Closing colleges or privatizing universities are radioactive issues that Colorado legislators don’t much like to talk about, but the Joint Budget Committee members and others were forced to do just that on Wednesday.
They learned closing colleges could save less than you might think, and letting universities go private would require breathtaking tuition hikes.
Scenarios for those two things were part of a briefing paper presented to the committee during a hearing that formally opened JBC consideration of state higher education spending in 2010-11, one of the many very tough issues lawmakers face in trying to balance that budget.
Spending on colleges and universities, neither partially protected like K-12 funding nor mandated like Medicaid and some other state-federal programs, took a beating during the recession at the start of the decade and has taken an even harder blow during the current downturn.
The higher ed budget is being held together with federal stimulus funds, but those run out after the 2010-11 budget year.
Here’s a little budget history:
- In 2008-09 state colleges received about $555 million in state tax funds, $151 million in stimulus money and $1.2 billion in tuition revenue.
- For the current 2009-10 budget, declining state revenues have forced Gov. Bill Ritter to propose trimming state tax support in the middle of the year to about $330 million and backfilling with $376 million in federal money. (Tuition revenue is roughly $1.3 billion.)
- In 2010-11, conditions in the stimulus law will require the state to take tax support back up to $555 million, but there will be only about $95 million left in stimulus cash. Overall higher ed spending would remain stable at about $1.9 billion, but only with the help of yet another 9 percent tuition increase.
Eric Kurtz, the JBC staff analyst who handles higher ed, outlined those familiar figures and tough choices during the two-hour briefing Wednesday afternoon.
But things got more interesting when he turned to four “briefing issues” – closing colleges, privatizing universities, proportional cuts to all colleges and eliminating the $8.2 million in financial aid given to students who attend private Colorado colleges and trade schools. (JBC staff analysts regularly give the committee such background on budget alternatives for information and discussion, not necessarily as recommendations.)
Kurtz wrote a closing scenario that used Northeastern Junior College in Sterling as an example, and he built his privatization scenario around the University of Colorado at Boulder.
Closing and privatization are possibilities that sometimes are mentioned around the Capitol but which to date haven’t been discussed seriously because of their political sensitivity.
Such sensitivity was clearly on display Wednesday as lawmakers reacted to Kurtz’ scenarios.
“I think we need to close two or three four-year institutions,” said Sen. Chris Romer, D-Denver. He warned that starvation budgets could threaten the accreditation of major campuses. “If we want to defend the accreditation of some of our larger institutions, which smaller institutions do we close?”
Romer suggested the JBC hire a consultant to study every state college, one by one, and examine the budgetary and economic implications of closure.
Rep. Frank McNulty, R-Highlands Ranch, piped up that the same sort of triage should be done for all state agencies.
Rep. Lois Court, D-Denver, warned, “We also have to consider the ripple economic effect. For some communities their community college is the major employer.” (Romer, McNulty and Court were among several non-JBC members who sat in on the briefing.)
JBC Chair Rep. Jack Pommer, D-Boulder, seemed uncomfortable with the whole discussion, saying, “For the record, I don’t know of any proposal to close any college.”
“This is a dead serious conversation,” Romer replied. “We’re at the tipping point where these decisions have to be made.”
“Sen. Romer, let’s take this discussion up later,” Pommer said.
(Pommer earlier had joked with Kurtz, saying that next time he created such a scenario it should perhaps be for a fictional institution, like “Mars Community College.”)
Here’s a brief rundown on Kurtz’ two scenarios. (Use the link below to read his full analyses.)
Closure – Northeastern Junior College: Kurtz said he chose the college as an example because it has a relatively high cost per student. Direct state support is now about $4.5 million a year (not counting the federal aid). But, if even 40 percent of students went to another state college and drew support there, the savings would be reduced, plus the state would have to pick up Northeastern’s debt. Net savings would be only about $2.4 million, Kurtz calculated. And, that doesn’t include the loss of tax revenue from out-of-work college employees and broader losses to the economy in northeastern Colorado. Northeastern is the third largest employer in the region.
(One interesting sidelight to Kurtz’ report was his comment that Northeastern students could drive 40 minutes to Sidney, Neb., and find cheaper tuition at the community college there – even as non-residents – than they pay in Colorado.)
Privatization – CU-Boulder: Kurtz calculated that the campus could replace state tax support (but not federal stimulus money) and “go private” in just two years – but doing so would require 18 percent tuition increases for Colorado students in each of those years.
Tuition hikes would have to rise to 22.5 percent a year if CU followed current state policy and set aside 20 percent of new tuition revenue for increased financial aid.
Boulder is the campus most frequently mentioned when privatization comes up. Most recently the idea was kicked around in a legislative study committee last summer. The idea was quickly pooh-poohed by CU President Bruce Benson and committee chair Sen. Rollie Heath, D-Boulder, a staunch CU supporter.
Department of Higher Education officials will appear before the JBC at another hearing in early December to answer budget questions.
Read the full briefing paper
- Closing colleges scenario – page 23
- Privatization scenario – page 27
- Proportional reductions scenario – page 31
- Cutting financial aid for students at private colleges scenario – page 34