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Higher education panel wrestles with controlling tuition rates

Parents talk to Memphis Rise employees about the new charter schools
Parents talk to Memphis Rise employees about the new charter school
J. Zubrzycki

For two years, Colorado college students have been protected by a 6 percent cap on tuition increases.

But a draft new policy being considered by state higher education officials looks a lot like an old system that gave colleges and universities significant flexibility in setting tuition rates. In some instances, that led to double-digit increases.

The Colorado Commission on Higher Education, meeting Thursday in Colorado Springs, gave Department of Higher Education staff the go-ahead to refine the proposal before the commission makes a final decision.

“It’s expiring,” Diane Duffy, department chief financial officer, said of the current tuition cap. “The state of Colorado is going to need to do something” about tuition.

Any new policy would amount to a recommendation, with legislators having the final say.

In broad terms, the proposed policy would work like this: Every year the department and the commission would consider the expected amount of state funding for the coming school year and affordability factors for students, plus the financial needs of individual colleges and universities, in order to recommend a tuition increase cap.

Institutions would be allowed to increase tuition above the cap if they met commission-set requirements for affordability, student completion and other factors.

The biggest factor in the tuition equation is the level of state support.

“They are so inextricably linked,” Duffy said.

State budget cuts after the 2008 recession forced state colleges and universities to raise tuition rates to keep their budgets balanced. This year state colleges and universities are receiving about $740 million in state support but raise more than $2 billion in tuition revenue.

Higher education experts don’t believe the state can restrain tuition growth merely through cost savings at colleges and universities.

Colorado colleges have less revenue per student than institutions in most other states and “are already far more efficient than comparable public institutions” in other states, according to a cost study done for the department this summer.

That study, done by the Boulder-based National Center for Higher Education Management Systems, also noted “the share of the [higher education] budget devoted to expenditures for items other than compensation has declined substantially.”

A 2014 law requires the commission to deliver a proposed new tuition policy to the legislative Joint Budget Committee by Nov. 1. DHE staff members are continuing to work on the draft policy and will gather feedback from college and university leaders and others. The commission is expected to vote on a final version at its Oct. 29 meeting.

Tuition as a political issue

Tuition increases in recent years put pressure on student and family budgets and also came at a time when the state was trying to increase enrollment of low-income and first-generation students, for whom college costs can be a significant barrier.

Rising tuition rates sparked concern among legislators, including some who tried to make college affordability a 2014 election issue.

During the 2014 session, lawmakers increased funding for higher education by 11 percent and also set the 6 percent cap on tuition increases for resident undergraduate students.

Tuition increases have moderated a bit recently. The median percent increase in tuition was 5 percent for 2014-15, the lowest since 2006-07, when it was 2.5 percent.

Proposal echoes prior tuition flexibility law

As state funding shrank after the 2008 recessions, lawmakers threw colleges a lifeline with a 2010 law that gave institutions greater power over tuition than they had in the past.

That law set a 9 percent cap for five years but allowed the commission to approve larger increases if institutions provided detailed rationales for why they needed more money.

Most state colleges took advantage of that flexibility, and double-digit rate increases were imposed by some colleges. The legislative repealed that flexibility law in 2014.

In contrast to the 2010 law, the new proposal would be more integrated into the annual budget setting process for higher education, and the new plan would set different requirements for colleges that want to exceed the annual cap.

Commission doesn’t have the final word

Lt. Gov. Joe Garcia, who also heads DHE, reminded commissioners that they won’t have the final say on tuition, regardless of what new plan is adopted.

“What we would be adding here is a recommendation about tuition increases,” he said. “The General Assembly could elect to do something different.”

Commissioner Jeanette Garcia, an educator from Pueblo, said, “My hope is that the General Assembly starts recognizing that this body and the department are the right people to be making these decisions.”

Commissioner Paula Sandoval of Denver, a former state senator, noted, “We have to convince 35 senators and all of the representatives that what we’re doing is valid and sound.”

Bigger budget problems could derail any formula

The lieutenant governor also stressed that a tight state budget could make a new tuition policy meaningless if lawmakers have to cut support of higher education.

He referred specifically to the hospital provider fee, income that doesn’t come from taxes but which still counts against the annual state revenue limit required by the Taxpayer’s Bill of Rights. An attempt to reclassify the fee so it doesn’t count against the limit failed during the last legislative session, but the Hickenlooper administration plans to try again in 2016.

“If the hospital provider fee isn’t converted … there’s no chance there will an increase for higher education, and probably a decrease” in 2016-17, Garcia said. “And we’ll see tuition go up.”

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