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Today in the House Education Committee, http://www.leg.wa.gov/house/committees/ED/Pages/default.aspx, in Olympia, the committee ground to a halt as committee members were voting on proposed laws.
Legislative committees hold public hearings on bills where the public and interested parties can air their opinions on legislative proposals. Once public hearings have been completed, committees then vote on bills in “executive session” (no testimony is heard, no further public input is taken).
As is customary, the committee staff explains bill and proposed amendments and each party’s members go into “caucus” to discuss among themselves how they will vote on those proposals. These caucus gatherings are in private rooms so legislators can discuss their disagreements in private and work out differences among their party members. Then both parties reconvene for a final committee vote, usually preceded by speeches as to why they are voting for or against a particular measure.
The House Education Committee takes on a number of controversial K-12 issues, such as charter schools, teacher and principal evaluations, graduation requirements, educator professional development, school board duties and function and a host of other topics.
The committee has 11 Democrats and 10 Republicans, making it one of the more politically balanced committees in the House. Among the Democrats there are some disagreements about how much educational reform should be pushed.
A good example of this is in the teacher and principal evaluation area. There were two major bills on that topic, HB 2334 and HB 2427. HB 2427 was the more “aggressive” bill in that it ends the “LIFO” system of teacher promotion (last in, first out). Under HB 2427, seniority would no longer be the deciding factor to keep or let a teacher go. Seniority would be one factor of several, among other provisions. HB 2334 continues a “pilot” program begun in 8 school districts last year. Both bills have merit and move evaluations forward .
But HB 2427 makes a major policy change that would affect the older but not so good teachers. The teacher’s union, WEA and others opposed HB 2427 while supporting HB 2334. Education reformers and others, including WTIA, believe it is time for HB 2427.
This issue was particularly divisive among the Democratic caucus and the Republicans were hoping to team up with a couple of Democrats to pass HB 2427. A couple of Democrats refused to vote for HB 2334 so neither bill was voted out of committee. Once it was obvious that there was a stalemate, the committee adjourned after passing four “agreed to” bills.
This leaves teacher and principal evaluations up in the air for the moment but the issue is too important to leave undone this session. But for now both bills are in limbo as both parties seek ways to bring one or both issues to the full House of Representatives.
For those of us like your scribe who toil in the halls of Olympia regularly, this kind of legislative drama is both entertaining and frustrating. It is interesting to watch events unfold that are not orchestrated but not knowing how this important issue gets sorted out leaves many people hanging.
Here is today’s House Education Committee agenda: http://www.leg.wa.gov/house/committees/ed/Pages/Agendas.aspx?aid=17730
WTIA will continue to monitor and advocate on K-12 topics, especially around improving student achievement in math and science.
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Below is a cut and paste letter from AG Rob McKenna and King County Prosceutor Dan Satterberg on laws protecting consumers from identity theft and other information about protecting personally identifiable information (PII).
January 27, 2012
Dear Business, Financial Institutions, Private Industry and Public Service Organization Leaders:
Over the last seven years, Washington State has made great gains to stop identity theft and financial fraud. Even with these gains, Washington remains in the top twenty states for complaints of financial fraud and identity theft. We are writing you on behalf of our organization, Law Enforcement Group against Identity Theft (LEGIT), to ask you to help make Washington State safe for you and our community.
LEGIT has worked hard over the past several years to strengthen the laws against identity theft:
· In 2005 we helped pass bipartisan legislation to strengthen data breach notification laws;
· In 2007 we proposed and passed legislation to enhance credit freeze requirements. Consumers can now freeze their accounts or be alerted when their credit history is requested, and not just after they have been victimized by identity theft;
· In 2008 we obtained passage of several laws to better protect identity theft victims. Victims can file police reports where they live, rather than in the multiple jurisdictions where their stolen identities may have been used. Identity thieves can also be punished for each time they use a victim's identity, rather than one conviction per victim, no matter how many times the crimes were committed with that identity;
· In 2009 we obtained passage of a bill that requires that only the last four digits of debit card numbers be printed on most retail receipts, supplementing the federal law that requires truncation of credit and debit card numbers on receipts and deletion of the expiration date; and
· In 2011 we achieved passage of legislation making the act of stealing mail and possessing stolen mail a felony. Previously it was only a misdemeanor.
Despite our legislative successes, we cannot reach our goal of crime reduction without your help. Identity thieves target businesses, government, and especially financial institutions to unlawfully obtain access to personal identifying information and the finances of consumers. Personal information includes, but is not limited to, these pieces of information:
· Name and address
· Telephone and cell phone number
· Driver’s license or other government identification
· Place of employment
· Employee identification number
· Banking info – deposit account numbers, savings accounts, checking accounts
· Credit card number
· Passport number
· Alien registration number
· Health insurance number
· Taxpayer identification number
· School identification number
· PIN
· Computer or account passwords
· Email addresses
· IP addresses
· Date of birth
· Biometric data
· Birth certificate information
· Death certificate information
· Credit/loan applications
Criminals may use technology to hack into company databases, but they also employ low-tech methods such as stealing mail, dumpster diving, taking recycled materials or obtaining unencrypted computers. A significant amount of theft occurs from employees or vendors who have access to your records and databases. A current, alarming trend is the use of “skimming” devices placed over ATMs, gas pumps that take credit/debit cards, or other point-of-sale card readers. The skimming device collects account information off the magnetic strip on the back of the credit/debit card. Often, but not always, there is a pin-hole camera set up to obtain the PIN number associated with the debit card. This information is then transferred to a blank credit or debit card and used immediately to drain bank accounts and to rack up thousands of dollars in cash advances or credit card debt.
The goal of this letter is not to address all the areas of risk for you in your business operations. You likely already know of many risks and have taken steps to protect your customers. Rather, the purpose of this letter is to ask you to take the following risk reduction efforts, if you are not already, and to reinforce any current methods you have:
1. Destruction of Personal Identity Information. Federal and state laws require all businesses, banks, and other organizations ensure proper destruction of any sensitive consumer, financial, health or government identifiers contained in information received from consumers. These laws also require that when businesses retain this information, they must protect against unauthorized access to or improper use of sensitive consumer and financial information.
· What kind of personal identifying information is covered by these laws?
Any record about an individual whether in paper, electronic, or any other form that is identifiable to an individual and is commonly used for financial or health purposes is subject to secure storage and destruction laws.
· What are reasonable data retention practices?
Scale down. Keep only consumer information that is required for business purposes or to meet legal obligations.
· What are reasonable destruction measures?
Prior to destruction, the identifying information must be altered to the point where it cannot be read, deciphered, reconstructed or used by unauthorized persons. Shredding is an example of a way to destroy paper records. Wireless or electronic records may require different destruction methods.
· For information that is not destroyed due to business needs, what are reasonable storage measures?
Electronic and Internet security is as important as the locks on your business doors. Are your computers and servers encrypted? Do you have effective policies regarding security of mobile devices? Is your software up to date to avoid Internet and software viruses? Do you restrict access to your information technology systems?
2. What are key considerations in risk reduction?
· Do you know what personal information about individuals you have in your files and on your computers?
· Do you keep only the information about individuals you need to conduct your business and comply with applicable laws?
· If you are a financial institution or other business that has accounts covered by the FTC’s Red Flags Rule, do you have policies and procedures in place that can indicate the possible existence of identity theft and outline how to respond appropriately? (For more information about how to comply with this rule, see http://www.ftc.gov/bcp/edu/microsites/redflagsrule/faqs.shtm .)
· Does your organization have written policies and procedures in place to assure proper disposal of personal information?
· Do you provide training to all staff on the policies? Can you demonstrate that you have provided training to each employee?
· Do you require your contractors to comply with the laws on destruction and breach of personal information?
· Do you require your contractors to comply with your policies?
· Have you established technical and physical safeguards to restrict access to personnel and files or other records containing personal information or other non-public identifying information regarding your own employees or consumers?
· Can you demonstrate that you limit access to both personal and non-public information to only those who actually need the information to allow employees to do their official duties?
· Do you perform security and background checks on all employees who have access to personal information and non-public information on consumers and employees?
· Do you truncate all personal numbers (social, telephone, accounts) on documents (paychecks, correspondence) with consumers and employees?
· What is your breach notification policy? Do you have trained staff to notify law enforcement, consumers, and other affected people if you experience a data breach?
· If you are a company with surveillance cameras, where are they placed? Are they at face level, which will maximize the ability for recognition? Are they in a place to capture the front of the face, as opposed to the side? Is the video of sufficient quality to be useful to law enforcement? The best placement tends to be on a door jamb where someone exits a location, about five feet from the ground. The quality should be at least 30 pixels between the eyes, which is a standard measurement for video quality.
· Are your credit card terminals safe from wireless hacking? Are you familiar with Payment Card Industry Rules (PCI)? Credit card companies have industry rules that require merchants to be audited if there is a breach in the credit card data, and the credit card companies levy steep fines if security is insufficient or eliminate a merchant's ability to use credit cards.
· Are your business computers safe from wireless hacking? If you have a wireless router, is the security setting WPA2? A security setting using an older level of security of WEP or WPA is vulnerable to hackers. Is the password for your security system a combination of symbols, numbers, uppercase letters and lower case letters? Is the password changed regularly?
Addressing each of these basic security concerns and implementing changes where appropriate can go a long way to protect your customers, your employees, and your organization from identity theft, fraud and abuse. The Attorney General’s Office provides useful information on identity theft prevention specifically for businesses at www.atg.wa.gov. The King County Prosecuting Attorney’s Office website at http://www.kingcounty.gov/Prosecutor.aspx has numerous helpful links if you are victim of a crime, including identity theft. The Federal Trade Commission is a great resource and provides helpful industry compliance information on its website at http://business.ftc.gov/privacy-and-security. Washington State Labor and Industries also has good information for identity theft victims at http://www.lni.wa.gov/ClaimsIns/CrimeVictims/default.asp. If you need legal advice on any of these issues, we suggest you confer with a private attorney who specializes in this area of practice.
We are pleased to count you among our partners in efforts to reduce identity theft crimes. Through our combined efforts, we can continue to make gains in our battle against fraud and identity theft. We seek to make our cities and counties the most hostile places in the nation to attempt to commit identity theft. Sincerely,
ROB MCKENNA DAN SATTERBERG
Attorney General King County Prosecutor
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Today in Olympia, WTIA testified against HB 2231, a bill to eliminate student assessments in writing, math and science as high school graduation requirements.
The original education reform legislation that was passed in 1993 (HB 1208) still has not been fully implemented. There are reasons for this but the main one is that the K-12 education system has resisted reforms, delayed implementation and fought against measures that would improve student achievement.
WTIA and our technology company members strongly support improved student achievement, particularly in math and science. WTIA and other education reform groups have pushed hard to require that students demonstrate knowledge in math and science by passing a test to graduate from high school.
Students must now pass a reading and a writing test to graduate from high school. Passage rates for both tests are well over 80% now that schools, teachers and students have gotten focused on it.
However, there have been delays for the math and science requirements for a number of years now. Students can earn their diploma if they pass the math "end of course" assessment. If they do not pass, they must take an extra year of math. In 2013 though, passage of the math test in Algebra is required to graduate. In 2014, students must pass a geometry test in addition to algebra to graduate. Once these tests become requirements, students will take them more seriously and get more focused on doing well on them.
For science, the graduation requirement begins in 2015. Remember that these tests are taken in 10th grade; students can retake the test up to four times and there are alternatives if they are unable to pass.
HB 2231 would eliminate the requirement that students pass the tests to graduate. WTIA believes this is a flawed policy that does not help students, nor does it provide educators, parents or the public any gauge of how students are doing. Here is a link to the bill page on the legislature's website: http://apps.leg.wa.gov/billinfo/summary.aspx?bill=2231 A bill analysis is attached.
Washington's K-12 system still has a number of flaws that still need to be addressed. Much progress has been made in the last 3-4 years in terms of higher standards, aligned curriculum and more effective assessments. HB 2231 takes our state in the wrong direction.
Because of the state budget crunch, proposals like these are couched as ideas that will "save money". But not knowing if our students perform adequately in math and science is not a good policy. WTIA will continue to work against passage of HB 2231.
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Today in Olympia, the WTIA testified in favor of a proposal to allow individuals who have been victimized on social networks or online bulletin boards sue for harm caused by being impersonated online.
Substitute House Bill 1652, sponsored by Sen. David Frockt, attempts to provide a civil remedy for those who have been victimized online by being falsely impersonated.
If you are interested in reading this bill, you can find it here: http://apps.leg.wa.gov/documents/billdocs/2011-12/Pdf/Bills/House%20Bills/1652-S.pdf and other related documents here: http://apps.leg.wa.gov/billinfo/summary.aspx?bill=1652&year=2011
WTIA supported this bill last year but it failed to make it through the state Senate after passing unanimously from the state House of Representatives. Barring any unforeseen snafus, this bill should make it through the legislative process this session.
If you'd like to know more about this bill or other legislation that WTIA is involved in, please contact us at Lmcmurran@washingtontechnology.org
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The state legislature convened today in Olympia for the 60 day session. As has become customary, the primary task facing lawmakers is cutting the state operating budget. Since the economic downturn hit in earnest in 2009, the legislature has cut the state budget 3 times; first in the 2010 session that also included tax increases, which were largely erased by the voters that year; in the 2011 special session and then again in December 2011.
The 2012 session will be the fourth time in a row where the state legislature has had to cut spending. Unemployment rates remain stubbornly high in some key sectors (construction, finance, real estate) that generate lots of tax revenue. The state spent literally every penny of real estate excise tax that was generated by the housing boom, without putting enough away for the inevitable downturn. Then when the economy did not regain strength as it did in the 2001-03 period, revenue growth had to be re-forecast downward several times over the last two years and thus the assumptions on which the state budget is written.
Yet, parts of the state economy are literally booming. Aerospace, agriculture, biotech/life sciences/healthcare and IT/software/internet have all been growing at fairly steady clips over the last three years. In the sectors IT and tech sectors that WTIA represents, companies of all sizes have been growing.
We at WTIA hear regularly about the need for software developers, software engineers, electrical engineers, web designers and other high skilled positions that usually require a four year degree or more. In the aerospace sector, aeronautical engineers are needed and in biotech/life sciences, it is biology related degrees that are most desired.
So as the need for holders of bachelor’s degrees in STEM fields grows, the legislature cuts higher education. The higher education system has made up for that loss by raising tuition, cutting certain low demand majors, limiting high cost majors (which are also often high demand, such as engineering) and experimenting with “differential” tuition where students pay more for majors that cost more. Again, engineering falls into this category.
The result of not funding higher numbers of STEM degrees from Washington universities is that local companies either have to incur substantial costs to recruit from out of state or positions remain unfilled for long periods of time. Salaries in the technology field are far above the state average and benefits are usually generous.
WTIA will be in Olympia as we are every legislative session, advocating for STEM degree production and to limit budget cuts to higher education. WTIA has been very active for a long time on higher education issues, especially around STEM degree production.
We may be calling on you to communicate with your state lawmaker on the need for supporting higher education and especially to keep producing high quality STEM degrees.
With the revenue picture still lagging, there are now a wide range of tax increase proposals being discussed. The governor has a temporary half-cent sales tax increase proposal.
Other legislators are floating an income tax, a capital gains tax and all other kinds of ways to increase revenue. We will see proposals to curtail tax incentives for R&D that are widely used by all types of technology companies. Many if not most of these ideas are not well thought out; they are simply ways to raise more money to avoid more difficult cuts. WTIA is not in favor of having useful and valuable tax incentives that help companies grow be curtailed. We will evaluate tax related proposals if they are not punitive to the technology sector and help prevent more cuts to higher education and K-12.
If you are interested in finding your legislator, check the legislature’s website here: http://apps.leg.wa.gov/DistrictFinder/Default.aspx
Keep an eye on this blog for regular updates during the legislative session. Follow me on twitter at www.twitter.com/lewismcmurran
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Your scribe wishes to thank you for reading this blog and my ramblings. I feel blessed to live in the state of Washington, in the Puget Sound region and to represent the state's technology industry.
I am humbled and inspired by the growing entrepreneurial spirit in the Seattle area as well as in other areas of the state, such as Bellingham, Spokane, Tri-Cities and Wenatchee. Washington has a bright future as a hub for technology development and technology deployment.
It is important that our region and state keep our edge. We can do that by ensuring our students, from age 3 through college age and beyond get a top notch, world class education. We have made progress but there is a long way to go before Washington is recognized as a top state for education.
We must invest and expand higher education, especially at the four year level for our young people and for those who need to improve their mid career skills. STEM jobs are among the most plentiful available, high paying with good benefits but require computer science or other engineering related degrees. Washington needs to improve its graduation rate for STEM degrees, both grads and undergrads.
Washington is an amazing and wonderful state to live in. Let's make sure that we set the right priorities to maintain a prosperous and sustainable future.
May you all enjoy Christmas and the holidays and have your best year ever in 2012.
follow me on twitter at www.twitter.com/lewismcmurran
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Washington’s most recent revenue forecast for the current 2011-13 biennium was lowered once again. The state legislature uses this quarterly forecast to craft their two year budget, which runs from July 1, 2011 until June 30, 2013.
While we are not technically in a recession as economic growth is in positive territory, the growth of tax revenue is much slower than previous recoveries. This is occurring despite the hiring spree that the tech and aerospace industries have been on for the last couple years. The ag/farming and trade sectors are also doing well. Construction/real estate and auto sales are still slow, which generate high levels of sales tax that Washington relies on as its primary revenue source. You can read the full forecast here: http://www.erfc.wa.gov/publications/documents/nov11pub.pdf
The state’s revenue projections are now $1.7 billion lower than the March 2011, on which the 2011-13 budget is based. This is clearly a significant drop that makes providing government services and education more difficult. The legislature needed a special session in May to do all the cuts necessary to be in balance. States generally cannot incur budget deficits the way the federal government can. The 2011-13 budget currently stands at $32.2 billion. For comparison purposes, the 2007-09 budget was $32.5 Bil and 2009-11’s was $30.17 Bil.
We can debate the efficacy of state spending on K-12, higher education, health care, social services, correction and environment until we are blue in the face but it doesn’t change the fact the legislature has difficult choices to make. They should not have ramped up health care and social services when times were good. They should have put a brake on state employee pension and health care costs and COLAs for retirees years ago. They should have implemented reforms to K-12 compensation schemes to reward performance over seniority, etc.
But many of these reforms have now been put in place (not yet in K12) and now we need to move forward. One of the biggest concerns for the technology industry and for business in general is the continued reduction in state support for higher education. The colleges and universities have taken real cuts to the point where the state covers only 30% of the cost of attending college. Tuition has gone up at every institution and it is students and parents who are bearing it. Washington’s universities are still a good deal overall but for middle and lower income households the burden has increased significantly.
At the same time, young people have gotten the message that getting a 2 or 4 year degree helps them get employed and increases opportunity. Displaced and laid off workers are seeking retraining at community colleges to update their skills. This means there is greater demand for higher education than ever before. But the reduction in state support limits access and will eventually erode quality. Tuition increases mean that colleges and universities do not have to take as many out of state students to cover their costs. UW will be experimenting with “differential tuition”. This means charging more for higher cost degrees. Engineering and bio-related majors are more expensive due to the cost of labs and equipment.
For businesses and citizens alike the question now is a tax increase of some type acceptable in the face of more budget cuts, especially in higher education. Gov. Gregoire has proposed a half cent increase in the state portion of the sales tax (from 6.5% to 7.0%) for three years. You can peruse the governor’s revenue options here: http://www.ofm.wa.gov/budget12/highlights/govrevoptions.pdf.
A half cent increase in the sales tax “buys back” cuts to K-12 and higher education. These two areas of the budget are critically important to the state’s future. While education reform has been painfully slow, there are many signs of improvement in student achievement. Math and science are getting more focus and attention. Students have to pass a math test to graduate from high school, with the science requirement coming in 2015.
The advantages of a sales tax increase are that it is spread broadly over the taxpaying public—both businesses and consumers pay it. It raises substantial money—over $400 million annually. It is also billed as temporary.
At this point, a temporary sales tax increase likely will not kill job creation or be a drag on the economy. An extra half cent probably won’t stop anyone from buying a car or an appliance if they need it.
But let us also remember that the technology industry had its B&O tax rate increased 20% in 2010, from 1.5% to 1.8% of gross receipts. This applies to all companies under the “services” category except biotech related. This is set to expire in 2013. The tech industry has also had to absorb the sales tax on digital goods and products that has been difficult for smaller companies to handle.
There is some discussion of curtailing the B&O credit for R&D but no specific proposals have emerged yet. The bottom line is that the state’s tech-based industries need engineers—aeronautical, electrical, mechanical and software—badly. The state’s higher education system needs more state support to provide access and maintain quality. The state’s technology industries are growing and need talent more than anything else. If a temporary sales tax increase can help with supplying talent to the state’s most dynamic industries, then it may well be worth it.
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Today, the WTIA and ther Master Builders of King and Snohomish Counties are teaming up to protect the health insurance you have access to through our respective associations. These are known as "Affinity Group Health Plans" or "Association Health Plans". Our two associations have combined resources to place an ad in the Seattle Times (see page A5)and The Olympian today. See attached document for the text of that ad.
These health insurance plans are a critical member benefit, not just for WTIA and the Master Builders, but for all kinds of small businesses and their families across the state. Trade associations of all types, from farmers to teachers to cities to chambers of commerce sponsor these plans so their small business members can provide affordable and comprehensive coverage to their employees and families.
The major advantage of these plans is that they are able to combine the buying power of many small groups into one large distinct group. This allows "affinity groups" to bargain for better rates for their members, with limited underwriting. For a small company, this is a huge advantage.
In the technology industry, this is especially critical as many WTIA members are competing with the likes of Microsoft, Google and Facebook for talented employees. If small companies cannot offer competitive benefits to potential employees, they lose them to larger companies where the benefits are richer. This hurts economic growth and job creation--something we need badly in today's economy.
The ad is targeted towards Insurance Commissioner Mike Kreidler. We are not intending this to be personal but the fact is that Commissioner Kreidler has been actively lobbying against affinity group health plans at both the state and federal level. He has made disparaging remarks to elected officials and federal regulatory agencies about these plans. In fact, the courts ruled against the Insurance Commissioner a couple years ago for abusing his authority to regulate affinity group health plans.
We have also been working with Washington's congressional delegation to advocate with federal regulators at the Dept. of Health and Human Services so that any rules that are put in place are neutral towards Affinty Group Health Plans. These plans are unique to Washington state. Almost 500,000 people in our state are covered by them. We simply want to be able to offer these plans in substantially the same form once federal health care reform is fully implemented.
You can help by contacting Insurance commissioner Kreidler here to support Affinity Group Health Plans: http://www.capwiz.com/techvoice/wa/home/
Be on the lookout for future posts on this topic and calls to action. Thank you for participating.
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Congressmen Dave Reichert (WA-R-8) and Adam Smith (WA-D-9) are hosting a job fair in Kent on Tuesday, Nov. 22, 2011. Below is a cut and paste announcement about the event. If you are interested in being a vendor, see information below. Thank you.
October 27, 2011
Dear Friend,
The United States has, historically, been a shining example for the rest of the world. Our entrepreneurial spirit and work ethic have made us a global economic leader. In the past few years, however, Americans have endured a recession and high unemployment. We remain confident in our ability to work together to find solutions to our nation’s most pressing problems and are pleased to invite your company to join us from 10:00 AM to 3:00 PM on Tuesday, November 22nd, at the Showare Center in Kent for a Jobs Fair.
We are working together on this joint venture because we have heard and understand the common request of local business leaders and job seekers alike: create an environment for economic growth and work across party lines to create jobs. Bringing local businesses and individual constituents together in one place is a great way to increase employment, improve the local economy, and gather feedback on how families are coping during these difficult economic times.
We are honored to co-host this event in Kent, a city we both represent. We both believe strongly in strengthening businesses in our local economy and no amount of partisan politics can change the fact that we, as elected representatives of the people, will work together and do our best to improve the communities in which we serve and live. What if we place just a few dozen eager workers in new positions this holiday season? Think of the impact that would have on their families, their employer, and the community.
The event is free for businesses and job seekers. Please email RSVPSmith@mail.house.gov to register as a vendor or contact Roel van der Lugt at (253) 593-6602 to ask questions. Space is limited so please sign up by 5:00 PM on Friday, November 4, to guarantee your business is represented. Your service to the community is appreciated and we hope you can partner with us to make this Jobs Fair a success.
Sincerely,
U.S. Rep. Adam Smith (WA-09)
U.S. Rep. Dave Reichert (WA-08)
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Washington's Employment Security Department released employment/unemployment numbers for September yesterday. You can read ESD's press release here: http://www.workforceexplorer.com/article.asp?ARTICLEID=11448&PAGEID=148&SUBID=
While the big "news" was job loss of 18,400 postions (10,800 in government, 7600 in the private sector), it is important to look past the bad news for the positive trends. ESD's website, www.workforceexplorer.com, provides a ton of useful data about the direction of the state economy.
The numbers show that the state's tech industry continues to grow and hire people at a fairly nice clip. the September figures (which are preliminary) show that in the category of software publishing jobs grew by 1800 to 53,400 in the past 12 months. In the category of "computer system design and related", there are 4300 more jobs now than 12 months ago--a growth rate of over 10% (38,900 today vs. 34,600 in Sept. 2010).
In the broad category of "Professional, Scientific and Technical Services", which includes biotech/life sciences, research institutes and other high tech related services, there was employment growth of 8600 to 170,500 from 161,900 in Sept. 2010.
This is obviously good news for the state as tech sector positions tend to pay on average about 40% more than the average state wage, which leads to higher sales tax collections. For companies, hiring generally means expansion and an increase of B&O and sales taxes, as well as multiplier effects.
Unfortunately, this positive trend is not enough to pull the state out of its economic doldrums where the state unemployment rate is 9.1% and the state revenue projections for the next two years continue to drop. This problem is what prompted Gov. Gregoire to call for a special legislative session beginning November 28 to cut more from K-12, higher education, social and health services, environment and public safety.
No doubt these are difficult times for many people, especially for those without employment. So what should we as a state do to move forward? For one thing, our educational system, both K-12 and higher education, must be geared toward educating young people for the world that now exists and will be coming, not for last century's economy. If at least one goal of our education system is to prepare our students for succeeding in the economy, then what we teach should be relevant to where the economy is and where it is going. In Washington that means better STEM education (science, technology, engineering and math) at the K-12 level and in the colleges and universities. See the attached presentation that puts this issue into real numbers.
There will be policymakers and government spending advocates crowing for higher taxes, an income tax and every other shopworn idea to take more money from the state's citizens and businesses. While there is a case that can be made for increasing revenue, the education problem was with us in 2005-07 and 2007-09 when the state budget increased substantially across the board. The real issue is making education and education reform a priority over everything else. For too long, there has been resistance to policies that would improve teaching and student performance. Throwing more money at a system where nothing is measured makes no sense.
Fortunately, we are moving in the right direction. Students are passing the statewide reading and writing tests at over 80%. Passing a math test will be a high school graduation requirement next year. More students understand the need to get higher education of some type, whether it is 2 or 4 year degree or specfic career or trade. The downside is that serious budget cuts to both community and technical colleges and the 4 year universities are limiting the opportunities for our young people, as well as those who need additional skills and training.
Recently, WTIA participated on a panel at the Western Washington University Board of Trustees to discuss these issues, particularly higher education. You can view it on TVW here: http://www.tvw.org/media/mediaplayer.cfm?evid=2011100043&TYPE=V&CFID=8309079&CFTOKEN=55508832&bhcp=1
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Sen. Maria Cantwell has signed on as a co-sponsor of federal legislation that would make permanent and simplify the federal R&D tax credit. See attached statement from Sen. Cantwell's office that provides additional details about the GROWTH Act (Greater Research Opportunities with Tax Help).
The federal R&D tax credit requires annual reauthorization. It has been extended on 14 separate occasions, and has expired more than once due to legislative dithering. This particular credit is used by all sizes and types of companies that perform Research and Development (R&D).
Making this credit permanent is long overdue and will provide some semblance of tax predictability. The WTIA applauds Sen. Cantwell's co-sponsorship of the GROWTH Act that is being brought forth in a bipartisan way by Sen. Max Baucus of Montana and Sen. Orrin Hatch of Utah.
In addition to making the credit permanent, another significant aspect of the proposal is to simplify calculation of the credit--often a costly and time consuming exercise that eats up valuable resources of a small or mid-sized company.
The WTIA is working with Sen. Cantwell's office on featuring local companies that have benefitted from the federal R&D tax credit.
If your company would like to be featured at an upcoming event with Sen. Cantwell promoting this legislation, please contact Lew McMurran at the WTIA, lmcmurran@washingtontechnology.org, for more information.
For more information about the GROWTH Act and Sen. Cantwell, visit her website: http://cantwell.senate.gov/news/record.cfm?id=334117
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Marian Wright Edelman is a virtual icon in America for her work on behalf of children and civil rights. She will be the keynote speaker at Stand for Children's October 20 fundraising event at the Bell Harbor Conference Center in Seattle.
You can learn more and register for the event here: http://www.stand.org/wa/cto
Ms. Wright Edelman is the founder of the Children's Defense Fund and was intimately involved in the civil rights movement in the South as director of the NAACP's Legal Defense Fund in Jackson, MS. Her bio is attached.
Stand for Children, www.stand.org, is a multistate coalition of parents, citizens, business and civic groups focused on real and substantial improvements to student achievement.
The WTIA works with Stand for Children via the Excellent Schools Now coalition to improve STEM education, increase graduation rates and maintain high quality and standards in Washington's K-12 schools.
Please register for what is likely to be an inspiring and important event.
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In an announcement released today, Gov. Chris Gregoire is calling a special legislative session to start Monday, November 28. Special sessions can last up to 30 days.
The latest state revenue forecast is lower than expected, reducing planned revenues by approximately $1.4 billion, with no major improvement in sight. While tax revenues will be higher in the budget period that began July 1 and ends June 30, 2013, those revenue are coming in below expectations. Continued economic weakness, especially in the construction/housing/real estate/finance sectors, is undercutting the state's economic recovery.
The private sector is creating jobs in aerospace and technology-based industries but now governments at all levels are shedding workers. While that reduces the amount of public spending, it also puts people into the unemployment line, reducing overall spending, which reduces tax revenue, putting pressure on governments at all levels to cut budgets, raise new revenue or some combination of both. Raising taxes during difficult economic times is a double edged sword as policymakers found out in 2010.
The legislature raised various taxes, including a 20% increase in the B&O tax for services, in the 2010 session, only to see most of those taxes repealed by I-1107 (but not the B&O increase). In addition, an income tax proposal, I-1098, was soundly defeated and a tax limiting measure from Tim Eyman, I-1053, passed by a similar margin (almost 2 to 1).
Citizens simply did not believe that this state government had done enough to manage resources efficiently and truly cut out unnecessary spending. This situation led to actual and sometimes severe budget cuts to almost every area of state government. Higher education, one of WTIA's and the tech industry's priorities, got hit extremely hard in the budget is now in place.
There are simply few options for lawmakers to deal with this situation. Some would argue that government has yet to truly reform itself to deliver services that people want and need in an efficient manner. The recent example of DSHS not implmenting a final rule to carry out the direction of the legislature in the "disability lifeline" program, resulting in extra costs to taxpayers is another in a long history of that agency's inability to manage tax money properly.
There is a major philosophical divide over the legislature's priorities as well. The growth of health care and social services spending has exploded over the past few years, much higher than the growth in K-12 spending. Yet, the return to the taxpayers for the billions that are spent is not at all apparent. But when we spend more on K-12 and higher education, with the right policies in place, society and the state benefit by having better educated citizens who do better economically and socially.
The legislature will be pressured by various advocacy groups and unions reprenting government workers and those receiving government benefits to raise taxes, close tax "loopholes" and not cut any more from the state budget.
There may indeed be a case to find new revenue sources, raise tax rates or even curtail some exemptions. However, as long as teachers are promoted based on seniority only; as long as affinity group health plans are targeted for extinction and as long as the state continues to cut higher education, it makes no sense to support any kind of increased revenues.
When the legislature adopts K-12 policies that improve math and science achievement and increase graduation rates, and makes a real commitment to producing more engineers from the state's universities, then the WTIA will entertain discussion of tax increases, not before.
You can read Gov. Gregore's statement about the special session here: http://www.governor.wa.gov/news/news-view.asp?pressRelease=1772&newsType=1
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On September 1, the federal Health and Human Services Department released updated rules pursuant to PPACA, the controversial federal health care reform law that goes fully into effect in 2014.
Between now and full implementation in 2014, HHS must provide guidelines on a myraid set of issues relating to the various provisions in PPACA. The regulation promulgated on September 1 deals with "rate review".
The WTIA cares about health care issues and is engaged in them because they affect the health insurance plan we offer to our members. The WTIA has offered an affinity group health plan, also known as "association health plans" for many years to provide a needed benefit to our small company members.
Many trade associations and member-governed groups, such as teachers, also offer these affinity group plans. These types of plans came about in 1995 in Washington state. During that time there was a flurry of legislative activity at both the federal and state level to reform and improve health care and health insurance. One of those reforms in our state was the creation of affinity group health plans.
The major advantage of these types of plans is that it allows small groups to band together in a large group to improve the collective purchasing power for the benefit of the group's members. The vast majority are small businesses with fewer than 25 employees. State law recognizes these plans as large groups and they can be rated differently than if a ten person company went to the market by themselves. In almost every case, being part of a large group yields lower rates for the group members. Affinity group plans also have more flexibility than the small group market. Adoption of a wellness program, for example, can help reduce health insurance rates for small companies. This type of flexibility is unavailable to small companies purchasing health coverage directly in the small group market.
Unfortunately, there are those at both the federal and state level, both elected and unelected, that want to eliminate affinity group health plans. Their rationale is that affinity group plans are "cherry picking". This is a red herring. There is limited underwriting of any company that applies. If you are a bona fide technology company, you will get covered under the WTIA plan. There are no exclusions of any employees, no matter their health history. Rates may be adjusted annually based on experience but that is true under any plan.
Which brings us back to the rate review rules. The WTIA and other trade associations weighed in with HHS when the rules were first drafted over the summer. Our main concern was to ensure that state law governed with respect to rate review. Under state law, affinity group plans, as stated above, are deemed large groups. HHS ignored our comments and said that for purposes of rate review, it does not matter if a small company purchased their health insurance through a large group plan, they were considered a small group.
This means that HHS will now have the authority to review literally thousands of different rates for companies who purchase through their trade associations. This makes no sense and will require huge staffing requirements. Which means it will fall on the carriers, like Regence, who underwrite the WTIA plan. They will be forced to pass these costs along to policyholders, i.e. those same small companies who banded together in the first place to lower their health insurance costs.
Attached is the letter the WTIA wrote to HHS on this issue.
You will be hearing more about this issue in the coming months. The WTIA has had discussions with Washington's Congressional delegation to enlist their help in protecting the health coverage of over half a million people in our state, several thousand of whom are on the WTIA plan. We will do all we can to protect your options for covering your employees and families. We will need your help communicating the importance of keeping affinity group health plans viable in Washington now and in the future.
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The federal Small Business Administration, www.sba.gov, is holding a federal grants and resources workshop this Friday, Sept. 16 at the SBA's office on Fourth Avenue in Seattle.
Please see attached flyer for more information and to register.
The SBA has all kinds of resources available for small businesses, including its well regarded Small Business Innovation Research program (SBIR). You can learn more about SBIR here: http://www.sba.gov/content/small-business-innovation-research-program
Many Washington state companies, including WTIA members, have taken advantage of the SBIR program to commercialize promising research. Phase I grants can be as high as $100,000 and Phase II grants can go up to $750,000. There are a number of conditions and restrictions on how the funds can be used. Much more detailed information can be found by going to the SBA's website directly.
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