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Wisconsin regents OK tuition hike for 2018-19

University of Wisconsin System regents unanimously approved a plan to raise in-state undergraduate tuition for the 2018-19 school year if Republicans lift their tuition freeze.

The proposal calls for keeping tuition flat for 2017-18 and raising it by no more than the rate of inflation for 2018-19.

It didn’t detail how the rate of inflation would be calculated, but System President Ray Cross told the regents at their recent meeting at UW-Eau Claire that system officials would use the latest annual average at the moment it sets tuition for that year.

The annual average is currently 1.1 percent; raising tuition by that much would generate about $7.5 million, system spokeswoman Stephanie Marquis said.

“The adjustment is modest,” Regent Gerald Whitburn said. “It should be affordable for students and for their families. And it is in fact required as we look at system and campus financials.”

The tuition freeze has proven popular among parents and students, including James Langnes, a UW-Whitewater business major who serves as a student representative on the regents board. But he acknowledged that students will have to pay more at some point.

“Tuition can’t remain flat forever,” he said.

The plan hinges on whether and when Gov. Scott Walker and Republican lawmakers lift the freeze that’s been in place for four straight years. That move came after the GOP learned in 2013 that the system was sitting on massive reserves while raising tuition annually.

The prolonged freeze — coupled with a $250 million cut Republican lawmakers imposed on the system in the last state budget — has led to layoffs and fewer class sections, increasing time to graduation and student expenses in the long run, system officials say.

Walker has said he wants to continue the freeze for another year as he prepares his 2017-19 state budget but hasn’t committed to extending it for a sixth year.

The plan states that tuition is a key factor in college affordability but a high-quality education can be delivered in a timely manner only if tuition keeps pace with the cost of living.

“The bottom line is simple,” regents President Regina Millner said. “Continued budget cuts and frozen tuition cannot be sustained.”

The regents also provided material with the plan showing they’ve asked Walker to increase financial aid by $19.2 million in the next state budget, and that system officials are working to find administrative cost-savings. Such costs represented 6.2 percent of its budget in fiscal year 2014 compared with the 8.8 percent national average for colleges.

Annual resident tuition at UW-Madison, the system’s flagship school, is $9,273. UW-Milwaukee charges $8,091 for tuition. The system’s other four-year schools’ rates range from $7,361 at UW-Eau Claire to $6,298 at UW-Green Bay and UW-Parkside. UW-Stout’s tuition is $234, but that school also charges per credit. Students at all the schools pay hundreds of dollars in fees every year as well.

Asked about the system’s plan, Walker spokesman Tom Evenson said only that the governor is continually reviewing how to make education more affordable and appreciates that UW officials support a freeze for 2017-18. Staff members for the co-chairs of the Legislature’s budget-writing committee, Rep. John Nygren and Sen. Alberta Darling, didn’t respond to messages seeking comment.

Jason Klein, a spokesman for the Associated Students of Madison, UW-Madison’s student government arm, said in an email that tuition is too high but the regents are hamstrung by dwindling state aid. He said tying increases in state funding for the system to the rate of inflation makes more sense than raising tuition.

Yellen: Case for interest hike strengthened

The case for a U.S. interest rate hike has strengthened in recent months because of improvements in the labor market and expectations for solid economic growth, Federal Reserve Chair Janet Yellen said today.

Yellen did not indicate when the U.S. central bank might raise rates, but her comments reinforced the view that such a move could come later this year. The Fed has policy meetings scheduled in September, November and December.

Speaking at a three-day international gathering of central bankers and academics in Jackson Hole, Wyoming, Yellen said the “U.S. economy was nearing the Federal Reserve’s statutory goals of maximum employment and price stability.”

Data released earlier on Friday, however, showed the economy was more sluggish than initially thought in the second quarter, with gross domestic product expanding at a 1.1 percent annual rate. At the same time, consumer spending, which makes up more than two-thirds of economic activity, grew at the fastest rate since the fourth quarter of 2014.

Yellen pointed to a recent rebound in employment and said the Fed expects the economy to continue expanding.

“In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months,” Yellen said, adding that the Fed still thinks future rate increases should be “gradual.”

The Fed raised rates in December, its first hike in nearly a decade, but it has held off further increases so far this year due to a global growth slowdown, financial market volatility and generally tepid U.S. inflation data.

Yellen did not lay out a clear roadmap for what the Fed needs to see to raise rates. Investors have been doubtful about the central bank’s guidance, in part because its policymakers appear to be divided over whether to hike rates soon or take a more cautious approach.

“She’s just kept the door open for a hike sooner rather than later,” said Subadra Rajappa, an interest rate strategist at Societe Generale in Washington.

Prices for fed funds futures implied investors saw about even odds that the Fed will raise rates in December, largely unchanged from before Yellen’s remarks. Investors see much smaller chances of hikes in September or November.

The dollar jumped against the yen and euro on Yellen’s remarks before turning lower. U.S. stocks briefly pared gains, while prices of longer-dated U.S. Treasuries were trading higher.

Yellen noted that Fed officials have a wide range of views on where rates will likely be in the coming years. She said current forecasts imply a 70 percent probability they will be between 0 percent and 3.75 percent at the end of 2017, and a 70 percent probability they will be between 0 percent and 4.5 percent at the end of 2018.

Such uncertainty, she said, is inherent in the inability to predict economic shocks.

OTHER OPTIONS

Yellen was speaking at a Fed conference on designing new monetary policy frameworks, with central bankers eager to find new ways to stimulate economies even after they have cut rates to near zero and flooded banks with money.

She devoted much of her speech to outlining how the Fed may deal with future recessions now that many economists and Fed officials believe that an aging population and other dynamics appear to be slowing U.S. economic growth over the long term.

Because slower growth means future U.S. interest rates will likely also need to be lower on average, some analysts have suggested that the Fed will have less room to fight future recessions because there will be less room to cut rates.

Such a view is “exaggerated,” Yellen said, because the Fed will be able to use bond purchases and forward guidance to ease conditions. She said the Fed still planned in the future to wind down its massive balance sheet but that it would take time, adding that the balance sheet was likely to be useful for policy for some time.

The Fed may also want to explore other options, including broadening the range of assets it can purchase, raising the inflation target, or targeting nominal GDP, she said.

Reporting by Jason Lange and Ann Saphir; Additional reporting by Lindsay Dunsmuir in Washington; Editing by Paul Simao.

Wisconsin Democrat introduces bill to hike minimum wage

Wisconsin Sen. Bob Wirch, D-Somers, announced on the first day of the 2015-16 Legislative session that he has introduced legislation to raise the state minimum wage from $7.25 per hour, where it has been since 2009, to $10.10 per hour and index the minimum wage to inflation.

“With so many families struggling just to get by and the cost of necessities and utilities continuing to rise, we need to take this small step to help them stay afloat,” Wirch said. “Studies have shown those making minimum wage tend to spend nearly all of what they earn, so this increase will provide a boost not just to the families directly affected but to our small businesses and communities, as well,” stated Wirch.

In the Nov. 4, 2014, election, voters in nine Wisconsin counties and four Wisconsin cities passed advisory referenda in support of a $10.10 minimum wage. The questions passed with at least 55 percent of the vote and, taken together, 67 percent of Wisconsin voters who were asked favored an increase to $10.10.

Kenosha County voters approved the measure with 63 percent of the vote and the question passed in the city of Racine with 72 percent support.

Meanwhile, voters in five states, including traditionally-conservative states South Dakota, Alaska, Arkansas and Nebraska, approved minimum wage increases.

“This isn’t just the right thing to do; it’s also the will of the people. Everywhere this issue is put to a vote, the people speak loud and clear in saying that the current minimum wage is too low and has been for too long. It’s time to listen to the voters,” said Wirch in a news release.

Twenty-nine states and the District of Columbia currently have minimum wages hire than Wisconsin’s and fifteen states index the minimum wage to inflation.

Twelve states and the District of Columbia enacted minimum wage increases in 2014.

A study by the Center for Wisconsin Strategy estimated that raising the state’s minimum wage to $10.10 per hour would increase the state’s economic activity by $517 million and generate 3,800 new jobs.

Republicans hold majorities in both legislative chambers and the governor’s office in Wisconsin. Increasing the minimum wage is not on the state GOP’s agenda.

Seattle could set highest minimum wage in nation

Seattle Mayor Ed Murray this week proposed a phased-in increase of the minimum wage to $15 an hour over the next seven years — a compromise endorsed by both business and labor that would make the city’s pay baseline the highest in the nation.

A group called 15 Now, led by socialist City Council member Kshama Sawant, wanted to see an immediate wage hike for large businesses and a three-year phase-in for organizations with fewer than 250 full-time employees. They are gathering signatures to get their competing $15 wage initiative on the November ballot.

The mayor’s proposal is the latest by cities and states nationwide to raise minimum wages. Last month, Minnesota raised the state’s guaranteed wage by more than $3, to $9.50, by 2016. California, Connecticut and Maryland also have passed laws increasing their respective wages to $10 or more in coming years, and other states are going well above the federal minimum of $7.25 per hour.

If Seattle’s plan is approved, the city would move toward having the highest wage of any U.S. city. San Francisco, at $10.55 an hour, has that distinction now.

The mayor’s proposal gives businesses with more than 500 employees nationally at least three years to phase in the increase. Those providing health insurance will have four years to complete the move.

Smaller organizations will be given seven years, with the new wage including a consideration for tips and health care costs over the first five years.

Once the $15 wage is reached, future annual increases will be tied to the consumer price index.

Murray said 21 of 24 members of his minimum wage task force, which included representatives of business, labor and community groups, voted in favor of the plan.

“I think that this is an historic moment for the city of Seattle,” Murray said. “We’re going to decrease the poverty rate.”

Howard Wright, CEO of the Seattle Hospitality Group and a co-chairman of the task force, said he thought the plan would have support from the business community.

“While I know not everyone in the employer community will be satisfied, I believe it is the best outcome given the political environment,” he said.

The measure now goes to the City Council for discussion. Council member Nick Licata, a member of the task force, said he would work to get the proposal approved with minimal tinkering.

Washington state already has the nation’s highest minimum wage among states at $9.32 an hour. According to a chart prepared by the mayor’s office, many Seattle workers will reach $11 an hour by 2015. The state’s minimum wage is scheduled to be $9.54 at that time.

Business leaders had pushed for the phase-in and wage credits for tips and health care benefits.

Fewer than 1 percent of the businesses in Seattle have more than 500 workers in Washington state, according to a study for the city by the University of Washington. Those businesses have a total of about 30,000 employees, representing about a third of those earning under $15 an hour in Seattle.

Murray called the plan a compromise and dismissed concerns that he would face opposition at the city’s May Day events, which include a “15 Now” theme.

“I wanted 15, but I wanted to do 15 smart,” he said.

Labor leaders congratulated the mayor for starting a national conversation, which many credit to Sawant, the socialist City Council member.

“Raising Seattle’s minimum wage to $15 reaches far beyond the 100,000 workers who will benefit with the city limits,” said David Rolf, president of SEIU Healthcare 775NW and co-chair of the task force. “Today, Seattle workers send a clarion call to all working people in America.”

Budget office: Hike in minimum wage would help some families out of poverty

The Congressional Budget Office on Feb. 18 released its analysis of two options to rising the minimum wage in the United States.

The CBO reviewed the “$10.10 option” and a “$9 option.”

In its review, the CBO said increasing the minimum wage would “have two principal effects on low-wage workers.”

Most workers, the report said, would receive higher pay that would increase their family’s income, and some of those families would see their income rise above the federal poverty threshold. However, some low-wage jobs would probably be eliminated and the share of low-wage workers who were employed would probably fall slightly.

The “$10.10 option” would increase the federal minimum wage from $7.25 per hour to $10.10 per hour in three steps — in 2014, 2015, and 2016. After reaching $10.10 in 2016, the minimum wage would be adjusted annually for inflation.

The “$9 option” would raise the federal minimum wage to $9.00 per hour in two steps — in 2015 and 2016 — but it would not be automatically adjusted afterward for inflation.

The CBO said once fully implemented in the second half of 2016, the $10.10 option could reduce total employment by about 500,000 workers, or 0.3 percent. There is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1 million workers.

The CBO said many more low-wage workers would see an increase in their earnings.

Also, some higher-wage workers would owe their jobs and increased earnings to the heightened demand for goods and services that would result from the minimum-wage increase.

The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion.

Once the increases and decreases in income for all workers are taken into account, overall real income would rise by $2 billion, the CBO said.

The $9.00 option would reduce employment by about 100,000 workers, or by less than 0.1 percent, CBO projected. There is about a two-thirds chance that the effect would be in the range between a very slight increase in employment and a reduction in employment of 200,000 workers.

The increased earnings for low-wage workers resulting from the higher minimum wage would total $9 billion.

Once the increases and decreases in income for all workers are taken into account, overall real income would rise by $1 billion.

In addition to affecting employment and family income, increasing the federal minimum wage would affect the federal budget directly by increasing the wages that the federal government paid to a small number of hourly employees and indirectly by boosting the prices of some goods and services purchased by the government.

Most of those costs would need to be covered by discretionary appropriations, which are capped through 2021 under current law.