReviseABORpolicyinaccordancewithnewStateMuseumfeesetting process. Reportduewithin12monthsofAugust6,2016. 4 StateBudget BudgetEnacted5/4 BalanceForward Revenues Spending EndingBalance FY16 $312M $9.43B $9.52B $225M FY17 $225M $9.45B $9.61B $66M FY18 $66M $9.73B $9.63B $166M NewFY2016&FY2017SpendingInitiatives One-TimeInitiativesFY16&FY17 Universitiesrolloverrepayment $200M Universities $19M DCS $35M K-12currentyearbackfill $31M SFBbuildingrenewal $30M SFBnewschoolconstruction $23M DESrolloverrepayment $21M DCSrolloverrepayment $11M Borderstrikeforce $15M Transportation(57Mstate/30Mlocal) $87M ITprojects $17M ADOAcapital&FlagstaffVeteransHome $18M Counties $8M Total $515M OngoingInitiativesFY16&FY17 Universities $13M DCS $24M JTEDs $29M Borderstrikeforce $8M Total $74M 5 FY19 $166M $10.12B $9.82B $464M StateBudget:ABOR&Universities ForFY2017,theuniversitysystemreceivedjustunder$37millionnewdollars,bringingtotal statesupportto$705million.ThesystemalsoreceivedaFY2016supplementalappropriation of$4.1millionandone-timemoniestofullyretirethe$200millionpayment“rollover.” TheFY2017fundingisamixof$13.2millioninongoingdollars,$19millionone-timedollars thatmaybespentateachuniversity’sdiscretion,and$3.9millioninresearchinfrastructure debtservicepaymentadjustments. FY2016SupplementalFunding UniversityRollover AspartofthebudgetsolutionsforFY2009andFY2010, thestatedeferred$200millioninpaymentsfromthe universitysystem.Thisactionisknownastheuniversity rollover.Whenimplemented,therolloverweakenedthe university’scashpositionandcreatedareceivableon universitybooks.Therolloverpayoffwillswitchthe receivabletocashandimproveeachuniversity’scash position. UniversityPayment DeferralRollover ASU $90.6M NAU $30.5M UA $78.9M Total $200M HealthInsuranceAdjustments AspartoftheFY2016budget,thestatereduced employerhealthinsurancepaymentsandmade correspondingreductionstogeneralfundbudgetsbased ontheanticipatedsavings.Thestateoverallocatedthe universitiesreductions,whichuniversitystaffsuccessfully challenged.Torestorethoseamounts,theFY2017budget providesaone-timeFY2016supplementalof$4.1million. 6 HealthInsurance Adjustments ASU $2.3M NAU $40,000 UA $1.8M Total $4.1M NewFY2017OngoingFunding-$13.2M ResidentStudentFundingModel ABORandthepublicuniversitiesproposeda ResidentStudentFunding newfundingmodelduringthe2016 legislativesessionthatputsArizonaresident Allocation studentssquarelyatthecenteroftheplan. ASU $4.4M Themodelproposesthatstatedollarsbe allocatedtosupportArizonaresident NAU $1.5M students,upendingthemodelofperformance funding,althoughperformanceremainsat UA $2.3M thecoreoftheenterprise’sstrategicplan. Total $8.2M $8.2millioninongoingfundingwas appropriatedtotheuniversityenterprise basedonthisnewresidentstudentfundingmodel,signifyinganendorsementofthemodel fromthelegislatureandexecutive.Buildinguponthisinvestmentwilllikelybeaprimary aspectofnextyear’slegislativesession. FreedomSchools AbudgetfootnoterequiresASUtoconsolidatethecurrentlyexistingCenterforPolitical ThoughtandLeadershipandtheCenterfortheStudyofEconomicLibertyintoanewSchool ofCivicandEconomicThoughtandLeadership.Theschoolisrequiredtooperateasasingle stand-aloneacademicentitywithinASU. Thetotal$5.5millionappropriationtoASUandUAmaynotbeusedtosupplantanyexisting statefundingorprivateorexternaldonationsforthe“freedomschools”andareprohibited frombeingusedforindirectcostsfortheuniversities.Reportsmustalsobesubmittedtothe legislaturedetailingthetotalamountoffundingreceivedbyeach‘freedomschool’fromall sources,adescriptionoffacultypositionsandcoursesoffered,totalstudentparticipationand significantcommunityevents,initiativesandpublications. ASU&UAFreedomSchools ASUSchoolofCivicandEconomic ThoughtandLeadership $3M UACenterforthePhilosophyof Freedom $2M Total $5M 7 OtherFY2017UniversityFunding One-TimeAppropriation $19millionwasappropriatedtotheuniversity enterprisebasedonanarbitraryallocation method,exceptthe$8millionappropriation totheUAwaslikelydeterminedbasedonthe UA’srequestfor$8millionforcapitalcosts relatedtotheUAveterinarymedicine program.Nobudgetfootnotemandatinghow thedollarsbespentwasincluded,therefore universitiesmayspendtheirportionofthe $19millionappropriationattheirdiscretion. One-TimeFlexFunding ASU $7M NAU $4M UA $8M Total $19M ResearchInfrastructureDebtServicePaymentAdjustments Inaddition,reductionstouniversityResearch RIF1Adjustments InfrastructureI(RI1)appropriationsare ASU $716,100 continuedthroughFY2017.Thesereductions areduetoRI1lease-purchaseagreements NAU ($1,246,400) beingrefinancedbyallthreeuniversities resultingintheannualstateGeneralFund UA $4,384,800 appropriationsexceedingtheactualpayment Total $3,854,500 amounts.Thelegislaturesubsequently reducedtheannualappropriationsin accordancewiththecost-savingsforeachuniversity. ELASFeeElimination ELASFeeEliminationSavings Thebudgeteliminatesa$6perFTEfeethe universitiescurrentlypaytotheDepartment ofEducationforthedevelopmentofa studentlevellongitudinaldatasystem.The eliminationofthefeewillsavetheuniversity approximately$868,000. 8 ASU $479,000 NAU $149,000 UA $240,000 Total $868,000 TuitionRemittanceElimination Currently,universitiesremittheappropriatedportionoftuitiontotheTreasurer’soffice. Thesedollarsarethenreturnedtotheuniversitiesinmonthlyallotments.Thestatebudget eliminatesthisprocessandinsteadcreatesalocalfundthatwillholdalltuitionandfee revenue.Thisfundwillbedividedbetweenappropriatedtuitionandnon-appropriated,butall tuitiondollarswillremainatthelocallevel.TheimplementationwasdelayeduntilFY2019to allowtheuniversitiestomakethenecessaryadjustmentstoaccountingprotocols.Eliminating thetuitionremittanceprocesshasbeenagoaloftheenterpriseforseveralyears.Its eliminationwillresultinmoreefficientfinancialoperationsattheuniversitiesaswellas increasedcashmanagementandliquiditypower. ArizonaGeologicalSurvey&ArizonaMining,MineralandNaturalResourcesEducational MuseumConsolidation&Transfer ThestatebudgetconsolidatestheArizonaGeologicalSurvey(AGS)agencywithintheUA. Furthermore,thebudgetalsotransferspartialcontroloftheArizonaMining,Mineraland NaturalResourcesEducationalMuseumtotheUA.TheAGSinvestigatesArizona’sgeology andprovidestechnicaladviceandassistancetostateandlocalgovernment,industryand membersofthepublic.Thecurrent $941,000generalfundappropriationfor theAGSwaseliminatedaspartofthe consolidation. TheMiningandMineralMuseumsitson theCapitolMall,buthasbeenclosedsince 2011.Itwilllikelytakeasignificant investmenttoreopenthebuilding.The budgetcontainsa$428,300annual appropriationand1FTEfromtheArizona HistoricalSocietytotheAGSforoperation oftheMuseum.TheMuseumtransferandappropriationareconditionallyenactedupon moniesbeingraisedbyJuly1,2018tosufficientlyrefurbishandopentheMuseumatits currentlocation. 9 Proposition123 Prop123Results 49.08% 50.92% No Yes Proposition123isareferendempassedbythe legislatureandleadbyGovernorDuceyasa meanstoincreaseK-12funding.Theproposition passedbyamarginof19,416outofatotal 1,053,314votescast.Theballotmeasure allocates$3.5billionforArizona’spublicK-12 schoolsover10years,with$1.4billion appropriatedfromthestategeneralfundand$2 billionallocatedfromthestatelandtrustby increasinglandtrustdistributionratefrom2.5 percentto6.9percent. Yes:536,365 No:516,949(Source:SecretaryofState) WhileArizona’spublicuniversitieswerenotpartiestotheK-12lawsuitnorthesettlementthat spurredProposition123,theyarebeneficiariesofthestate’slandtrustandasaresult,willbenefit fromthechangestoearningsdistributionsfromthelandtrustmadeunderProp123. Thepublicuniversitiesareprojectedtogainapproximately$64millionoverthenexttenyears. Basedonstatutorydistributionformulas,thosedollarswouldbeallocated46%forASU, 38%forUAand15%forNAU. TheseestimateswerecalculatedbytheABORofficebasedonofficialnumberspublishedbyJLBC lastfall.Numberswillberefinedandupdatedasmoreinformationon2016staterevuesbecome available. Eachuniversity’sshareofincreasedlandtrustdistributionswillbecomeunrestrictedmonieswithin theuniversitybudgets. 10 ProjectedAdditionalLandTrustDistributions–Prop123 FiscalYear ASU(46%) NAU(15%) UA(38%) FY2016 $2,482,920 $839,757 $2,033,385 FY2017 $2,716,542 $918,772 $2,224,710 FY2018 $2,927,612 $990,159 $2,397,565 FY2019 $3,064,841 $1,036,571 $2,509,949 FY2020 $3,113,867 $1,053,152 $2,550,098 FY2021 $3,116,693 $1,054,108 $2,552,413 FY2022 $3,104,638 $1,050,031 $2,542,541 FY2023 $3,080,284 $1,041,794 $2,522,596 FY2024 $3,044,798 $1,029,792 $2,493,534 FY2025 $2,999,046 $1,014,318 $2,456,065 $29,651,243 $10,028,456 $24,282,855 Total Totalincreasedstatelandtrustdistributionstotheuniversityenterpriseover10yearsasa resultofProposition123isapproximately$64million. 11 NationalLandscape NationalTrendsinPostsecondaryEducation&Arizona Market Nationally Legislation Arizona StudentDebt Increasing Similar trendsto otherstates Enrollment declining Enrollment increasingat recordlevels Residentvs.nonresidentgrowth Similar enrollment trends Mergers& consolidations ASU& Thunderbird; SXUclosing Nationally Gunson campus (20+ states) Arizona 2bills introduced; 1signed HB2072 failed HB2338 passed Free speech protection (VA,MO, TN) 2newbills signed: HB2548& HB2615 Market StudentDebt AccordingtotheWhiteHouse,totaloutstandingstudentloandebtintheU.S.is$1.2trillion, makingstudentloansthesecondhighestrankingconsumerdebt,withmortgagesbeingfirst. Approximately40millionAmericanstudentspossessloandebtandroughly70%ofindividuals whohavegraduatedwithabachelor’sdegreegraduatewithdebt.Onaverage,theclassof 2015graduatedwith$35,051indebt,reportedlythemostinU.S.history.Furthermore, accordingtotheConsumerFinancialProtectionBureau,oneoutoffourborrowersareeither delinquentordefaultontheirstudentloans. 12 Thebreakdownbetweenloanstakenoutbystudentsattendingfor-profitandnon-profitor publicpostsecondaryinstitutionshaschangeddrasticallyoverthepast10plusyears.Astudy fromtheBrookingsinstituteshows13institutionsinthetop25institutionswiththemost federaldebtin2014werefor-profit,comparedtoonly1for-profitinstitutioninthetop25in 2000. For-profitstudentsarealsomuchmorelikelytodefaultontheirloans,asseenbelow. BorrowingatArizona’spublicuniversityenterpriseisincreasingconsistentlywithnational trends,butitisalsoaffectedbytheavailabilityofinstitutionalaidforstudents.During201415,totalfinancialaidprovidedtoArizona’spublicuniversitystudentswas$2.2billion, increasingabout43percentfrom$1.5billioninFY2010.SinceFY2010theamountofloans securedbyuniversitystudentshasincreasedbynearly37percent,however,loansasa percentoftotalaidhasdeclinedsinceFY2010.Loansrepresentedabout48percentoftotal aidinFY2010versus46percentinFY2015. 13 DecliningNationalEnrollment–ArizonaEnrollmentatRecordHighs TheNationalStudentClearinghousereportsenrollmentatpostsecondaryinstitutionshas declinedforseveralyears,primarilydrivenbyfor-profitcolleges,studentsaged24andolder andfulltimecommunitycollegestudents. ChangeinTotalStudentEnrollmentatAmericanPostsecondaryInstitutions Fall2014 19,619,773 Fall2015 19,280,473 TotalEnrollmentDecrease 339,300 Morethanhalfofthetotalenrollmentdecreaseoccurredatfour-yearfor-profitinstitutions, whileenrollmentatfour-yearpublicinstitutionsremainedessentiallyflat.Whileenrollment nationallyissliding,enrollmentatArizona’spublicuniversityenterpriseremainsstrong. BetweenFall2014andFall2015,headcountenrollmentfortheentireuniversitysystem increasedby6.7percent-thelargestpercentageincreaseinenrollmentsinceFall1975. Totalenrollmentisattherecordlevelof163,183,anincreaseof10,250fromtheprevious year,andthelargest1-yearincreaseeverrecorded.Undergraduateenrollmentat132,735is atarecordlevelaswellasgraduateenrollmentat30,448. Residentvs.NonresidentGrowth Thechangeinresidentvs.non-residentenrollmentdemographicsisbecomingmore prominentnationwide.ThePioneerInstituteissuedareportanalyzingtrendsinnon-resident vs.residentenrollment,withacase-studyfocusonMassachusetts.UMassincurredan85 percentincreaseinnon-residentstudentgrowthsince2008,withthereportclaiminga growingtrendthatnon-residentgrowthistheresultofpublicinstitutionsseekingtoraise revenuefromhighernon-residenttuitionratesinordertosubsidizealluniversityoperations. Asaresult,thePioneerInstituteisrecommendingacaponnon-residentstudentstothe MassachusettslegislatureandboardoftrusteesofUMass.Cappingnon-residentenrollment isagrowingnationaltrend–theUniversityofNorthCarolinaandUniversityofCalifornia Berkley,twonationallyprominentpublicinstitutions,recentlycappednon-resident enrollment.Contrarily,lastyearABOReliminatedapolicycappingenrollmentoffull-time non-residentundergraduatestudentsatthepublicuniversities,whichhadbeensetat30 percentofeachuniversity’stotalundergraduateenrollment. Asaresultofnon-residentenrollmentgrowth,severalstatesaredebatingwhatthe responsibilityisforpublicpostsecondaryinstitutionsregardingtheprioritizationofeducating residentstudents,particularlydrivenbythefactthatpublicinstitutionsreceivepublicmonies (seeMassachusetts,Virginia,California,Louisiana).ThismaysignaltheArizonapublic universityenterpriseiswellpositionedgiventheboard’srecentlyadoptedresidentbased 14 fundingmodelplacescostofresidentstudentsatthecenteroftheenterprise’sfunding relationshipwiththestate. StateFundingofPublicUniversities StatesupportforpublicuniversitiesinFY2017variedwidely.Belowisacomparisonofthe percentchangeinstateappropriationforpublicuniversitiesofArizonaanditsdesignated peers.Asshown,manyofArizona’speerstateseitherreceivednewstatedollars,orhave fundingincreasesproposed. FY2017StateAppropriationPeerComparison State %Change Status Washington 6.0 Governorproposed Nevada 5.8 Bienniumaverage Texas 5.7 Enacted California 5.0 Enacted Arizona 4.8(Wouldbe2%if Enacted$32M(19M onlycountingongoing) is1-time) Pennsylvania 4.8 Governorproposed Michigan 4.3 Enacted Ohio 3.2 Enacted Minnesota 3.0 Enacted Maryland 3.0 Enacted Wisconsin -9.0 Enacted However,newdollarsarenotthecaseforallstates. • • Wisconsin’s2015-17budgetcutWisconsinuniversitysystem$250million. Illinoisisinthemiddleofabudgetimpasse.Publicuniversitiesdidnotreceivestatefunding forroughly10monthsuntil$600millioninstopgapfundingwasapprovedtokeeppublic postsecondaryinstitutionsopenthroughthesummer.Moody’sInvestorsServicehas downgradedthecreditratingof3publicuniversities.Permanentfundingcutshavebeen proposedintherangeof6.5percentto31percent. 15 • Louisianacurrentlyhasanestimatedbudgetshortfallofover$700million.Louisianapublic postsecondaryinstitutionscouldbefacingcutsintherangeof8percentto12percent. NationalLandscape-Legislation GunsonCampus AccordingtotheNationalConferenceofStateLegislatures,over20stateshaveintroduced legislationinthepast5yearsauthorizingthecarryingofconcealedfirearmsoncampus. • • • • 8statesallowthecarryingofconcealedgunsonpublicpostsecondarycampuses: Colorado,Idaho,Kansas,Mississippi,Oregon,Texas,UtahandWisconsin. ArkansasandTennesseeallowcertainfacultymemberstocarrygunsoncampus,but donotpermitcarryingbystudentsorthegeneralpublic. 19statesbancarryingaconcealedgunonacollegecampus: o California,Florida,Georgia,Illinois,Louisiana,Massachusetts,Michigan, Missouri,Nebraska,Nevada,NewJersey,NewMexico,NewYork,North Carolina,NorthDakota,Ohio,SouthCarolina,TennesseeandWyoming. 23statesallowuniversitiestosetcampuscarrypolicies: o Alabama,Alaska,Arizona,Arkansas,Connecticut,Delaware,Hawaii,Indiana, Iowa,Kentucky,Maine,Maryland,Minnesota,Montana,NewHampshire, Oklahoma,Pennsylvania,RhodeIsland,SouthDakota,Vermont,Virginia, WashingtonandWestVirginia. Twobillswereintroducedduringthe2016Arizonalegislativesessionandwerebothformally opposedbyABOR.HB2072,sponsoredbyRep.SonnyBorrelli,wouldhaveauthorized universityfacultyandregisteredstudentstocarrygunsoncampusiftheindividualpossessed aconcealedweaponspermitandregisteredthegunwiththeuniversity.Thebilldidnot receiveahearinginanyHousecommittee. HB2338,sponsoredbyRep.EddieFarnsworth,addslanguageforbiddingArizonaeducational institutionsfromprohibitingthelawfulcarryingofadeadlyweapononapublicright-of-way. Asintroduced,thebillincludedadefinitionof“publicright-of-way”thatmayhaveexpanded thetraditionaldefinitiontoincludedpathsandthoroughfaresonuniversityproperty. Thebillwasamendedtoclarifythatpropertyofaneducationalinstitutionisexemptfromany newrequirements,thusalleviatingmanyABORanduniversityconcerns,andwassignedinto law. FreeSpeechonCampus AccordingtotheFoundationforIndividualRightsinEducation(FIRE),1in6ofAmerica’stop collegesanduniversitiesimplement“freespeechzones”,orrestrictstudentexpressiverights 16 tosmallareasofcampus.Asthisissuehasgrownnationally,manystateshaveattemptedto passlegislationwithvaryingresults. In2014,Virginiapassedalawprohibitingrestrictionsonstudentspeechexceptfor reasonabletime,placeandmannerrestrictions.Thelanguagelargelyincorporates protectionsonspeechprovidedbytheFirstAmendmenttotheU.S.Constitutionandcaselaw interpretingtheFirstAmendment. In2015,MissouripassedtheCampusFreeExpressionAct,whichdefinesentirecampusesas “publicforums”andprovidesforlegalramificationsforaggrievedindividuals,including specifyinga$500penaltyfortheinitialviolation,and$50foreachdaytheviolationremains ongoing. ItisimportanttonotethatArizona’spublicuniversitiesdonotlimitfreespeechtoany confinedareaofcampusandcontainnofreespeechzones–freedomofstudentspeechis protectedthroughouttheentiretyofeachcampusatallthreeuniversities. Duringthe2016Arizonalegislativesession,twobillsweresignedintolawregardingstudent speechonuniversitycampuses.HB2548,sponsoredbyRep.PaulBoyer,asintroducedwas nearlyidenticaltothe2015Missourilegislation.Thebilldefinedentirecampusesaspublic forums,setforthaprivaterightofaction,andestablishedspecificcompensatorypenalties. Concernswiththelegislationwereraisedregarding:1)alteringlegalregulationsoffree speech,arguingtheFirstAmendmentandcurrentcaselawalreadyprovideappropriate protectionofstudentspeechoncampus;and2)specifyingdollaramountsaspenaltiesin statelaw,astheymightencourageindividualstopursuefrivolousactions.Basedonthese concerns,ABORanduniversitylobbyistssecuredseveralamendmentsalleviatingmostofthe concerns(seeHB2548intheBillsAffectingtheEnterprisesection). HB2615,sponsoredbyRep.AnthonyKern,originallyprohibitedacommunitycollegeor universityfromdesignatinganyareaoncampusa“freespeechzone”anddirectedanyfree speechzonesinexistencetobeconvertedtoamonumentormemorial.Basedonthesame concernsexpressedregardingHB2548,ABORanduniversitylobbyistssuccessfullyreplaced muchofthelanguageinHB2615withaspectsfromthe2014Virginialaw(seeHB2615inthe BillsAffectingtheEnterprisesection). BothHB2548andHB2615asamendedweresignedintolaw. 17 LookingForward StateBudget&Revenues StategeneralfundrevenuegrowthremainsabovethebudgetedestimatesofJLBC.April revenueswerethestrongestin8yearsandleaveArizona’syear-to-daterevenues$61M aboveestimateand$402millionabovethefirst10monthsofthepreviousfiscalyear. ProjectedbaserevenuegrowthforFY2016was3.5percentand4.0percentforFY2017. Thestatebudgetpictureisgraduallyimprovinglargelyduetorevenuesslightlyaboveforecast andthepassageofProposition123.Jobgrowthisalsoimprovingatahigherratethanany timeduringthestate’scurrenteconomicexpansion.Theseindicatorsmayresultinupwards of$200+millionavailablefordiscretionarystatespendingduringthe2017legislativesession. Proposition301 Perhapsthesinglebiggestissuefacingthestatein theupcomingyearswillbethepossible reauthorizationofProposition301.Prop301was passedinNovemberof2000andimplementeda20yearincreaseof0.6percenttothestate’ssalestax, expiringinJuneof2021.WhilethemajorityofProp 301fundingisdedicatedtoArizona’sK-12system, thepublicuniversityenterprisereceives12percent ofthemoniesremainingafterdesignatedK-12debt servicepayments. Prop301Total UniversityAppropriation FY2016 $63.7M FY2015 $67.2M FY2014 $65.3M FY2013 $59.8M UniversityProp301dollarsareallocatedtotheTechnologyandResearchInitiativeFund (TRIF)andusedforvariouspurposes,includingthestimulationofentrepreneurship, innovation,andresearchanddevelopmenttosupportArizona’sknowledge-basedeconomy. EnsuringthepublicuniversityenterprisemaintainsanactiveroleinProp301 reauthorizationtalkswillbecriticallyimportantduringtheforeseeablefuture. BallotInitiatives Ballotinitiativeslegalizingtherecreationaluseofmarijuanaandchangestominimumwage andpaidsickleavearelikelytoappearonthe2016Arizonaballot.Recreationaluseof marijuanaislegalinfourstatesandtheDistrictofColumbia,andNevadawillbevotingonthe prospectlaterin2016.TheArizonaMinimumWageandPaidTimeOffInitiativeaimstoraise Arizona’sminimumwagefrom$8.05perhourto$10in2017,andincrementallyto$12by 2020.Theinitiativealsowouldmandatepaidsickleaveof40hoursperyearforlarge companiesand24hoursperyearforsmallbusinesses. BothinitiativesareundervastscrutinybythepublicandArizona’sbusinessgroupsand coalitions.ABORshouldmonitortheseinitiativescloselyandconsiderathoroughanalysisof eachinitiative’seffectsonthepublicuniversityenterprise. 18 BillsAffectingtheEnterprise HB2271universities;commercialpaper(Rep.DavidLivingston) HB2271authorizesABORtoissuecommercialpaperonbehalfofthepublicuniversitiesto provideshorttermfinancingforcapitalprojectsorrelatedexpenses.Commercialpaperis essentiallyashorttermpromissorynotewithverylowinterestrates;oftenbelow1%. Commercialpaperisusedbymanypublicuniversitysystemsandprivatecorporations nationwide. Underthebill,anyissuedcommercialpapermustberepaidwithin270daysandmaybe payablebyapledgeoftuition,fees,rentals,andothersourcesthatmaybepledgedwithout violatingconstitutionaldebtlimits.ABORmaycontractwithabank,insuranceorindemnity companytoprovideadditionalsecurityforthecommercialpaper. ThebillalsoauthorizesABORtoobtainlinesofcreditforcashmanagementorliquidity purposes. HB2271istheonlystandalonelegislationrunbyABORandtheuniversitiesduringthe2016 session.Theintroducedbillwasverysimilartotheboard’scommercialpaperbillfromthe previoussession,yetthefinalenactedbillhasseveralkeydifferences.HB2271receiveda thoroughhearingintheHouseBankingandFinancialServicesCommitteeresultinginagreed uponamendmentsthat: • • • • • Subjectcommercialpapertoeachuniversity’s8%annualdebtcap; Limitusesofcommercialpapertocapitalprojectsandrelatedexpenses; EnsurecommercialpaperisonlysubjecttoJCCRreviewwhenissuedforacapital projectthatwillbefinancedwithlongtermfinancing. Limittheamountofcommercialpaperthatcanbeissuedat25%ofeachuniversity’s 8%annualdebtcap;and Includedetailsoncommercialpaperintheboard’sannualdebtreport,ratherthan creatinganannualreportexclusivetocommercialpaper. Issuingcommercialpaperandestablishinglinesofcreditwillallowthepublicuniversitiesto operatemoreefficientlyand,mostimportantly,savemoney.HB2271passedoutofthe HouseandSenatewithoutasingleNOvote,demonstratingastrongadvancementofthe board’sregulatoryreformagendathattheenterprisewillbuilduponnextsession. BoardPosition ABORsponsoredbill Outcome SignedbyGovernor HB2033post-9/11veteraneducationrelieffund(Rep.SonnyBorrelli) HB2033establishesthePost-9/11VeteranEducationReliefFundandthePost-9/11Veteran EducationReliefAdvisoryCommittee.TheFundiscomprisedfromdonations,grants, 19 bequestsandotherdollarsdedicatedtotheFundtobeusedasfinancialassistancefor veteransattendingoneofthepublicuniversitiesbasedonfinancialneed.Dollarsmaynotbe usedasfinancialassistanceatotherpostsecondaryinstitutions,andarepaiddirectlytothe respectivepublicuniversity.The9-membergubernatorialAdvisoryCommittee,includingone memberrecommendedbyABOR,establishesthecriteriaandapplicationprocessforthe financialawards. BoardPosition Support Outcome SignedbyGovernor HB2547/SB1122universities;in-statetuition;AmeriCorps.(Rep.RustyBowers&Sen.David Bradley) HB2547andSB1122areidenticalbillsauthorizingstudentswhoparticipateinthe AmeriCorpsorVolunteersinServicetoAmerica(VISTA)programinArizonaforatleast1year tobeeligibleforin-statetuitionatthepublicuniversities.AmeriCorpsandVISTAconsistof manydifferentprogramsbasedonpublicandcommunityserviceandindividual development,suchasTeachforAmerica. Thetwobillsareidenticalandwereswitchedon3rdreadfortransmittaltotheGovernor. Individualswhoqualifyfortheresidenttuitionrateduetothislegislationwillresultin foregonetuitionrevenueequalingthedifferencebetweentheresidentandnonresident tuitionrateforthestudent’sparticularacademicprogram.Thelegislationwillrequirea revisiontoABORpolicyinordertocomplywiththenewlaw. BoardPosition Support Outcome SignedbyGovernor SB1267militaryservice;postsecondaryacademiccredit(Sen.SteveSmith) SB1267requiresthepublicuniversitiesandcommunitycollegestoawardacademiccreditto certaincurrentandformermilitarymembersthatmaybeusedtowardthepursuitofa bachelorsorassociatedegree,respectively,basedonboth: • • Themember’slengthoftimeofactivedutyservice;and Skills,knowledgeandcompetenciesthememberacquiredwhileserving. ThebillallowsABORtoadoptthepolicythatwillregulatetheawardingofacademiccredit. Currently,allthreeuniversitiesawardacademiccreditformilitaryexperience,basedon commonnationalbenchmarks,suchasthoseestablishedunderJointServiceTranscriptsand 20 theDefenseActivityforNon-TraditionalEducationSupport.NAUandUAalsocurrentlyaward academiccreditsolelybasedonthelengthofamember’sservice. Sincethebillrequirescredittobebasedonbothlengthofserviceandcompetencies,the legislationwillnotresultinanychangesforcurrentuniversitypractice. BoardPosition Support Outcome SignedbyGovernor HB2088schools;assessments;surveys;informedconsent(Rep.Finchem) HB2088prohibitsK-12schoolsfromadministeringasurveytostudentsthatsolicitscertain personalinformationandthatisretainedforlongerthan1yearbytheschoolwithoutprior writtenconsentfromthestudent’sparents.TheintroducedversionofHB2088wasdrafted broadlyenoughthatitmayhaveprohibitedseveralsurveysusedtocollectcommonstudent demographicsusedbythepublicuniversities,suchascollegeentranceexams,frombeing administered. SeveralamendmentswereaddedtoHB2088thatalleviatedABORanduniversityconcerns. BoardPosition Opposedtointroducedbill;nopositionafter amendment Outcome SignedbyGovernor HB2338educationalinstitutions;firearms;rights-of-way(Rep.EddieFarnsworth) HB2338prohibitseducationalinstitutions,includingABORandthepublicuniversities,from adoptingpoliciesprohibitingthelawfulpossessionorcarryingofadeadlyweapononapublic right-of-waybyapersonorintheperson’smeansoftransportation.Asintroduced,thebill includedadefinitionof“publicright-of-way”thatmayhaveexpandedthetraditional definitiontoincludedpathsandthoroughfaresonuniversityproperty. Thebillwasamendmendedtoclarifythatpropertyofaneducationalinstitutionisexempt fromanynewrequirements,thusalleviatingmanyABORanduniversityconcerns. BoardPosition Opposedtointroducedbill;nopositionafter amendment Outcome SignedbyGovernor 21 HB2436regents;designees(Rep.Stevens) HB2436,asintroduced,allowedtheGovernorandSuperintendentofPublicInstruction(SPI) toauthorizeadesigneetoparticipateasavotingmemberofABORintheirplace.TheHouse RulescommitteeremovedtheabilityfortheGovernortoselectadesigneebasedonlegal concerns.ThebillonlyamendedstatelawregardingtheGovernor’sappointmentasaregent, howevertheGovernor’sappointmentasaregentisestablishedundertheArizona Constitution,therebyrequiringaconstitutionalchange. SimilarconcernsexistregardingauthorizingtheSPItoappointadesigneetoserveasaregent instatestatutewithoutmakingaconstitutionalchange.Article11,Section4oftheArizona ConstitutionstatestheSPIshallbeanex-officiomemberor“anyotherboardhavingcontrol ofpublicinstructioninanystateinstitution.”Finalresolutionofwhetherornotthislanguage constitutionallyappointstheSPIasaregentwasnotdeterminedasthebillwasheldinthe Senate. BoardPosition Opposed Outcome HeldinSenate HB2479ABOR;terms(Rep.WarrenPetersen) HB2479shortensthelengthofregentstermsfrom8yearsto4years.Thebillasintroduced statedthataregentservingontheeffectivedateofthebillwouldbepermittedtoserveout theremainderofa“normal”term.Thissessionlawwasamendedtoclarifythatsitting regentswouldbepermittedtoservetheremainderoftheregent’sappointedtermofoffice. Thesponsorandproponentsofthebillargued8yeartermsaretoolong,particularlywhen comparedtootherpublicofficials,suchastheGovernor,whoservesa4-yearterm.ABORand universitylobbyistsengagedseverallawmakersandstakeholdersonHB2479aftertheboard tookformaloppositiontothebill,arguingthebenefitsoflongertermsforregents.Primarily, lobbyingeffortsfocusedonthenecessityofinstitutionalknowledgeforregentsduetothe importantdecisionsdecidedbyABOR,suchastuitionsetting,hiringandfiringofuniversity presidents,andmulti-million-dollarrealestatetransactions. Thebillnearlymadeitswaythroughtheentirelegislativeprocess,butfailedonSenate3rd Readbyavoteof14-16.VotingNO,wereallSenateDemocrats,andRepublicanSenators Pierce,Driggs,DialandWorsley. BoardPosition Opposed Outcome FailedonSenate3rdRead 22 HB2548publicforums;activities;postsecondarycampuses(Rep.PaulBoyer) HB2548establishesnewregulationsoffreespeechonpublicuniversityandcommunity collegecampuses,andmodifiesthepenaltyforobstructingahighway,thoroughfareor entrancetoapublicforum. Asintroduced,thebillpermittedtheAttorneyGeneral(AG)oranypersonwhoseexpressive rightsonauniversityorcommunitycollegecampuswereviolatedtofilesuitinacourtof competentjurisdictiontorecovercompensatorydamages,reasonablecourtcostsand attorneyfees.Penaltiesof$500fortheinitialviolationand$50perdaytheviolationremains ongoing,werealsoestablished.Furthermore,thebillestablishedactiontobebroughtwithin 1-yearofthecauseofaction. Concernswereraisedoveralteringlegalregulationsoffreespeech,aswellasspecifying dollaramountsforpenaltiesinstatelaw,astheymightprovideatargetforindividualsto pursue.Basedontheseconcerns,ABORanduniversitylobbyistssecuredseveralamendments alleviatingmostoftheconcerns.ThebillwasheldintheSenateJudiciaryCommitteetwice, appearingtokillthebill.However,thebillwaswithdrawnfromSenateJudiciarybySenate PresidentBiggs,andwasabletomoveonafterpassingoutoftheSenateEducation Committee. Thefinalchangesregardingfreespeechoncampusthatwereincludedintheenactedbillare: • • • AuthorizestheAGorastudenttobringactionincourtforviolationofexpressive rightsonpublicuniversityandcommunitycollegecampuses; Directsthecourttheawardinjunctivereliefforanyviolationandawardreasonable courtcostsandattorneyfees;and Specifiesa1-yearstatuteoflimitationsstartingwiththecauseofaction. Thebillwasalsoamendedtoincludeanotherchangeunrelatedtofreespeechon postsecondarycampuses.Inresponsetoprotestorswhoblockedaroadwaynearapolitical eventforpresidentialcandidateDonaldTrump,anamendmentwasaddedexpandingthe offenceofobstructingahighwaytoincludeintentionallyinterferingwithpassageoncertain publicthoroughfares,thatresultsinpreventingotherpersonsfromgainingaccesstoa governmentmeetingorhearingorpoliticalcampaigneventafterreceivingverbalwarning. Suchaviolationisdefinedasaclass1misdemeanor. BoardPosition Opposed Outcome SignedbyGovernor HB2615campuses;freespeechzone;prohibition(RepresentativeKern) HB2615asintroducedprohibitedacommunitycollegeoruniversityfromdesignatingany areaoncampusafreespeechzoneanddirectedanyfreespeechzonesinexistencetobe 23 convertedtoamonumentormemorial.AfterABORformallyopposedthebill,ABORand universitylobbyistsworkedwiththesponsortoaddressconcernssimilartothoseexpressed regardingHB2548. Asaresult,theenactedbillnolongercontainsanyreferenceto“freespeechzones”,asthe termisnotwelldefinedinstateorfederallaw.Thislanguagewasreplacedwithlanguage basedonasimilarlawfromVirginiathatprohibitspublicpostsecondaryinstitutionsfrom imposingrestrictionsonfreespeechexceptforreasonabletime,placeandmanner restrictionsconsistentwiththeU.S.Constitution.LanguagefromHB2548wasalsoincludedin thefinalversionofthebilltoensurenoconflictsexistedinstatuteifandwhenbothbills becamelaw. BoardPosition Opposed Outcome SignedbyGovernor SB1389student,teachdatacollection;prohibitions.(Sen.JudyBurges) SB1389establishesseveralnewrestrictionsandrequirementsregardingstudentandteacher data.Thebillisverysimilartodataprivacybillsintroducedforthepastfewyears,allofwhich havebeenopposedbyABOR.Theprimaryconcernsofsuchlegislationfocusonbroadly draftedlanguagethatcouldlimitthecollectionofcommondatausedbythepublic universitiesforlegitimatebusinessandacademicoperations. ThebillreceivedaninitialhearingintheSenateEducationCommitteebutwassubsequently heldinSenateRules. BoardPosition Opposed Outcome HeldinSenateRules SB1418fees;notice;posting;statemuseum(Sen.GailGriffin) SB1418,asintroduced,subjectedallstatemuseumfeechangestoreviewandapprovalby theGovernor’sRegulatoryReviewCouncil.ThebillwasintroducedduetoconcernsofArizona cooperativeandutilitycompaniesthatStateMuseumfeesettinglacksproperpublicinput andfinalapprovalbyanentityotherthantheUAandStateMuseum. Basedondirectionfromtheboard,ABORandUAlobbyistsreachedagreementwithbill stakeholderstoestablishnewstatutoryfeesettingprocessthatmaintainsABORoversightof theStateMuseum.Thenewlyestablishedprocessisbelow. 24 Within12monthsofthebill’seffectivedateABORisrequiredtosubmitareporttothe Governor,SenatePresidentandSpeakeroftheHouseofRepresentativessummarizingthe progressofthenewfeesettingprocess. 1. ABORmaintainssoleauthoritytoadoptanyfeeincreasesproposedbytheMuseum. 2. TheDirectoroftheMuseummust: a. ProvidenoticeofintenttoincreasefeesontheMuseum’swebsitepriortoJanuary 1,includingjustificationandtheidentityofanyentityaffectedbyafeeincrease; b. SubmitthefeeincreaseproposaltoABORforsubmittaltotheSecretaryofState; c. PostthedraftproposalontheMuseum’swebsitebythesecondMondayin January; d. Provideforpubliccommentforatleast30days; e. PostareviseddraftproposalontheMuseum’swebsiteattheendofthepublic commentperiod,ifapplicable; f. Provideforpubliccommentonanyrevisedproposalsforatleast20days;and g. Post,within5businessdaysaftertheendofthepubliccommentperiod,afinal proposalontheMuseum’swebsiteandtheexpecteddateABORwillconsiderthe proposedincrease. BoardPosition BoarddirectiontomaintainABOR&UAauthorityofthe StateMuseum Outcome SignedbyGovernorw/favorableamendments HB2666Governor’sEconomicOpportunityOffice;consolidation(Rep.KarenFann) HB2666establishestheGovernor’sOfficeofEconomicOpportunity(GOEO)andtheArizona FinanceAuthoritytoworkinconjunctionwiththeArizonaCommerceAuthoritytoencourage economicgrowthanddevelopmentandpromoteprosperitybydevelopingandprotecting Arizonabusiness,industryandcommerce. Withregardtothepublicuniversityenterprise,theDepartmentofEconomicSecurityandthe GEOEareauthorizedtodiscloseunemploymentinsuranceinformationtoABORandthe publicuniversitiesforevaluationofcertainprogramsandresearchpurposes.Datamaybe disclosedtoABORandtheuniversitiesinaccordancewithguidelinesestablishedbythe WorkforceDataTaskForceandadatasharingagreement,inaformdeterminedbythe WorkforceDataTaskForcepursuanttostatelawandapplicablefederalregulations. TheWorkforceDataTaskForceisalsoestablishedwithintheGOEOtooverseeworkforce systemevaluationdatasharing.ThepresidentofABORisincludedasaTaskForcemember andispermittedtoappointadesigneetoserveinthepresident’sstead. WorkforcedevelopmentinArizonaisbecomingasubstantialfocusfortheGovernor, policymakersandthebusinessandacademiccommunities.Thus,ABORshouldcontinueits 25 workforcedevelopmentfocusandensurecontinuedABORparticipationinnewandongoing workforcedevelopmentinitiatives. BoardPosition Noposition Outcome SignedbyGovernor HB2707K-12education;budgetreconciliation;2016-2017(Rep.SteveMontenegro) HB2707istheK-12budgetreconciliationbillcontainingK-12policyinitiativesandlanguage correspondingtotheFY2017statebudget.ThebillincludesaproposalfromGovernorDucey titledtheCollegeCreditbyExaminationIncentivePilotProgramandanannual$5millionis appropriatedfromthestategeneralfundstartingFY2018forprogramawards.Detailson ABORandpublicuniversityparticipationintheprogramfollow. CollegeCreditbyExaminationIncentivePilotProgram • • • • ADEoperatestheprogrambyprovidingincentivebonusestoteachers,schooldistricts andcharterschoolsforstudentswhoobtainapassingscoreonselectedcollegecredit examswhileinhighschool. StartinginFY2018,ADEpaysanincentivebonustopublichighschoolsforstudents whoobtainaspecifiedscoreoneligiblecollegecreditexamsduringtheprevious schoolyear. Bonusesareawardedasfollows: o $450foreachpassingscoreachievedbyastudentinaschoolwitha50%or morefreeandreducedpricelunch(FRPL)studentpopulation;and o $300foreachpassingscoreachievedbyastudentinaschoolwithalessthan 50%FRPLstudentpopulation. o Atleast50%ofbonusdollarsmustbeallocatedtotheassociatedclassroom teacherinadditiontoregularwages;remainingdollarsmustbeusedfor teacherprofessionaldevelopment,instructionalsupportormaterials. o Ifthetotalsumofbonusesstatewidesurpassesthemoniesavailablefromthe annualappropriation,reducedbonusesaretobeawardedproportionatelyto coveralleligiblebonusawards. ABORisrequiredtodeterminethelistofexamsandwhatconstitutesapassingscore oneachexaminordertotriggeracorrespondingbonus. o ForanexamtobeeligibleforselectionbyABOR,astudentmustbeableto taketheexaminordertoreceivecollegecreditfromoneofthepublic universitiesineither: § Math; § Englishlanguagearts;or § Science. 26 • ABORmustsubmitthelistofselectedexamsandscoresthattriggercollegecreditto ADEandJLBCbySeptember1ofeachyear. BoardPosition Noposition Outcome SignedbyGovernor 27 VetoedLegislation HB2434abandonedvehicles;towingreimbursement(Rep.DavidStevens) HB2484estimates;statebudget;notice(Rep.JustinOlson) HB2524uniformfirearmstransfercompact(Rep.BobThorpe) HB2568communityfacilitiesdistricts;formation;governance(Rep.DavidGowan) SB1141legaltender;taxation;regulation(Sen.DavidFarnsworth) SB1156stateelectedofficials;absence;protection(Sen.JudyBurges) SB1197schools;cursivewritingrequirement(Sen.GailGriffin) SB1268adequatewatersupplyrequirements;municipalities(Sen.GailGriffin) SB1367Assyriangenocide;monument;procedures(Sen.NancyBarto) SB1400countywatersupplyprovision;renewal(Sen.GailGriffin) SB1401tradenames;trademarks;application(Sen.GailGriffin) SB1434informationtechnology;consolidatedpurchasing(Sen.DonShooter) SB1443healthprofessionregulatoryboards(Sen.NancyBarto) SB1510incompetentpersons;mentalhealthevaluations(Sen.AdamDriggs) 28
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