DENVER– Lawmakers here are proposing that half of the money allotted to education will be cut in the 2011-2012 state budget. The new reality will force tuition increases and program eliminations in what the Senate Majority and Minority leaders characterize as a last-ditch effort to save Colorado higher education.
Yesterday, Senate leaders John Morse, D-Colorado Springs, and Josh Penry, R-Grand Junction, held a press conference to explain a 40-page proposed amendment to Senate Bill 003 (pdf) that would change the nature of the state’s educational system forever.
“Never waste a crisis,” Morse said with a sort of gallows humor, explaining that now was the time to overhaul an educational system where he believed the poor to pay for the rich and that has become a drain on the state purse. Penry said that this was a chance for universities to retool an out-of-whack system.
It’s a rare day when the leaders from both sides of the aisle can sit side by side “without throttling each other,” Morse said, suggesting the depth of the crisis. There’s no choice but to slice $300 million from the $600 million doled out annually to Colorado Colleges and Universities across the state.
“If this fails, you have a system in crisis next year or you have a huge tax increase, neither are desirable and neither would turn out well for higher ed in Colorado,” Penry said.
The state faces a budget shortfall of $1.7 billion next year. Morse said that even by shuffling cash here and there and borrowing Medicaid funds, constitutionally mandated programs will be left $600 million short. He said that K-12 education takes up 46 percent of the budget but is protected by law against the worst cuts. Higher education uses only 9 percent of the budget but enjoys no protections. What’s more, universities and colleges have other revenue streams including tuition, endowments and philanthropy.
“What I am suggesting at this point is that it makes sense to plan on a fifty-fifty deal, with $300 million coming out of the roughly $600 million higher education budget, and another $300 million dollar cut to K-12,” Morse said.
K-12 already has been cut by nearly $260 million.
Morse reminded reporters that the proposed cuts are still just estimates. “It could be a lot less. It could be a lot more.”
To compensate for the cuts, institutions would be provided flexibility to manipulate their programs and funding structures to stay solvent. Institutions will now be allowed to raise tuition and use philanthropic funds in new ways. In exchange for the power to control their own budgets, state colleges and universities will have to submit budget plans that detail how they expect to compensate for losses of state money or how they would spend any eventual surplus state cash.
Hiking tuition at public schools is controversial. Under the proposal the state would allow considerable increases but only according to the plans submitted by the schools demonstrating how the increases improves access to education for Colorado students and generate improvements in overall services.
Based on the various school proposals, the Colorado Commission on Higher Education would determine the system-wide budget, which would be reviewed by the Joint Budget Committee when it draws up the state budget each year.
“It represents a fundamental shift from using state dollars to using other kinds of dollars and making cuts to figure how to get through this time. In exchange, there has to be accountability,” said Morse.
Colleges will continue to give priority to in-state students. Only after an institution accepts all eligible Colorado students can it consider accepting out-of-state and foreign applicants. Student members on college boards, except for in the case of the University of Colorado, will have a vote on budget matters.
Morse said that the plan is not for institutions to privatize. He said this was about creating a new hybrid or shared funding model. Governing boards will calculate each student’s share of the costs of education based on each student’s ability to pay.
Penry said that tuition flexibility along with financial aid flexibility would be the key to continuing to maintain opportunities for students of all income brackets. “What is likely to happen is that the most affluent kids will pay a little more and the poorest kids will pay quite a bit less.”
Penry suggested there would be an element of market Darwinism in play. Some institutions will survive, others will not, he said.
“What this means is that colleges will be extremely sensitive to price pressures. If they price their kids out of the market place, then they price their doors shut.”
In many cases, schools will cut programs that are not pulling their weight. In that way, the changes could well alter the shape of the state workforce and shift the Colorado economy as smaller humanities programs, for example, fail to generate private funding or tuition dollars and fall away.
“We have worked very hard not to follow the California model, where tuition increases skyrocketed 40 percent and students rioted in the streets,” Morse said.