State higher-education funding a ‘long-term’ problem

The state is likely to pour 23 percent less cash into Mesa State College this fall than it did two years ago.

A projected net gain of 1,773 students, a 4.7 to 6 percent proposed tuition increase and a 3.2 percent room-and-board rate increase will help make up the $5.5 million difference in state funding this fall. But if a growing number of Medicaid claims and demands from other programs continue to crowd higher education in the revenue-shy state budget, the extra tuition money won’t be enough, Mesa State President Tim Foster said.

“If they cut us another 10 to 15 to 20 percent, that will begin to impinge on what we’re doing,” Foster said.

A decade ago, the state paid half the cost of operating Colorado’s public colleges and universities.

This fiscal year, 21 percent of Mesa State’s total funding came from the state. The state contributed $22.1 million in 2010–11 to the college, using $19.8 million from state coffers and $2.3 million the state was given in federal recovery act funds to dole out to colleges and universities.

Even with state funds making up a smaller portion of institutional budgets, Foster said it would be difficult to let go of any more state funding. If the state halved its contribution to the school in the next few years, for example, it would wipe out an amount equal to this year’s scholarship awards.

“We can’t just fundraise that every year,” Foster said.

Senate Bill 3, which passed during the 2010 legislative session, asked colleges to file a report describing what would happen if the state halved its contribution to each school. The report said such a cut would lead to high tuitions and less access to higher education for low-income and at-risk students.

The bill also required each school to submit a five-year plan for how it would keep college accessible for these students if schools were granted greater flexibility to increase tuition. Mesa State’s five-year plan was nearly rejected because it was vague about how much the institution planned to increase tuition. That was a conscious choice, according to Pat Doyle, the college’s vice president of finance.

“We didn’t want to put a number out there and scare people,” Doyle said.

Schools can increase tuition as much as 9 percent, according to the legislation passed last year, and more if they can justify it to the Colorado Commission on Higher Education. Mesa State is proposing an increase of 4.7 or 6 percent for this fall. Colorado School of Mines, the University of Colorado campuses at Boulder, Colorado Springs and Denver, Fort Lewis College, Metro State College and Western State College all are proposing tuition increases of 9 percent.

Increases of 14, 16 and 20 percent have been made at the University of Northern Colorado, Adams State College and in the Colorado State University system, respectively.

‘Collect what you can’

Western State College President Jay Helman said higher tuition is unavoidable under the current higher education funding system.

“When this model started, we didn’t have the Medicaid case- loads and K–12 requirements we have now,” he said, referring to the constitutional requirement that K–12 education funding increase at the rate of inflation each year. The inflation-based increase for Colorado school district funding in 2010–11 was 0.4 percent.

Helman believes higher education will continue to be squeezed out by other budget items. His solution if state funding nears extinction is to act like a private school and charge higher tuition while offering larger discounts for high-performing students with less money to spend on tuition.

“You collect what you can and deal the rest back and make sure you’re making your university accessible,” he said. “I don’t want to diminish education to airline tickets, but it’s like a discount on an airline ticket: The more people you have buying tickets, the more you can offer discounts.”

While Helman searches for more money from high-income students, Foster is banking on more students paying tuition overall. The college took in more than 1,000 additional students last fall and predicts the same thing will happen in August. Foster said the school loses money on in-state students, so the college’s portion of out-of-state students counts. The college has a recruiter in California and advertises across the West. The result was a 38 percent increase in out-of-state tuition revenue, from $4.088 million in 2008–09 to $5.641 million in 2010–11.

Renaming the college a university and possibly trading in “Mesa State” for a name that better indicates where the school is located could be an out-of-state recruitment tool, according to Rick Taggart, the college’s executive director of marketing and recruitment. Foster said during a recent teleconference discussing the possible name change with alumni and students that the school’s out-of-state population increased from about 8 percent three years ago to 12 or 14 percent this year.

“Twenty to 25 percent wouldn’t be a bad mix for us,” Foster said.

“Efficiencies” are another way to avoid the tough cuts. Mesa State saved $7 million in operating cuts and cost avoidance since 2004 and steered around $11 million in capital costs through measures such as installing a geothermal-energy system and eliminating deans.

State ponders solutions

Finding money in the state budget for higher education is a “long-term issue,” according to state Sen. Rollie Heath. The Boulder Democrat said it doesn’t matter how soon the Colorado economy improves, the state budget is losing space for funding higher education.

That’s why he’s proposing a 2011 ballot initiative that would increase the sales and use tax rate from 2.9 percent to 3 percent and raise the income tax rate from 4.63 percent to 5 percent in 2012, 2013 and 2014. Heath predicts the initiative would raise $1.63 billion for higher education and K–12 education.

“The state has to raise money. There is no other way,” Heath said. “We just cut education to the bone.”

Heath said even schools with little state support — the University of Colorado receives less than 6 percent of its funding from the state, for example — aren’t interested in going private.

However, Heath said, “If we have less and less money, we may have to say to some schools, ‘We can’t afford you anymore,’ and we don’t want to do that.”

Heath is co-sponsoring higher-education-related Senate Bill 52 with Republican Rep. Tom Massey of Poncha Springs. The bill is waiting for a second reading in the Colorado Senate. It’s one of few higher-education-funding bills still alive this session. A bill that would allow people to contribute to public education on their state income tax forms has been sitting in committee since January. A bill that aims to create a committee that would make recommendations about funding higher education is idling in Legislative Council, a state entity that researches and drafts bills.

Senate Bill 52 sets five goals for higher education and would distribute up to 25 percent of state funding for higher education based on how well each school met its goals. The bill asks schools to decrease the gaps between degrees earned by white and minority students and low-income and high- or medium-income students and gives colleges and universities 10 years to increase the number of degrees conferred by 30 percent.

“We’re not graduating enough people,” Heath said. “A school that’s doing great, maybe they don’t have to do better. For others, we provide incentives to do better.”

Massey said the legislation likely will change. One alteration could include a provision that puts the bill’s goals on pause until higher-education funding reaches $706 million, an amount $187 million above statewide funding proposed by Gov. John Hickenlooper this year and $151 million below the amount Colorado’s college presidents requested for the year.

Massey said he’s opposed to Heath’s proposed ballot initiative.

“This isn’t the time to be raising taxes in any form or fashion. We’re going to have to look for alternative sources of revenue,” Massey said.

He did not say what alternative sources he would use to fund higher education.

Mesa State trustees are researching Senate Bill 52 and may adopt a resolution opposing it at their April 26 meeting.

“Sen. Heath thinks we need accountability in higher education, and he thinks if we have accountability, taxpayers will vote for this ballot measure,” Foster said at the trustees’ March 23 meeting. “Voters don’t make that connection.”

Reporter Charles Ashby contributed to this report.


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