UW Impact FAQ: Workforce Education Investment Act
What is it?
The Workforce Education Investment Act, passed by the Washington State Legislature in 2019, creates the Washington College Grant (WCG), which incorporates and expands on the State Need Grant (SNG). The WCG will cover or subsidize the cost of post-secondary education – including apprenticeships, community and technical colleges, and universities – for lower and middle-income students and families. In the 2019-2020 academic year, students with family incomes at or below 70% of Washington’s median family income qualify for a grant. Starting in the 2020-21 academic year, students with family incomes at or below 100% of the state’s median family income qualify (aid is determined on a sliding scale).
How is it funded?
The Act establishes the Workforce Education Investment Account, which is funded through a higher business and occupation tax rate on professional services, on an escalating scale depending on the size of the business. Smaller businesses will see an increase of about 20% (from 1.5% to 1.8%), and the state’s two largest tech companies will see about a 60% increase. The new tax rate affects about one-fifth of all Washington businesses. Revenue from this increase is expected to total about $1 billion within 4 years.
Does this new revenue fund salaries and other expenses that used to be covered by the state’s general fund?
The revenue will mainly support financial aid and the expansion of high-demand degree programs, including some initial faculty and staff hires. This funding is additive to the state’s existing general fund support, which provides core funding to higher education institutions, including ongoing salary costs, maintenance, and student services.
Who decides how the revenue will be spent or invested each year?
The Workforce Education Investment Accountability and Oversight Board will provide guidance and recommendations to the Legislature on which workforce education priorities should be funded and to ensure that workforce education investments produce intended results. The Board will have 17 members—4 from the legislature, and 13 to be appointed by the Governor as representatives of business, labor, higher education, and students. The Board must report to the Legislature annually.
When will eligible students receive funding through the WCG program?
Eligible students will receive financial awards beginning in the coming 2019-20 academic year, with the fund eliminating the former SNG wait list by 2020-21.
How much of the revenue from this new account will go to the University of Washington?
About 75% of the revenue from the Workforce Education Investment Account will go directly to post-secondary students in the form of financial aid, and to community and technical colleges to immediately expand opportunities. The remaining 25% will be split among other institutions, including the University of Washington.
With a new revenue source available, will UW departments and units devise new programs to compete for funding?
No. The revenue will be used to fund items that appear on the UW’s annual legislative agenda by the usual process of determining university priorities. The funds are not an “extra” pot of money for new initiatives. Any non-disbursed funds will be saved and invested by the state for future use.
Is financial aid only available to students who want to study high-demand subjects?
No. Financial aid is available regardless of area of study.
What will happen to the Husky Promise, which has been the primary source of financial aid for UW students with financial need?
WCG funding is meant to supplement—not replace—existing funding for students, creating opportunities for the Husky Promise to further improve college affordability, provide additional services to students, reduce college attainment equity gaps and student loan debt for low-income students. While new WCG funds will continue to reduce the UW’s offset to the unfunded portion of the program, the magnitude of the effect is not yet known. In FY21, the state is expanding WCG eligibility. The effects of this must be analyzed alongside possible savings.
With the WCG in place, does the University still need scholarship and financial aid support?
Yes. The need remains for scholarship and financial aid support. The WCG covers tuition, which is about 40 percent of the full cost of attendance. Housing, books, and other expenses are still a significant financial barrier for students. Scholarships enable low- and middle-income students to reduce their need for loans and allow them to take full advantage of UW’s educational experiences.