First, the Tax Review Commission (TRC)…IS NOT THE LEGISLATURE.  The TRC makes RECOMMENDATIONS to the Governor’s Office and the Legislature on state tax related matters.  The TRC is advisory, only.  The only entity in the state with the power to levy a tax (of this type) is…the Legislature.

Every year, since 2003 when I joined the state legislature, there has been a discussion (or proposal) to slap a tax on services (i.e. attorneys, accountants, cosmetologists, etc.).  And, every year the proposal magically disappears.

Why?  Well…we can only speculate.  Maybe its because the TRC is ONLY advisory.  Maybe its because the attorneys, accountants, cosmetologists, etc.  have some of the most powerful lobbies on Capitol Hill.  Nah, couldn’t be it.  Or, maybe because the State of Utah has a citizen legislature, which could mean a large portion of  legislators work in service industries.  (Why, in heaven’s name, would you vote to increase taxes on yourself, your business, or a client?!)  Or, maybe its something else entirely…

Whatever the arguement, for or against, this service tax increase “suggestion” by the Tax Review Commission, will more than likely magically disappear just like it has over the past six years.  More reading HERE.

Briefing on Scholarship Programs for Legislative Leaders

June 12, 2009 

With strong legislative support, two scholarships have been established, administered by the State Board of Regents, to encourage high school students to prepare for and attend college.  One of these, the New Century Scholarship, has been in existence for ten years, the other, the Regents’ Scholarship, is in its second year.  Even with very limited publicity and out-reach, this year both programs are seeing tremendous growth in qualified applicants—significantly outpacing the funding.  This raises questions for the short-term as awards may be reduced and students and their parents disappointed and could damage the credibility of the programs and undermine the goals of increasing college preparation and participation. 

Background 

New Century Scholarship

Purpose & Program: 

• To encourage high school students to take college courses in high school in order to complete a bachelor’s degree more rapidly once they are in college.
• Provides for scholarship equal  to 75% of tuition¹ for two years if a Utah high school student earns an Associate’s degree (or completes science & math track) by the September after high school graduation. 
• Premise of scholarship is that it reduces a student’s time in college, thus saving state money in the long-run.

Legislative History:

• Established in 1999 by SB 90 by Sen. Robert Montgomery (Gov. Leavitt initiative).
• Amended in 2000 (HB 23 by Rep. Brad King) to require a “B” average in college and to allow students to use the scholarship at BYU & Westminster College.
• Amended in 2002 (HB 206 by Rep. Afton Bradshaw) to provide one more year before scholarship expires to better accommodate LDS missionaries, and to allow Board of Regents to reduce the number or amount of awards based on legislative appropriation.
• Amended in 2006 (HB 326 by Rep. Kory Holdaway) to add a math & science track as a way to qualify.  (Unfortunately, no students have taken advantage of this option.)
• Amended in 2009 (SB 104 by Sen. Lyle Hillyard) to change award from 75% of tuition to maximum of $5,000 over two years, effective for high school class of 2011.
• Until 2009, always received a supplemental appropriation to cover number of new recipients.

Performance & Status:

• 2,347 awarded since 1999 from 113 public and private Utah high schools (74 in 2008-09), with an estimated 695 new recipients in 2009-2010 (when those receiving awards for their second year are included, the total to be awarded this year is estimated at 1,248).
• Current base funding is just under $2 million annually (on-going $1,958,400).
• All administrative costs have been absorbed by Board of Regents staff and UHEAA.
• No formal outreach, advertising or promotion for program—students have learned about it through “word of mouth.”  Recently, early college charter high schools started promoting it.
• FY 2009-2010 is the first year without a supplemental appropriation; no new funding, must absorb 8% net budget cut.
• Estimated shortfall for 2009-2010:  $1.2 million

Regents’ Scholarship

Purpose:

• Recognizing that only one of four Utah high school students taking the ACT are proficient in all four core areas for success in college, the Regents’ Scholarship was proposed to incent students to reverse this trend.  The scholarship encourages students to take a rigorous core of classes in high school (including four years of math and three years of science) based on the State Scholars (Utah Scholars) curriculum.
• Provides awards at two levels:
  • Base award of $1,000 (one time) for completing course requirements with at least a 3.0 GPA and no core course grade lower than a “C”.
  • Exemplary award of 75%² of tuition for two years (3.5 GPA, 26 ACT composite, no individual core course grade lower than a “B”.)
  • Plus a savings match of up to $400 ($100 per year for four years prior to college) for saving with UESP.
• Like New Century, students may use scholarship at any USHE institution or at BYU or Westminster College, and Board of Regents may reduce number or amounts of awards or based on legislative appropriations.

Legislative History:

• Established in 2008 by SB 180 by Sen. Lyle Hillyard.
• Original funding of $400,000 on-going, $500,000 one-time, to launch the scholarship.
• Amended in 2009 (SB 104 by Sen. Hillyard) to make technical changes and to change exemplary award to maximum of $5,000 over two years for high school class of 2011.

Performance & Status:

• 2008:   195 students awarded (79 base award, 116 exemplary award).
• 2009: Estimated 525 students qualify (169% increase) for at least the base award (from 72 Utah public and private high schools).
• On-going funding of $2 million ($2,035,000).  Administrative costs including outreach are shared by the program and Board of Regents/UHEAA.
• Estimated shortfall for 2009-2010:  $1.1 million.

Next Steps 

Without a commitment of a supplemental of approximately $2.3 million for FY 2009-2010, awards for both New Century and Regents’ Exemplary will be reduced to the range of 40-45% of tuition, instead of the 75% students and their parents are expecting.  While necessary, this will result in an estimated 1,500 disappointed and likely frustrated students (and parents) and may hurt the credibility of both programs.  (An equal or probably greater budget increase would also be needed for FY 2010-11 to maintain programs at current level.) 

We have begun a study to track success of New Century students in college, to determine performance and how quickly recipients are graduating with a Bachelor’s degree.  This will inform recommendations for future of the New Century. 

A sustainability plan will be developed this summer for both programs.  Steps to be considered include:

• Announcing 2010-2011 awards for both programs will be a flat-dollar amount that is more realistic given program growth and current funding (can be done administratively but contrary to legislative intent in making change effective for graduating class of 2011).
• Limiting awards to use only in USHE institutions (would require legislative approval).
• Placing a deadline on applications for New Century and eliminating the option of completing work the summer after high school graduation (would require legislative approval).
• Combining programs into a single scholarship program based on college and workforce readiness rather than associate’s degree completion (would require legislative approval).
• Identifying with legislative leadership new revenue or funding source.

Conclusion 

With strong legislative support and interest and even a minimum amount of publicity and outreach, these scholarships are beginning to make a positive change in behavior among high school students by encouraging greater preparation for and participation in high school.  We are also starting to see high schools add class sections in science to meet the demand as students work to qualify for the Regents’ Exemplary award.  This is exactly the kind of change in behavior we hoped for when the scholarship was designed.  It is important that the momentum we have not be lost, but also that the programs be made financially sustainable.  We look forward to working with you and your colleagues to make this happen.

¹ Recently we have advertised this as “up to” 75% due to budget concerns, however, people are used to 75%

² We have consistently advertised for 2009 that this is “up to” 75%

Each time I receive additional information from Legislative leadership or the Office of Legislative Research and General Counsel on the New Century Scholarship program, I’ll pass it along.

The 2007 Legislature approved a base funding level of $1,330,400 in ongoing funding for the New Century Scholarship program for FY 2008.  To this, the 2008 Legislature added $459,700 in supplemental (one-time) funding for a total FY 2008 appropriation of $1,790,100.  The 2008 Legislature added $800,000 for FY 2009 expected growth, for a total ongoing appropriation of $2,130,400 for the New Century Scholarship.  This was based on the number of students expected at that time for FY 2009.

During the September 2008 Special Session, budget were reduced by four percent.  The New Century Scholarship program’s allocation of the four percent cut was $86,400.  The base was reduced an additional $127,800 to get to a new FY 2010 base during the 2009 General Session.  A further ongoing cut of $151,900 was made, but was offset with one-time funding in the amount of $194,100, leaving an FY 2010 finding level of $1,764,300 (ongoing) and $194,100 (one-time).

As shown above, in previous years, the Legislature has approved additional funding for the expected growth in the number of eligible students, plus provided supplemental funding for the actual increase in the number of eligible students in the current year.  During the 2009 General Session, there was insufficient funding for either the expected increase or the actual increase.

With the combination of no funding for expected growth and the ongoing state appropriation reduction of $366,100 (offset in FY 2010 with $194,100 one-time), together with additional growth beyond what was expected, the amount of funds is insufficient to provide the full scholarship for all of the eligible students.  In Utah Code 53B-8-105(4)(c), language provides for such an event, stating “. . . if the appropriation under Subsection (4)(a) is insufficient to cover the costs associated with the New Century scholarship  program, the State Board of Regents may limit or reduce scholarships.”

Frequently Asked Question about New Century Scholarship Awards Levels for 2009 & 2010 

Q- Why is the award not at 75% as I expected?

•   The scholarship is funded by legislative appropriation.  During most years, the Legislature has appropriated additional money to keep up with the demand.  For example, in 2008, the Legislature added $800,000—an increase of 60%.  This year, the scholarship program received a budget cut of 8%, (the same as all of Higher Education). The number of awards to be funded is expected to increase by 50%.

Q- How much is appropriated by the Legislature and how big is the funding shortfall for New Century?

•   The total amount appropriated in 2009 is $1,958,400.00.  It is estimated that an additional $1.5 million is needed to fully fund this year’s awards.  Due to the state’s budget problems, no new funding has been made available.

Q- Why is the award projected to drop to 25% of tuition next year?

•   That is our best estimate assuming the current budget (which has been programmed by the Legislature to drop another 9% next year), assuming an average increase in the number of awards and an increase of 5% in tuition.

Q- Doesn’t the state guarantee the award to be 75% of tuition?

•   No.  While the law provides for awards of up to 75% of tuition, it also gives the State Board of Regents the authority to “limit or reduce” the awards based on legislative funding.  When it became clear there was a funding shortfall, the Board had no choice but to make adjustments.

Q- Why didn’t students who already received the award, such as in 2008 or earlier, continue to receive it at the 75% level for 2009?

•   This was considered; however, to fully fund the continuing students it would still cost $800,000 more than the money available (even if new students received nothing). The Board felt it was most fair to help as many qualified students as possible with the money available.

Q- How much of the money appropriated by the Legislature for the New Century Scholarship goes for administering the program? 

•   Zero.  All administrative costs have been absorbed within the budgets of the Office of the Commissioner of Higher Education.

New on the horizon is the “debate” related to the funding of the New Century Scholarship.  Please take a moment to acquaint yourself with this Higher Education funding mechanism for qualifying High School Students (Graduates).

Senator Lyle Hillyard, Co-Chair of the Executive Appropriations Committee, has released a statement (blog) to educate the public about the issues surrounding the New Century Scholarship and to start the debate.  Read Sen. Hillyard’s message at the Senatesite.com.

What should be done regarding the New Century Scholarship?  Let’s begin the dialogue.

For a number of weeks now, I’ve been reading Joseph Ellis’s American Sphinx, The Character of Thomas Jefferson.  Ellis’s thoughtful deliberations on multiple hypothesis create a stimulating anthology of Jefferson’s life and revolutionary function.

Originally the Constitution of the United States mandated the offices of President and Vice President were to be voted separately, setting up the potential of a split party presidency.  This was the case when John Adams secured the office of President as a Federalist and Thomas Jefferson, a Republican, became Vice President.  Running as a “ticket” didn’t appear until adoption of the Twelfth Amendment in 1804.  Therefore, by electoral college vote Adams was Washington’s Vice President and Jefferson was Adams’ Vice President.  The electoral presidency “problem” wasn’t resolved until half way through Jefferson’s tenure as President (1801-1809).

In American Sphinx, Ellis maintains the loss of the presidency by John Adams after only one term was the result of Adams “carrying over” too many of Washington’s cabinet advisors and not carving out an executive team unique to the Adams’ character and demeanor.  Ellis’ assertion is that “carry over” of advisers from the previous executive administrations may be imprudent and politically fatal.  (Hindsight is 20/20.)  He supports that theory in the following paragraph:

As it turned out, even the most invisible and unobtrusive federal government required executive leadership, if for no other reason than to implement the principle of republican austerity.  Here again Jefferson was the beneficiary of Adam’s administration, but this time as a graphic example of how not to do it.  “My wish is to collect in a mass around the administration all the abilities and the respectability to which the offices exercised here can give employ,” Jefferson explained, adding that he was determined to “give none of them to secondary characters.”  Adams not certain about how much discretion he possessed as incoming president, had felt obliged to retain Washington’s cabinet as his own.  It proved to be the most disastrous decision of his presidency and the chief source of his political frustrations, since he inherited the “secondary characters” Jefferson was referring to, as well as cabinet more loyal to Hamilton and to memories of Washington than to Adams himself.  The cabinet choices Jefferson made were governed by two criteria: proven ability and complete loyalty to the Jeffersonian version of republicanism.  On this score he was extremely shrewd as well as blessed.  His cabinet proved to be one of the ablest and the most stable collection of executive advisers in the history of the American presidency.  (Ellis, American Sphinx, p. 222, bold and italics added)

Lessons from Jefferson

Shortly following the announcement from President Obama regarding his selection of Governor Jon Huntsman, Jr. to the office of Ambassador to China, then, Lt. Governor Herbert was quoted as saying…

Hundreds were present yesterday, in the Capitol Rotunda.  As newly-sworn Governor Gary Herbert stepped to the podium and inspired the congregation in his first Inaugural Address.  The patrons heard the convictions and vision of the new Chief Executive of the Great State of Utah.  An independent vision.  A commitment to smaller, more efficient government.  A republican message of responsibility and accountability.

Governor Herbert’s administration will be markedly different in style and content from the prior administration.  Herbert’s administration will be founded on a genuinely Republican platform.  The planks of a solid structure—time-tested.  True.  And, it will be his own.

Within the governor’s current cabinet are some capable advisors who fit Jefferson’s implicit description of “primary characters.”  Some current advisors are uniquely fitted to the previous administration.  Which advisors Governor Herbert keeps and who he shows to the door, according to Ellis, will make or break his opportunity for a future as Chief Executive of the greatest state in the nation.

An Evening with the Constitution is planned for Thursday, August 13th, presented by Mike Lee, an attorney and former law clerk for Sureme Court Justice Samuel Alito.

The event will be held at 7 p.m. at the Pleasant Grove Library, 30 East Center St. Pleasant Grove. The public is invited to attend, listen to the presentation, ask questions and share concerns about the problems facing the nation and how following the Constitution can solve the current crisis.

Lee is the son of the late Rex E. Lee who served as president of Brigham Young University and as the Solicitor General of the United States during the first term of the Reagan Administration. He graduated from law school in 1997 and was a law clerk to Judge Benson of the U.S. District Court in Utah.

Mike was also a clerk for Judge Alito who was serving at the time on the U.S. Court of Appeals for Third Circuit Court.

He joined a Washington D.C. law firm and specialized in appellate and Supreme Court litigation. He returned to Utah as Assisant U.S. Attorney in Salt Lake City. He was Governor Jon Huntsman’s general council in 2005-06. It was at that point he returned to Washington D.C. for a year as clerk to Justice Alito.

Lee is now in private practice. He supports efforts to secure passage and ratification of a constitutional amendment requiring congress to operate on a balanced budget, rein in entitlement spending and reform campaign finance law.

For more information about this event please contact -
Connie Smith (801) 592-2813
or
Casey Jackson (801) 232-7180

While waiting in line this afternoon in the Capitol Gold Room for a photo op with Governor and Mrs. Herbert, I spoke briefly with Jason Perry about the fact that as of about an hour before our conversation he became “unemployed,”  as the Lt. Governor’s Transition Director.  Probing a bit, I came to the conclusion I wasn’t going to get much information from the discrete, loyal Perry about his future plans.

Well, well, well.  As I was doing a little late night cruising around Utah.gov, the answer to the question “what’s in Jason’s future?” appeared on Governor Herbert’s new website.  Clicking on the “STAFF” tab and scrolling down to nearly the bottom of the page, buried among all the other staffers, there it was…plain as day…PERRY, Jason/CHIEF OF STAFF.

Jason will be a valuable, prudent advisor to the Governor.  Congratulations, Jason, on the new job!

Already available for your perusing pleasure, is Governor Gary R. Herbert’s webpage at Utah.gov.  The following is an excerpt from Tuesday’s Inaugural Address available on the Governor’s site:

“…let me also affirm that I believe in the appropriate – but limited – role of government. I believe that what government we have ought to be well-run and efficient. As stated by former President Ronald Reagan in his farewell address, “There’s a clear cause and effect here that is as neat and predictable as a law of physics: As government expands, liberty contracts.” As Governor, I will lead the charge for government efficiencies in all that we are tasked to do.”