CMU goes deep on higher-ed economics
Colleges and universities are supposed to be laboratories for creative thinking and innovative ideas. And the folks at Colorado Mesa University have come up with a doozy of an innovative plan for sustained financing for higher education.
We applaud the CMU Board of Trustees, President Tim Foster and his staff for examining a new approach to funding higher ed at a time when state money for colleges and universities is continuing to decline and too many others at public colleges and universities in Colorado are doing little but wringing their hands about the budget outlook.
CMU officials have proposed creating educational authorities — for example, the Colorado Mesa University Authority — which would be formed under the same statute that allowed formation of the Colorado University Hospital Authority. The authorities would be quasi-public-private entities, political subdivisions of the state that operate independently.
The heart of the CMU proposal is to use certificates of participation, sold at today’s low interest rates, to establish operating endowments for colleges and universities statewide. Payments for the certificates would come from the state general fund, but the payments are expected to be less than the state now spends in direct funding for higher education.
For instance, CMU currently receives $18.5 million in state general funds, but that is expected to continue declining and could be less than $10 million in another five years.
According to a white paper prepared by Foster and his staff, if the state created a $260 million endowment for the CMU Authority with the sale of certificates of participation, it would generate an estimated $13 million a year for the university in perpetuity.
Meanwhile, the state’s annual debt service on the certificates could be as low as $13.2 million a year, a 29 percent savings from what the state currently spends on CMU.
Although the cut in yearly state funding from $18.5 million to $13 million “would take some adjustment at Colorado Mesa University,” the white paper says, “controlling its own destiny would enhance the institution’s ability to plan long term and remove annual uncertainty” about state funding.
A big hitch in this plan is that it must be approved by the state Legislature, and some lawmakers are sure to chafe at the notion of allowing CMU — or any other college or university — more autonomy, even if it saves the state money. As part of its proposal, CMU is saying college and university authorities should be exempt from oversight by the Colorado Commission on Higher Education and exempt from the state personnel system.
CMU officials have talked with a number of state lawmakers here and on the Front Range about carrying legislation to enact the college and university authority plan. Until we see how such legislation is written, we aren’t prepared to support it.
However, we are prepared to say the CMU Trustees and administrators deserve credit for looking beyond the funding declines and beyond traditional tax and tuition hikes toward a more innovative plan to stabilize long-term funding.