Independent school? Colorado Mesa University looks for new source of funds
Colorado Mesa University looks for new source of funds as state budget squeezes higher education
It’s a bit like one of those incomprehensible story problems: If the Medicaid train leaves Denver bound for Grand Junction at 44 mph, when does it force colleges and universities off the budgetary tracks?
The sense among policymakers, though, is that the problem isn’t so far-fetched.
The recent budget history of Colorado is that legislators have looked to cut higher education, a budget they can control, to fund Medicaid, which is spending they cannot.
The squeeze on state revenue has Colorado Mesa University looking for a way to get clear of what President Tim Foster sees as an impending collision. To avoid that collision, Foster has pitched the idea of the institution become a “charter university,” a term that has no precise definition but embodies an effort to extract the university from the state funding conundrum.
“We are one recession from defunding higher education,” state Rep. Cheri Gerou, R-Evergreen, a member of the Joint Budget Committee, said Friday.
More precisely, a $300 million drop in state revenue will pretty much force higher education to the side, Gerou said.
The Department of Health Care Policy and Finance, which has a budget mostly made up of Medicaid spending, has risen as a percentage of the state general fund from 20.83 percent in 2007-08 to 24.54 percent of approved appropriations in 2012-13, or from about $1.5 to $1.9 billion.
The percentage of spending on higher education, meanwhile, slipped from 10.5 percent in 2007-08 to 8.2 percent for the coming fiscal year. In raw numbers, higher-education spending tumbled from $748 million to $620 million over the period.
The Legislature’s $7.4 billion general fund for 2012-13 holds higher education at levels near the 2012 spending, but that amount had been cut by $36 million from the 2011 budget.
State funding to Colorado Mesa University has fallen by 10 percent since 2007, from $20 million to $18 million, according to the university. CMU’s enrollment, meanwhile, has shot up 44 percent during that same time, from 6,128 in 2007 to 8,844 last fall, according to the university and CDHE.
The same story is playing out statewide. While state funding is falling, enrollment at the state’s colleges and universities is on the rise, up about 20 percent between 2007 and 2010, according to records at the Colorado Department of Higher Education. Official enrollment records for 2011 and 2012 weren’t available on CDHE’s website.
Enrollment growth at institutions of higher education, however, pales in comparison to the growth rate in Medicaid enrollment over the same period.
Medicaid rolls have jumped 63 percent since 2007, from 385,852 to 632,960, according to enrollment statistics from the Department of Health Care Policy and Financing.
A particular problem for budget makers is that Medicaid tends to be countercyclical, or that its numbers tend to swell as the economy worsens.
Medicaid is a state program intended to provide health care to low-income adults. States and the federal government split the cost 50-50.
The Patient Protection and Affordable Care Act, meanwhile, added as much as $89 million to Medicare spending in the coming year’s budget, Gerou said.
The threat of losing higher education funding to Medicaid has Colorado Mesa University President Tim Foster suggesting that his institution, if not others, should be cut free from the annual budget free-for-all.
“We have thrown more than one solution at them (legislative budget leaders) and we just keep trying to come up with new ones,” Foster said.
Among the ideas was the suggestion that the state could borrow a large amount of money at current low interest rates, endow Colorado Mesa with a one-time bundle of cash, and cut it out of the general fund, Foster said.
Then, “we tried a block grant” as a way to get out from under the annual budget battle, Foster said. “We just keep swinging.”
Foster isn’t alone in thinking that applying the charter idea to higher education has promise.
Virginia, for instance, passed a restructuring act that gave the University of Virginia, Virginia Tech, the College of William & Mary, and Virginia Commonwealth University high levels of autonomy, allowing greater financial and administrative autonomy to manage day-to-day operations. The institutions, however, have to meet specified goals in exchange for greater autonomy.
Decentralization already has paid off in Colorado, Foster said, pointing to the 2003 dissolution of the State Colleges in Colorado that gave each of several state colleges, including what was then Mesa State College, independent boards of trustees appointed by the governor.
The result has been a decentralized, more efficient system of higher education that ranks second in terms of least cost per baccalaureate degree, Foster said.
That step reduced overhead costs “and each school has grown markedly and is doing a better job,” Foster said.
Not all the state’s colleges and universities are as pessimistic about the future of state funding for higher education as he is, Foster acknowledged, but “for us, we would love to just go ahead and see if we could do better.”