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Bill would tap windfall for scholarships

A bill introduced Wednesday would earmark proceeds from sale of state-owned student loans for college scholarships.

House Bill 10-1428, sponsored by Rep. Karen Middleton, D-Aurora, and Sen. Chris Romer, D-Denver, surfaced less than two weeks after the Department of Higher Education it’s selling a $1.5 billion portfolio of CollegeInvest student loans and hopes to net $35 million. (Read this article for background on why the portfolio is being sold.)

Romer also is backing a separate scholarship plan, Senate Concurrent Resolution 10-004, a proposed constitutional amendment that would raise financial aid money from the proceeds of video keno terminals statewide. The idea was panned by witnesses during a late-afternoon Senate committee hearing and won’t be voted on until Monday.

HB 10-1428 would take up to $15 million in proceeds from the loan portfolio sale and place it in a Financial Need Scholarship Fund. Up to $10 million could be held back until Jan. 1, 2011, to cover any costs or guarantees associated with winding down the old loan program. After that date, unspent money would go into the scholarship fund.

The bill also would give $100,000 to a job-retraining savings proposed by another late-breaking proposal, Senate Bill 10-202.

And, the measure would require DHE to submit a reorganization plan to the legislature by Jan. 1, 2011, proposing how CollegeInvest should operate after getting out of the loan business.

Gamblers oppose gambling plan

Romer’s impassioned warnings about the financial cliff facing the state’s higher education system didn’t stop a long series of witnesses Wednesday evening from lambasting his plan to spread electronic keno games across the state – and create a casino at the Colorado State Fair in Pueblo – to raise money for college scholarships.

The proposed constitutional amendment by Romer and Sen. Abel Tapia, D-Pueblo – SCR 10-004 – was the last item on a long Senate State Affairs Committee agenda.

After more than an hour of testimony, the resolution was laid over until Monday at the sponsors’ request.

“I’ve worked through about every idea in my playbook. … We are down to the last resort [to] avoid some very draconian results” for higher education, including much-higher tuition or asking the voters to raise taxes, Romer said. He challenged witnesses to say what option they’d prefer instead of supporting the keno plan.

Witnesses didn’t take him up on the challenge and found plenty to criticize in the idea.

Much of the opposition was predictable and came from casino operators, local officials from gambling communities fearful that statewide video gambling would dry up their business.

After Teller County Commissioner Jim Ignatius and El Paso Commissioner Dennis Hisey testified against the bill, Romer piped up, “What I’m hearing is you guys are gung ho” for dramatically higher tuition at the University of Colorado at Colorado Springs.

Committee member Sen. Bill Cadman, R-Colorado Springs, snapped, “This is out of line. … Protocol, tradition sayswe [committee members] get to ask the questions, not the bill sponsors.”

Chair Sen. Rollie Heath, D-Boulder, quietly allowed that Cadman was right, and Romer stayed pretty quiet after that.

Other opponents included:

  • Ken Strom, director of Audubon Colorado, who feared the plan would depress Colorado Lottery proceeds that go to conservation programs through Great Outdoors Colorado.
  • Ron Weidmann, a Centennial council member and a leader of Protect Our Neighborhoods, a coalition of local officials who oppose any spread of gambling. (Several witnesses noted that state voters have a history of rejecting expansion of gambling beyond the three towns of Black Hawk, Central City and Cripple Creek.)
  • Ed Nichols, CEO of History Colorado, who said a reduction in lottery revenue would threaten the funding stream the group needs to pay off the new history center under construction at Broadway and East 12th Avenue.

The only witness with anything even faintly positive to say was Pat Traub, an executive with Scientific Games, the technology provider for the Colorado Lottery. Traub said the experience in other states shows that such expansion doesn’t “cannibalize” revenue from established forms of gambling.

Even Rod Slyhoff, president of the Pueblo Chamber of Commerce, said, “Whether this is the way to go … frankly I don’t know.” But, he suggested the resolution ought to at least be debated by the full Senate.

No senior higher education officials spoke or were even in the audience. The proposal was only alluded to but not discussed at a meeting Monday of the Sustainability Subcommittee of the higher education strategic plan. That panel is developing ideas for new higher education revenues.

The details of how the Romer-Tapia plan would be implemented remain somewhat murky, and revenue estimates vary. One projection distributed at Wednesday’s meeting estimated net revenue for scholarships at about $52 million in 2013. However, a legislative staff memo noted revenue could vary depending on the number of terminals installed in the state and the details of the program.

In order to be proposed to voters in November, the measure will have to pass by two-thirds votes in both the Senate and House. The legislature has only 14 calendar days left before it must adjourn.

Related: Hearing on tuition and financial flexibility bill stalls