Key legislators signaled concern about tuition levels during a budget hearing Thursday, even though state colleges have promised to keep 2014-15 increases below 6 percent.

Colorado college campus montage
From left, Colorado State University in Fort Collins, the University of Colorado-Boulder and the Auraria Higher Education Center.

Institutional debt was the other focus of the daylong hearing before the Joint Budget Committee, an annual marathon at which college leaders get to pitch their institutions to the people who write the annual state budget.

The upcoming 2014-15 budget year looks to be a good one for the state higher education system, at least in comparison to the recent past.

Lt. Gov. Joe Garcia, who also heads the Department of Higher Education, touted the Hickenlooper administration’s proposed $100 million increase in higher education spending for 2014-15.

“This a request for a serious reinvestment in higher education,” he said, calling it the largest “in anyone’s memory” but adding the increase is “dwarfed by the cuts of the last decade.”

The administration’s proposal presumes that college and university governing boards won’t raise 2014-15 tuition by more than 6 percent. A 2010 tuition flexibility law gave institutions the power to raise tuition by up to 9 percent a year for five years. Larger increases are allowed if approved by the Colorado Commission on Higher Education. That law expires in two years. Tuition increases have averaged about 10 percent a year over the last few years.

Governing boards “have all agreed that they will use this money to mitigate their tuition increases,” Garcia said. “Most of them said it won’t be that high.” Individual institutions promised as much in their written responses to committee questions.

But that didn’t necessarily reassure lawmakers.

Impact of 6% tuition hike

  • $257 at community colleges
  • $345 at Metro
  • $430 at Adams, CSU-Pueblo, Fort Lewis, Mesa, Western, UNC
  • $559 at CSU-Fort Collins
  • $621 at CU-Boulder

Source: JBC

“I gain no comfort in this 6 percent deal” because larger increases are possible in future years, said Rep. Frank McNulty, R-Highlands Ranch. “To me it’s a bait and switch. … We need to increase the state’s commitment to higher education … and not rely on things like a handshake agreement to limit tuition increases for one year, which by the way happens to be an election year.” (Democratic Gov. John Hickenlooper is expected to see reelection next year.)

Denver Democratic Sen. Pat Steadman, JBC vice chair, was worried about the tuition flexibility law, wondering if it should be repealed early.

Garcia responded, “This year I would not encourage this body to change the existing statute.” He suggested that policymakers take the next year to study and discuss the issue, including whether the legislature wants to get back into the complex and politically tricky business of setting tuition, as it used to do.

“It’s time to revisit that conversation, either now … or next year,” Steadman said.

College debt worries aired

The other serious issue raised at Thursday’s hearing was the debt load being carried by some state colleges.

Chart shows where colleges rate on evaluation of financial health. (Click to see larger version.)
Chart shows where colleges rate on evaluation of financial health. (Click to see larger version.)

During a briefing last week, JBC staff analyst Amanda Bickel laid out an report that showed six out of 10 state institutions were “in relatively weak financial health” as of 2011-12, primarily because of high debt loads. She cited Adams State University in Alamosa and Western State Colorado University as particularly troubled.

As state construction funds dried up in recent years, colleges increasingly turned to issuing bonds, some to be repaid by student fees, to renovate and construct buildings. “Both Western and Adams have spent aggressively on cash-funded new construction in recent years, Bickel wrote.

On a 0-10 scale, Bickel listed Adams and Western as below 0. She recommended that policy makers continue to monitor the financial health of state colleges, keep a closer eye on bonds that are backed by the state and discuss whether small colleges should be taken over by larger systems.

Thursday’s hearing provided the first opportunity for college leaders and JBC members to discuss the issue face-to-face.

Interim President Brad Baca told lawmakers, “We do recognize that Western faces some challenges. … We are highly leveraged. … We can’t deny that.”

But he said that Western’s trustees have increased university reserves and that rising enrollment and student fee income also will help. “I feel very confident [that] we’re positioned to not be in any danger of missing any payment.”

“The actions we’ve taken over the last two years are working,” said trustee chair Todd Wheeler.

Trustee Gregg Rippy, a former legislator, also warned against combining Western with a larger system. Creating independent boards several years ago was “one of the best things” the legislature’s done for higher education, he said.

JBC member Rep. Cheri Gerou, R-Evergreen, was sympathetic but said, “We need a little bit more help from you, and a firm action plan would be great.”

Adams leaders were even more bullish about their plans to increase enrollment and stabilize finances.

“The rumors of our demise are greatly exaggerated,” said President David Svaldi. “Small rural institutions struggle.”

Noting that Adams had a decade of enrollment declines before creation of a strategic plan several years ago, Svaldi said campus upgrades were necessary, and “The risk of doing nothing was greater than the risk of borrowing in a time of historic low interest rates.”

Metro’s Jordan raises ticklish issue

While Hickenlooper’s proposed budget is seen as a welcome boost for higher education, it would distribute money to colleges based on an existing formula that’s the product of past political compromises among the state’s often-fractious colleges and universities.

Chart shows estimated per-student state support under the 2014-14 higher ed budget plan. (Click to view larger version.)
Chart shows estimated per-student state support under the 2014-14 higher ed budget plan. (Click to view larger version.)

Among other things, the formula doesn’t fully compensate colleges for enrollment growth, long a sore point for President Steve Jordan of Metro State University, which has been one of the faster growing campuses.

Jordan raised that issue Thursday, arguing that the formula needs to be fixed before a planned college performance funding system kicks in later this decade. (See this EdNews story for background on that plan.)

That needs to be done “so there will be a level playing field,” Jordan said.

Sen. Nancy Todd, D-Aurora, agreed with Jordan, saying Metro and the community colleges “are at the bottom of the barrel” in per-student support from the state.

Gerou was less sympathetic, telling Jordan that other colleges also have financial needs and “the world does not revolve just around Denver. … You may feel like you’re suffering right now, but I don’t think you’d trade places with Western State or that you’d trade places with Adams State.”

Jordan merely replied that he believes there needs to be similar per-student funding among similar institutions.

Average per-student support from the state would be $4,976 under Hickenlooper’s budget plan, but Metro and the community colleges would receive only about $3,000 per student.

Attempting to change the college allocation formula during the 2014 legislative session would be politically difficult, but JBC chair Rep. Crisanta Duran, D-Denver, asked Jordan for more information on the issue. She asked him for “a specific plan” on how the formula could be improved. “That information would be very helpful.” Duran’s District 5 includes the Metro campus.

Thursday’s hearing was just the second step in a long process leading to legislative approval of a 2014-15 state budget in late April. Among other steps, updated state revenue forecasts that will be issued next week and in March will affect the budget debate, both for higher education and other state programs.