February 2, 2004

• House and Senate Budget Committee Hearings Provide Glimpse Into This Year's Major Budget Fights
• University of Texas at Austin Task Force Recommends Enrollment Changes

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House and Senate Budget Committee Hearings Provide Glimpse Into This Year's Major Budget Fights

On January 27th, Members of the House and Senate Budget Committees responded to the Congressional Budget Office's (CBO) recently released Budget and Economic Outlook, providing a hint into how this year's major budget battles will likely be framed by Congressional Republicans and Democrats.

The Budget and Economic Outlook consists of baseline projections, which estimate the future paths of federal revenues and spending under current laws and policies. CBO's ten-year budget outlook assumes no changes in current law. On the spending side, for example, CBO's estimates assume that the $87 billion in supplemental funding for military and reconstruction efforts in Iraq will continue each year through the next ten years. On the revenue side, CBO assumes that the 2001 and 2003 tax cuts will expire as scheduled.

These two examples will likely play a major role in how this year's budget debates are structured. Republicans and Democrats will use assumptions outside of CBO's baseline projections to argue that their policy goals will lead the federal government back into the black. These assumptions will also impact whatever else — outside of the FY2005 appropriations bills — this session of the Congress will consider and pass, e.g., HEA reauthorization, the energy bill, reauthorizations of the welfare and transportation acts, social security reform, etc.

The Administration too has added fuel to the FY2005 budget/appropriations debate fire with its release of its FY2005 budget submission to Congress that will shape the nature of the debates and the Congressional agenda over the next eight to nine months of a very partisan, election year Congress. The Administration's submission includes re-estimates by the Administration of the cost of the Medicare prescription drug bill and the FY2004 budget deficit. The Administration is now estimating that the total ten year cost of the Medicare bill will not be the $400 billion promised by the Administration to garner Republican support to pass the bill, but rather $534 billion. The Administration is also now projecting a $520 billion budget deficit for FY2004 — an increase of $135 billion over the previous record deficit achieved in FY2003 — and a $43 billion increase over the Administration's most recent estimate of $477 billion.

If Members want to be able to adjourn early in order to get several weeks of campaigning in before the November general election, the agenda will have to be top heavy with non-controversial, popular legislation that can be easily passed and used as accomplishments in their campaigns. The HEA reauthorization bill may be an example of this type of legislation. However, it remains to be seen whether this will happen with the budget storm clouds gathering and the equally strong desire of the Administration to pass the legislation to extend the income tax reductions and increase spending in non-domestic areas. Members of both parties oppose new spending under the current environment.

Tax Cuts
During his State of the Union address, the President stated his support for making expiring tax cuts permanent. Not Republicans, in the face of record deficits, will support a permanent extension of all provisions in the 2001 and 2003 tax cuts.

Democrats will argue that making permanent expiring tax cuts will worsen budget deficits at the expense of increased education and health care funding. "The president says its the people's money, we ought to give it back to the people," Senate Budget Committee Ranking Member Conrad stated in response "Well, it's also the people's debt".

Deficits
House and Senate Budget Committee members today voiced their agreement with CBO Director Holtz-Eakin's assertion that "deficits do matter." However, there is a fundamental disagreement over the reason for the current deficit. Republicans claim that these are "spending deficits" attributed to the war on terrorism and war in Iraq; Democrats counter that the 2001 and 2003 tax cuts are the primary culprits.

Republicans will rally behind the president's goal to cut the deficit by half in five years, and for Democrats to argue that cutting the deficit in half — especially by dollar amount — will be impossible if expiring tax cuts are made permanent.

Medicare
CBO has estimated that the recently enacted prescription drug bill will cost about $475 billion over the FY 2005-2014 period, and to be "in the vicinity" of $1 trillion to $2 trillion over the next twenty years.

Democrats will accuse the administration of dodging the full budgetary effects of the prescription drug bill when it releases an expected five-year, as opposed to ten-year, forecast in the FY 2005 budget request.

Spending
The administration has confirmed that it will request a one percent increase in non-defense/homeland security funding. House and Senate Republican leaders will argue that spending needs to be reigned in. Democrats will counter that their staple issues such as health care and education will be significantly under-funded with a one percent increase.

This being an election year will likely result in an abbreviated Congressional schedule, which will compound the pressure on House and Senate Republican leaders to pass a final budget blueprint prior to the traditional April 15th benchmark. Throughout this year's budget debates, Democrats will continuously hammer Republicans as irresponsible "tax-cut-and-spenders," while Republicans lay out their mantra of reining in spending in order to halve the deficit in five years.

The House Ways and Means Committee will hold two hearings on the president's FY 2005 budget request. The first hearing is scheduled for February 3rd at 2:00 PM in 1100 Longworth (Treasury Secretary Snow will testify). The second meeting is slated for February 4th at 10:30 AM in 1100 Longworth (OMB Director Bolten will testify).

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University of Texas at Austin Task Force Recommends Enrollment Changes

The Task Force on Enrollment Strategy at The University of Texas at Austin has recommended increasing the size of the faculty, reducing the student population to 48,000 over the next five years and submitting proposed legislative changes to the 79th Texas Legislature in 2005 that would limit the percentage of new students admitted under the state's Top 10 Percent Law.

The 19 member task force appointed in 2002 and chaired by Dr. Isabella Cunningham, chairwoman of the Department of Advertising, emphasized that the size of the student body must be driven by the university's goal to be one of the top three public universities in the nation and that quality of education must be the first priority.

"The task force worked extremely hard over a long period to digest issues that are critical to this university and to Texas at large," said Larry R. Faulkner, president of The University of Texas at Austin. "At stake is our ability to offer Texans educational programs comparable with the best in America, but in an affordable, public context. Quality matters to students and to the health of Texas. This report is about how to assure that this public university can continue to make quality a reality for hundreds of thousands yet to attend. It will guide the development of the university for decades to come, and I am grateful to Professor Cunningham and her colleagues for their hard, effective work."

Comments on the report will be taken for 45 days.

The task force also endorsed the university's recent recommendation to the University of Texas System that race and ethnicity be among the criteria considered in the holistic review of applicants for admission to the university.

The task force was charged with recommending a reasoned strategy for managing student enrollment at The University of Texas at Austin into the indefinite future.

The task force's recommendation that the university pursue legislative changes to the state's Top 10 Percent Automatic Admissions Law (HB 588) was based on reasoning that the use of class rank exclusively for the admission of an increasingly larger portion of freshmen limits the discretionary power of the university to achieve a representative student body. From 1998 through 2003, the number of top 10 percent students enrolling in the freshman class at the university through automatic admission has increased to 65 percent. The task force recommended that the university be required to admit 50 percent but not more than 60 percent of a freshman class through automatic admission under the law.

The task force divided its work into two categories; recommendations for long-term strategies and recommendations for short-term strategies. Chairperson Cunningham said that while the group has recommended reducing the size of the student body over the next five years to a population of about 48,000 students compared to the 51,426 enrolled during the fall 2003 semester, the long-term strategies do not exclude the possibility of further growth in the size of the university. The task force also has not excluded the possibility, as enrollment policies are reviewed, to further decrease the size of the university.

"The task force has explored a number of size scenarios and has concluded that no substantial growth should occur unless key strategic constraints and goals are observed," the report said. "Growth of the size of the student population should not proceed at the expense of the quality of the educational experience."

To preserve and enhance the quality of students' educational experiences, the task force said, the student/faculty ratio at The University of Texas at Austin now is about 21 to one, high among the institutions with which the university wishes to compare itself, where the corresponding figure is no more than 19 to one. It recommended increasing the size of the faculty by about 170 to improve the ratio.

The task force recommended decreasing the time of graduation to 10 long semesters and implementing incentives for students to carry at least 14 hours per semester. Decreasing students' time to graduation is an important step in helping to control costs, the task force said, and it is a key factor in enhancing quality by improving the student/faculty ratio.

The task force said the university's enrollment situation should be reassessed starting in fall 2008, noting that it is unwise to advance a strategy to be pursued beyond a five-year window.

The group's short-term recommendations include placing a limit of 10 long semesters in residence for students to complete a baccalaureate degree and increasing to 15 the minimum number of required hours to be eligible for certain honors programs and merit-based scholarships. The task force also recommended reevaluating policies related to students returning from scholastic dismissal and placing limits on the number of students admitted from other University of Texas System component institutions under the pilot Coordinated Admissions Program.

The report also said the graduation rate at The University of Texas at Austin is lower than peer institutions because of the average number of semester-credit hours taken by undergraduates.

"To enhance this rate, we will have to induce our students to increase their course loads," the report said. It recommended increasing the average number of semester credit hours taken by undergraduates from its current level of 13.11 to 14.

"The report states clearly that a typical student who graduates from The University of Texas at Austin with one major takes an average of 142 hours or more, while only 120 hours is required for most majors," Cunningham said.

"Students who graduate with two majors take an average of more than 170 hours."

Other recommendations include that the Office of Admissions, in consultation with the Admissions and Registration Committee of the Faculty Council, develop more rigorous administrative policies that require reapplication for graduating students who wish to continue as students, as well as students who have been absent from the university for a long-session semester or longer. The task force recommends that the Office of Admissions review its policies for readmission and strictly enforce deadlines for application for readmission.

Changing colleges and majors also was addressed by the group, which recommended that the ability for students to make these changes remain at the discretion of the dean of that college or school. Approval by the dean of the college or school also would be required for exceptions to a proposal that students not be allowed to apply more than once for admission to a restricted program.

Other short-term recommendations:

• The university should develop a policy to limit the number of times a student may drop a course or withdraw from the university.
• Additional classroom space should be built or developed from existing space. In addition, the Office of the Registrar should develop a campus-wide policy for reserving classrooms to ensure the most effective use of available classroom space, at both the university-wide and departmental levels.
• Seniors nearing graduation should be given preference in registering for required classes.
• The number of credit hours a student must complete at another school before applying for transfer to the university should be increased. The task force recommended that a transfer student be required to have earned 30 semester hours after high school graduation.
• The task force recommends that no change be made in the normal process for graduate student admissions, but endorses the university's recent recommendation to the University of Texas System that race and ethnicity be among the criteria considered in the holistic review process.

All of the recommendations outlined in the report are in line with the issues concerning improving access to higher education and tuition and student financial aid policy being discussed by the state legislative Joint Committee on Higher Education and Legislative Oversight Committee on Higher Education, and will likely be a part of a legislative package of bills addressing several issues on these topics.

The complete Report of the Task Force on Enrollment Strategy can be accessed at: www.utexas.edu/opa/news/04newsreleases/nr_200401/
report_enrollment.pdf.

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For more information, contact:

TG Congressional and Legislative Relations
(512) 219-4503
P.O. Box 83100
Round Rock, TX 78683-3100