Privatizing Higher Education in Colorado ...

by Cliopatria

Will Colorado be the first state to privatize higher education? This appears increasingly likely, given declining state revenue, a constitutional amendment (Gallagher) limiting property taxes, an amendment (TABOR) limiting taxation and spending, and a third amendment which pegs increases in state spending for K-12 education at the rate of inflation plus 1% (Amendment 23). Unmodified, these provisions put funding of public higher education in a vise that could eliminate it altogether within a decade. This Denver Post editorial calls on Governor Bill Owens and the state legislature to act within the next two weeks to head off this crisis.

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Paul William Harvey - 8/19/2004

Jonathan: I'll see your "oh yeah, you think that's bad, actually it's even worse," and raise you one. Here are some quotes from today's Denver Post which further suggest how particularly snarky provisions in TABOR and its "ratchet-down" effect are accomplishing the purpose of making government small enough to drown in the bathtub, just like Grover Norquist wants. IN the process, of course, a lot of student dreams are getting drowned in that same tub.

(from Denver Post, 8/19):

The 1992 TABOR amendment to the Colorado Constitution has mutated into a formula-driven disaster for state programs ranging from highways to higher education. The measure is so mindless that a seeming bit of good news - a decline in the state's cost of living - may turn out to be bad news. No, make that awful news.

That's because the Consumer Price Index has a direct impact on TABOR spending levels, and figures released this week will ordain cuts of $165 million for the fiscal year beginning July 1, 2005.

The TABOR amendment limits annual increases in state revenue to no more than the amount dictated by population growth and inflation. Because Colorado's economy fell off a cliff in 2002, revenue collections dropped 14 percent that year and another 2 percent in 2003. The result is that the revenue ceiling for the upcoming fiscal year is about $1.3 billion less than would have been necessary just to keep up with population growth and inflation since 2002 - the amendment's notorious ratchet effect.

In calculating the increase that they would be allowed from this year's depressed budget, state economists had expected the rate of inflation would be about 2 percent. But a report Tuesday from the U.S. Bureau of Labor Statistics actually recorded a 0.7 percent decrease in the cost of living for the Denver-Boulder-Greeley area.

Todd Herreid, an economist with the Colorado Legislative Council, says the state may have to cut its TABOR revenue ceiling by $165 million for 2005-06 if inflation in the region comes in at 0 percent rather than the previously predicted 2 percent. But while the Consumer Price Index is supposed to offset inflation for the state government, the fact is that the state doesn't buy many homes. In short, the dip in the CPI is a statistical anomaly that won't reduce demands on the budget by much, if at all. But it will force $165 million in additional cuts in social services, youth programs and higher education, programs that have already been sliced to the bone.

About $90 million of that cut will come out of public school budgets, because of a provision in Amendment 23 requiring the state to increase school budgets by an amount equal to that same Consumer Price Index. But schools, like the state, don't buy a lot of houses. Most of their budgets go for teachers, support staff, energy costs and debt service on the buildings they already own. So the dip in the inflation rate won't save them much. The $90 million reduction in state aid it will trigger will force them to make cuts equivalent to laying off about 1,500 teachers.

It adds up to yet another reason for the legislature and the governor to pass TABOR reform. Assuming they fail to do so, the fluke in the inflation index will force a $165 million cut in state spending next year. Meanwhile, tax cuts or rebates already scheduled to hit $406 million will be increased to $571 million.

Yes, Colorado will be slashing education from kindergarten through college while simultaneously cutting taxes by $571 million. If Colorado continues eating its seed corn at this rate, we will condemn our children to a dismal economic future.

Jonathan Rees - 8/18/2004

Indeed, it is almost impossible to comprehend just how bad things are here. Higher education is now just about the only item in the state budget that legislators can cut. Everything else is non-discretionary for a variety of reasons, like the ones Ralph cites above.

Let me try to add a little more detail to the bleak picture. With state revenues expected to decline for the forseeable future and after years of difficult cuts, the only thing state schools can do is raise tuition. However, Governor Owens is dead set against the kinds of tuition increases needed to make up a significant portion the lost revenues and has repeteadly vetoed or threatened to veto all but the tiniest increases.

Apparently, the solution that is being championed out of Boulder is to have some schools achieve something called "enterprise status." Isn't that just so Republican? It's hard to explain, but only schools which get less than 10% of their budgets from the state can get it and it allows them to raise tuition to whatever figure they choose. Those schools that can't fit under the enterprise umbrella will have to fend for themselves.

By the way, in a year Colorado is scheduled to be the first state in the nation to begin vouchers for higher education. I'd try to explain that one to you, but I don't think the legislators who passed the bill knew or cared how it would go down. However, it will definitely cut state funding per student even more and allow state funds to go to tuition for private colleges such as the University of Denver. Personally, I'm just praying that it's found unconstitutional.

Jonathan Rees

Paul William Harvey - 8/18/2004

It's even worse than it appears, which is bad enough. The governor is governing in absentia right now, better known for his lame jokes about the French and his trumpeting Colorado's laws as the ideal for every state to follow. The legislature theoretically has until Sept. 7th to act, but actually only Aug. 30th since many, including the governor, are taking junkets to the Republican National Convention. Meanwhile, the House Majority Leader (Keith King, R, Colorado Springs) takes potshots at the Democrats and refuses to consider the best offer on the table presently to modify all three contradictory constitutional provisions at once, proposed by a Democrat from Denver. The President of the Senate, an ideologue named John Andrews, refuses to recognize that there's even a problem, and is currently vacationing in Mexico.
Further, if no solutions are proposed this time around, it will be two years before any proposals concerning TABOR (the tax limitation law) can even make it onto the ballot.

Meanwhile, as Ralph has said, by 2010 ALL funds for higher ed. in Colorado are expected to have vanished entirely. CU-Boulder and big research institutions will survive (the CU system currently receives just 8.9 % of its funding from the state, down dramatically from ten years ago), but smaller institutions and most community colleges will likely disappear entirely.

The Colorado Press has been shamefully neglectful in reporting this, despite the recent Denver Post editorial.