wa-law.org > bill > 2025-26 > SB 6325 > Original Bill
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The legislature finds that the current higher education funding methodology relies on a budget assumption, commonly known as the "fund split," which attributes a portion of incremental increases to compensation costs and central services that are paid by appropriated state funds and tuition. This assumption creates structural inequities and financial instability for Washington's public colleges and universities that undermine their ability to provide quality education, retain talented faculty, and serve as economic engines for the state.
The legislature finds that under this fund split methodology, when approving collective bargaining agreements with the employees of higher education institutions, authorizing salary increases for nonrepresented employees, approving changes to benefits costs, including health care, and assigning central service charges between state agencies, the legislature does not fully fund compensation increases for compensation costs paid with appropriated state funds and tuition with state funds. This effectively amounts to repeated budget cuts for the state's institutions of higher education.
The legislature further finds that:
Prior to the great recession, the state funded 100 percent of all maintenance level cost increases and prescribed compensation increases with new state appropriations, allowing institutions to retain tuition revenue to offset other increasing costs;
Beginning in the 2015-17 biennium, the legislature implemented a funding methodology that assumes projected new tuition revenue and prespends that revenue on compensation and other mandatory costs, fundamentally shifting the financial burden to institutions and students;
The fund split methodology requires institutions to use projected tuition revenue to cover mandatory costs, including compensation increases, minimum wage increases, central service charges, self-insurance premiums, and benefit rate changes, while legislatively capped tuition increases are inadequate to cover such mandatory cost increases;
Institutions have not met state tuition revenue projections, forcing them to reduce compensation enhancements for faculty and administrative professionals or make other budget reductions to cover mandatory costs;
Institutions face ongoing budget deficits and have been forced to consolidate or eliminate programs, directly impacting educational offerings and student access;
Some institutions experience increased budget deficits despite enrollment increases, demonstrating that even enrollment growth cannot overcome the structural funding inadequacy created by the fund split;
A substantial majority of state appropriations are directed toward compensation costs, and the fund split prespends most tuition dollars on compensation, resulting in severely reduced flexibility and continued erosion of institutional base budgets;
The proportion of tenure and tenure-track faculty has declined as institutions have been forced to cut costs to manage fund split pressures, undermining educational quality and faculty stability;
The structural funding inadequacy created by the fund split threatens Washington's ability to maintain a world-class higher education system, attract and retain talented faculty, and prepare the skilled workforce necessary for the state's economic competitiveness; and
The state has not identified the types and level of student services and instructional supports that evidence shows as necessary to improve degree and workforce certification completion for different demographic groups of students, enrolled in different types of programs, at different types of institutions. This information is vitally important for the legislature to make informed decisions on policies to improve student outcomes and whether local funding sources, such as tuition or state funding, are the appropriate source for sustaining such student services and instructional supports.
Therefore, it is the intent of the legislature to eliminate the fund split methodology and restore state funding for prescribed increases in compensation and central services at public institutions of higher education, ensuring that tuition revenue can be used to enhance educational quality.
The Washington state institute for public policy, in consultation with public four-year institutions of higher education and the state board for community and technical colleges, shall conduct a comprehensive study to define and evaluate essential higher education student services standards. The study must cover the following topics:
Academic support standards, including an evaluation of optimal student-to-advisor ratios, tutoring availability, writing center capacity, and library resource access necessary to maintain timely degree completion;
Wellness and basic needs infrastructure, including an assessment of the minimum necessary infrastructure for campus mental health services, including counselor-to-student ratios, and the effectiveness of benefits navigators in addressing student hunger and housing instability;
Instructional quality metrics, including a review of the impact of class sizes and the proportion of tenure-track faculty on student learning outcomes, undergraduate research opportunities, and faculty mentorship availability;
Career and workforce readiness, including an analysis of the services required to connect students with internships, undergraduate research, career counseling, and postgraduation employment in high-demand fields; and
Funding alignment, including a determination of the per-student cost required to provide these essential services and an analysis of how current funding levels, under the fund split methodology, have impacted the delivery of these services.
In conducting the study, the Washington state institute for public policy shall solicit input from student associations, faculty organizations, staff unions, the Western interstate commission for higher education, national research leaders in relevant areas, organizations providing community-based mentoring and advising services to first-generation and other underserved student populations, and community stakeholders to ensure the standards reflect the diverse needs of Washington's student population. The institute is encouraged to utilize research conducted by faculty at Washington institutions of higher education, and other regional and national research bodies.
In compliance with RCW 43.01.036, the institute shall submit a report of its findings and recommendations to the higher education committees of the legislature by December 1, 2026. The report must include a proposed "student service adequacy index" to be used in future biennial budget requests to ensure state appropriations are sufficient to meet defined student service standards.
This section expires August 1, 2027.
Starting in the 2029-2031 biennium, increases for employee compensation and central services for expenditures that are paid with appropriated state funds or tuition must be funded by state funds at levels funded in the 2023-2025 biennium, as follows:
University of Washington, 60 percent;
Washington State University, 66 percent;
Eastern Washington University, 70 percent;
Central Washington University, 70 percent;
The Evergreen State College, 85 percent;
Western Washington University, 70 percent; and
Community and technical colleges, 100 percent.
Every biennium thereafter, the amount of increases for employee compensation and central services funded by state funds must be increased by 10 percent until fully funded by state funds.
If such compensation increases are funded with dedicated fund sources with insufficient revenue, additional funding from other sources is not provided.
For purposes of this section, the following definitions apply:
"Compensation" means the cost of salaries, wages, and pension contribution costs, subject to RCW 28B.10.423, that are reported to the office of financial management for purposes of the state budget and accounting systems with a funding source of an appropriated state fund or tuition;
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"Employee" means any employee of a public institution of higher education and includes graduate teaching assistants;
"Employee" does not include graduate research assistants who are performing research primarily related to their dissertation and who have incidental or no service expectations placed upon them by the institution.
"Increases" for compensation includes increases set forth in employment contracts, cost of living adjustments, and legislatively approved collective bargaining agreements; and
"State funds" means the general fund—state account, education legacy trust account, opportunity pathways account, and the workforce education investment—state account.