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Another view on college “doomsday” plans

A 50 percent cut in state aid to higher education wouldn’t force closure of any colleges, but it would require some tough choices, the Joint Budget Committee was told Wednesday.

A recent report from the Colorado Commission on Higher Education warned of dramatic tuition increases, reduced access for minority and low-income students, a financial squeeze on middle-income students, reduced course offerings and bare-bones student services if state support were halved.

Colleges were required to file that report with the JBC by a 2010 state law (Senate Bill 10-003) that also gave institutions greater control over tuition rates and over some other financial operations. (Read article about the report and see full document.)

In a briefing paper presented to the committee at a Wednesday morning meeting, JBC analyst Eric Kurtz didn’t necessarily disagree with the report’s conclusions but he did take a more nuanced view.

Among other things, his report noted because direct state support provides only part of college revenues, “From the total funds, including tuition, this is a 9.2 percent reduction. It is a 10.9 percent reduction per students in constant 2010 dollars. If funding were reduced according to the SB 10-003 scenario, the [fiscal year] 2011-12 funding would be higher than in FY 2001-02 through FT 2004-05.” (That scenario assumes resident undergraduate tuition would increase 9 percent and non-resident tuition would rise 5 percent.)

The briefing report also said, “Staff believes the higher education institutions have options for reducing expenditures and increasing revenues to absorb a 50 percent reduction in state support without closing colleges.”

The CCHE “doomsday” report doesn’t raise the possibility of closing campuses, although that’s a subject regularly batted around in higher ed circles and by some legislators when the subject of possible future budget cuts comes up.

“There are options available and the institutions are capable of absorbing a 50 percent cut,” Kurtz told committee members. “You might not like the consequences, [but] it wouldn’t be Armageddon.”

The consequences Kurtz referred to include higher tuition, cuts in staffing (and, therefore, cuts in academic programs) and the ticklish question of shifting state aid among institutions.

“A 50 percent cut in state funds for a small rural community college is very different from a 50 percent cut for CU-Boulder,” he noted.

For example, a chart in the briefing paper details that community colleges receive about 39 percent of their budgets from state support while CU-Boulder depends on state aid for only 15.5 percent of its budget. Two of the smaller four-year colleges, Western State in Gunnison and Adams State in Alamosa, receive more than half their funding from the state.

“The impact by institution varies widely,” the briefing paper says, “creating challenges around how to allocate a reduction of this magnitude. To keep the total funds reduction for all institutions the same would require a significant reallocation of General Fund [state tax dollars] from some institutions with large amounts of tuition revenue to other institutions with small amounts of tuition revenue, and/or uneven tuition rate increases around the state.”

Such shifts “would be very controversial politically,” Kurtz told the committee. That’s an understatement. The question of institutional fund shifts came up repeatedly during the deliberations of the Higher Education Strategic Planning Steering Committee, and it was an issue that always raised the hackles of some institution leaders, particularly those at CU.

The college-by-college funding allocation in Gov. Bill Ritter’s proposed 2011-10 higher ed budget includes a slight funding shift, a plan some colleges weren’t wild about when the CCHE approved the formula.

Do your homework

Full JBC higher briefing paper
(See pages 22-29 for discussion of the 50 percent cut; pages 30-33 for the broader issue of balancing state support and tuition and pages 34-38 for an analysis of the recent higher education strategic plan.)

Staff briefing papers such as the one Kurtz presented Wednesday sometimes contain “briefing issues” that aren’t formal staff recommendations but are meant to give committee members background and food for thought on particular budget issues.

Committee members had a few questions about the 50 percent scenario but didn’t get into a lengthy discussion.

The document also contained briefings on the broader issue of balancing state support and tuition, and on the recently proposed higher ed strategic plan. (See story on the strategic plan.)

Members of the CCHE and college presidents will get to make their budget case to the JBC – and be quizzed by committee members – during an all-day hearing on Nov. 30. Kurtz won’t make his higher ed budget proposal to the committee until well after the 2011 legislature convenes in January.

In the current budget year, the higher ed system has funding of about $2.15 billion, including $535.3 million in state tax support and $85.6 billion in federal stimulus funds. According to Kurtz’ analysis, the Ritter administration’s proposed 2011-12 budget totals about $2.16 billion, including $534.2 million in state funds and no stimulus money. The budget assumes a 9 percent increase in resident undergraduate tuition and a 5 percent hike for non-residents.

The Ritter budget would seem to allay fears of drastic higher ed cuts in 2011-12. But incoming Gov. John Hickelooper and the legislature will have the final say on next year’s state budget, including whether to use the transfers of cash funds into the general fund that Ritter proposed as part of his balancing plan.

Eric Kurtz’ first name was corrected on Nov. 19.

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