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Special Budget Report: Gov. Paterson's Budget Proposal Explained

Also in higher education: Paterson is calling for an increase in SUNY and CUNY tuition for undergraduates. The hikes come on top of an existing 14 percent increase for both undergrads and grad students as well as a 21 percent increase for non-residents at SUNY schools, all effective in spring 2009. The proposal calls for an additional increase of 7 percent for graduate tuition effective in the fall of 2009 for SUNY. Tuition for graduate students at CUNY schools, meanwhile, would increase by 20 percent.

The tuition hikes would allow schools to retain a percentage of the fiscal benefit, a break from a 30-year tradition of using the money to offset General Fund spending. That money would be reinvested in the schools, including the Tuition Assistance Program.

The proposal calls for the creation of a new tier of pension benefits (Tier V) for state and local employees, removing pension enhancements added to Tier IV, upping the minimum retirement age from 55 to 62, requiring employees to contribute to their pension fund after their 10th year of service and restoring the minimum years of service required to draw a pension from five to 10. The new tier also excludes overtime compensation when calculating benefits.

The Empire Zone program, originally designed to promote the growth of business, is not accomplishing its purpose effectively, Paterson says, and is in need of reform. The executive budget proposal would require all current program participants to demonstrate that they are producing at least $20 in actual investments and wages for every $1 that the state invests in order to remain in the program.

After these reforms, Paterson estimates the total cost of the program would be $338 million, down from the original estimate of $610 million without reforms. The savings would be used to create a new grant program and to fund research and development tax credits.

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