Letter to Alumni Re-introducing the King Hall Budget Policy Committee

Dear King Hall Alumni,

We are writing to introduce a student group at King Hall that may particularly interesting to alumni.  The Budget Policy Committee (“BPC”) is a group of current students are elected or appointed from each class to represent students’ views on the financial integrity of King Hall.  The Law Student Association created the BPC in spring 2013 with the purpose of establishing a formal mechanism for King Hall students to obtain information about and have input on budgetary policy at King Hall.

The LSA bylaws require the BPC to collect information on the total cost of attending King Hall and law school expenditures.  Specifically, the BPC has been working throughout the year to promote fiscal transparency at King Hall by meeting and working with the administration to (1) gather information about the law school budget, Professional Degree Supplemental Tuition (“PDST”) proposals, cost-realignment efforts, and, most recently, changes to the Loan Repayment Assistance Program (“LRAP”), (2) present that information to the King Hall community, and (3) advocate for student interests. 

The following highlights some of our efforts during the 2013-2014 academic year:

• The BPC met with the administration to provide feedback on the Five-Year Plan, which was created to present a projection of the law school’s budget and policy goals to the Office of the Provost.
• With Brett Burns, the Senior Assistant Dean of Administration, the BPC reviewed the law school’s operating budget to see where tuition money is spent and how costs can be reduced to accommodate the administration’s commitment to avoid tuition increases.  During this process, the BPC also surveyed students and shared the results with the administration. 
• The BPC reviewed the University’s newly proposed PDST policy goals and implementation strategy documents, providing feedback about the level of student involvement in the setting of PDST fees. 
• The National Jurist published a commentary by Bill Stanger, a BPC representative from the Class of 2014, and Dean Burns promoting the formation of student budget policy committees as an appropriate step in promoting collaborative and transparent budgeting in law schools. 
• The administration is proposing significant changes to King Hall’s LRAP.  If approved, these changes would shift LRAP to a forgiveness-based model, relying on the Public Service Loan Forgiveness Program and tying monthly payments to the income-based and pay as you earn repayment plans.  The BPC is currently working to with the administration to disseminate information to students and alumni to ensure the administration receives meaningful feedback before the LRAP committee considers the proposal.  

We hope that the BPC can be a resource for alumni interested in the financial state of King Hall.  We maintain a Facebook group (https://www.facebook.com/kinghallbudget) and blog (kinghallbudget.blogspot.com) where we provide updates on our efforts.  

We also encourage you to reach out to the alumni board to have your opinions or concerns about these issues heard by the administration.  Please let us know if you have any questions or concerns.

Regards,

Rebecca Ferguson                                                      Heather Cantua

BPC Representative, Class of 2015                             BPC Founder and Alumni Liaison

PDST fees staying flat

Happy to report that PDST fees are not due for increase this year, for the first time in a while!

Because there is not a fee increase warranting in-depth consultation, there will not be a Sharepoint survey for all UC students like there was in summer 2013. Office of the Provost continues its PDST fee setting timeline and keeping administrative staff and students advised.

Loan repayment, the sequel

Following up after the LRAP proposed revisions, there has been another information session for public interest folks regarding federal programs supporting loan repayment.  If you were not able to attend on 4/15/15, then the recording can be found on the Intranet:

>Technology & Media >Mediasite Videos >Career Services >Title: LRAP/Loan Repayment >Air Date: 4/15/2014

Also, on topic of the LRAP proposed revisions:

• Do NOT affect alumni who graduated 2013 and earlier.
• Once enacted, the revised LRAP could** affect graduates 2014 and later.
• There is consideration of a transitional period in which classes of '14, '15, '16 may opt into the old LRAP terms or the new ones.
• Prospective students are being told about the LRAP terms up for revision so that they have notice in making matriculation decisions.
• Uncertain when the proposed changes to LRAP would progress even to the next stage - namely, discussion and vote by LRAP Committee. 
• Dean Kulwin continues to strategize with her subcommmittee in tweaking the proposal based on townhall and email feedback.
• The proposal will be presented to the LRAP Committee if/once there are some resolutions to the troubling issues.

Since there has not been notice yet that the window for comments is closed, please share your feedback and suggestions in comments to us, and to the LRAP Committee: LRAPComments@law.ucdavis.edu 

Petition for the Loan Forgiveness Program

Proposed federal budget will cap public interest loan forgiveness at $57,500 starting in 2015.  This loan forgiveness will be inadequate (to say the least) to cover 3 yrs. of law school tuition that you've incurred and that has been compounded with interest for 10 years.

Take a look at the petition and sign if you would ask the President to forego this cap on education spending:

https://petitions.whitehouse.gov/petition/retain-public-interest-loan-forgiveness-program-its-current-form-forgiving-all-qualifying-student/wkqnqBCH

     The Budget Request would also provide student loan borrowers with additional tax relief by excluding student loan forgiveness from taxation for borrowers who have made student loan payments for many years under an income- related repayment plan. The Budget Request provides an exclusion from income for student loan forgiveness and for certain scholarship amounts for participants in the Indian Health Service Health Professions Programs.

     The Budget Request also proposes limiting the value of certain tax expenditures and all itemized deductions to 28 percent for certain high income taxpayers: including the charitable deduction, which could impact donations to universities; tax benefits such as tax-exempt interest; and, tax exclusions for retirement contributions and employer sponsored health insurance.

     The Budget Request would also make the Research and Development Tax Credit permanent.

LINKS TO FEDERAL AGENCY BUDGET INFORMATION

White House/Office of Management and Budget Information: http://www.whitehouse.gov/omb/

• The FY 2011 President’s Budget Request (including supporting materials): http://www.whitehouse.gov/omb/budget/
• The FY 2015 Budget Request: http://www.whitehouse.gov/omb/overview
• President Obama’s prepared remarks: http://www.whitehouse.gov/the-press-office/2014/03/04/opportunity-all-middle-class-tax-cuts-president-s-fy-2015-budget
• Cuts, Consolidations and Savingshttp://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/ccs.pdf

DEPARTMENT OF EDUCATION

• Press Release: https://www.ed.gov/news/press-releases/obama-administration-2015-budget-prioritizes-key-education-investments-provide-o
• White House Agency Fact Sheet: http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/education.pdf
• Department Budget Webpage: http://www2.ed.gov/about/overview/budget/budget15/index.html
• Summary and Background Information: http://www2.ed.gov/about/overview/budget/budget15/summary/15summary.pdf
• Justifications of Appropriation Estimates to Congress: http://www2.ed.gov/about/overview/budget/budget15/justifications/index.html

DEPARTMENT OF HEALTH AND HUMAN SERVICES

• Secretary Remarks on Budget: http://www.hhs.gov/budget#remarks
• White House Agency Fact Sheet: http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/health.pdf
• Department Budget Webpage: http://www.hhs.gov/budget
• HHS Budget in Brief: http://www.hhs.gov/budget/fy2015/fy-2015-budget-in-brief.pdf

Town Hall 2014

Now posted on the Intranet and pending an external link for alumni is the video recording of today's town hall meeting regarding the current LRAP terms and proposed changes.  The proposed changes will likely be adopted by LRAP Committee sometime this year.  If the LRAP terms are changed in advance of November 2014, then the graduating class of May 2014 will be offered the new LRAP.  Otherwise, graduates will be offered the old LRAP.

Graduates will have the option of applying for LRAP (Loan Repayment Assistance Program) within 3 years of their graduation date.  Thus, anyone graduating May 2014 and afterwards will likely be faced with the new LRAP terms... which are still being ironed out***.  Today, Dean Kulwin has shared with us some key differences between old and new LRAP, which are better referred to in her chart in the video.  From memory, some changes include:

• Accommodating higher income levels, up to $80k or $100k, for which LRAP will still assist in loan repayments.  
• Extending the LRAP application period from 3 yrs. to 3.5 yrs. for graduates.
• Issuing LRAP payments to graduates in installments that rely on simultaneous participation with the Federal Public Service Loan Forgiveness Program (FPSLFP).  ...This may be due to affordability for King Hall, which is otherwise trying to curb its institutional costs.  

***The major problems caused by benching LRAP installments on FPSLFP are that graduates will experience negative amortization of their school loans. That is, loan repayments (sum of the graduate's income-based repayment + income-based LRAP installment) will not actually be enough to pay off any principal on the loan.  At some salary levels, the loan repayments won't even be enough to pay off that month's interest on the loan. Therefore, your unpaid interest rolls into the principal owed for the next month. Cycle continues and your principal just keeps escalating and you end up with more debt than you started out even trying to repay.

Best case scenario: If you kick this can down the road long enough to make good on your 120 repayments to federal gov., then FPSLFP will forgive your education debt.  However, even if you carry 10 yrs. of debt and never pay taxes, the 10 yrs. of debt and outstanding debt hurt your credit history and make it difficult for purchasing a car, home, etc.

Worst case scenario: if you don't make the 120 repayments due to changed circumstances, then you're laden with debt and disqualified from LRAP and/or FPSLFP.

These LRAP proposed changes are tabled for at least another 2 weeks in order to collect feedback and suggestions before the proposed changes go to LRAP Committee for discussion.  Dean Kulwin is getting a special inbox just to handle comments about the town hall and LRAP proposed changes.  I will give updates once that email address is shared.

Please do draft concerns and suggestions for the LRAP Committee to take into consideration!


Also, it was noted by Dean Kulwin that most graduates who enrolled in LRAP seem to have dropped out after 3 years of participation.  Few gave reasons for not continuing in LRAP and the ones who did cited:

• Marriage or family changes to income level may result in not qualifying for LRAP
• New job that didn't qualify for LRAP
• New income level that didn't qualify for LRAP

Please comment with what other problems you have faced or that made you stop LRAP so that the LRAP Committee can attend to these problem areas!  If you stopped participating in LRAP, is it for over 2 yrs. or without intent/ability to resume LRAP?  

National Jurist piece on King Hall's student budget committee

Finally in press (National Jurist) is our own BPC 3L representative (Bill Stanger) and Dean Brett Burns's commentary on a new model of collaborative and transparent budget setting in law school.

This piece describes how "UC Davis School of Law, known for its collegial and collaborative environment, is addressing budget concerns in a manner true to its reputation" through the formation of a student budget advisory committee.

The Committee serves to formalize student participation in the budgeting process and to provide feedback regarding programs and services.  It has also facilitated greater awareness of how a significant portion of student fees--roughly one-third--is returned to students in the form of financial aid, the article notes.

"While the formation of the Student Budget Advisory Committee is not a magic bullet for the rapidly rising cost of legal education, it is a respectable and appropriate step in keeping students engaged in the budget process at UC Davis School of Law," write Burns and Stanger.

http://www.law.ucdavis.edu/news/news.aspx?id=4676

http://www.nationaljurist.com/content/bringing-students-budgeting-process

Analysis on state funding for public universities

Dean Burns has just shared with us a California Legislative Analyst Office (LAO) report, which is one of many expounding on new budgetary practices for state universities.  Just yesterday, a report published that some measures are set in place for school sensitivity to student enrollment rate and inflation.

(1) Student Enrollment

        The lower enrollment in law schools has been felt nationwide and resulted budget realignments in many schools.  State gov. has "provided base increases so that universities could cover increased costs for their existing programs."  

(2) Inflation

        If state gov. regularly adjusts its funding base for inflation, then this would certainly help our schools to manage their operations with respect to the economy over time. However, the LAO has noted that "the state typically did not have a policy on student tuition levels and revenues, though tuition revenues are used along with state funds to support the universities' core programs." This is troubling. Education is a public good that, by nature, is price-sensitive and cannot have tuition raised and lowered to make up for operational costs. Society cannot afford to go without any policy or metric to stabilize student tuition levels. 

         LAO noted that the state has also earmarked funding for targeted purposes (pensions, student outreach programs) and otherwise uses state bond funds for specific projects that are reviewed and approved. Why shell out state funds and not use these shortages to identify a better business plan? Can we talk tuition policy and better align supply-and-demand now?

More enlightening might be a look for progress in the past 6 years.  Take a look, comments welcome as we consider these needs and design for a tuition policy.

A Review of State Budgetary Practices for UC and CSU

"Over the last six years, the state has moved away from its traditional budgetary approach for the University of California (UC) and the California State University (CSU). Notably, the state no longer (1) funds enrollment or inflation, (2) designates as much funding for specific purposes, or (3) reviews UC's capital projects as part of the regular budget process. Instead, the state has been providing the universities with unallocated funding increases and allowing the universities to make funding decisions previously made by the state. Another recent change to the state's budgetary approach is its inclusion of performance measures (though the state has not yet determined how to factor these measures into its budget decisions). Despite these changes to the traditional budgetary approach, one aspect that has not changed in recent years is the state's ad-hoc approach to student tuition.

"We recommend the Legislature return to using its traditional approach to funding the universities but make some refinements. Specifically, we recommend the Legislature resume funding enrollment but set enrollment expectations for different types of students and for a longer time horizon. We also recommend the Legislature fund a new freshman eligibility study. Further, we recommend the Legislature resume funding inflation and assume students and the state share in cost increases. To address concerns about the traditional budgetary approach's lack of emphasis on efficiency, we recommend the Legislature use its recently adopted performance measure relating to spending per degree to monitor the universities' productivity. We also recommend the Legislature review capital projects for the universities through the regular budget process."

This report (24 pages) is available using the following link:

http://lao.ca.gov/Publications/Detail/2913