Tempered Optimism in Colorado: 2015 State-of-the-State

In the last issue, Vol. 41 No. 2, the article for the State of the States for Colorado was inadvertently omitted. Please see the article below.

The hopefulness highlighted by Weiler and Serna (2015)¹ regarding education finance trends in Colorado during 2014 appears more appropriate after this year’s session. The 2015 legislative session and governor’s budget that includes increases in funding for both P-12 and Higher Education show some support for maintaining at least a measure of tempered optimism

Funding priorities

P-12

The Colorado legislature is constitutionally obligated to provide the 178 school districts with an annual increase to the total program of at least the rate of inflation plus 1%. However, during the Great Recession this constitutional mandate became fiscally impossible to meet under the restraints of the Taxpayers’ Bill of Rights (TABOR).² As a result, the negative factor, which recaptured state funds from school districts after those funds were allocated, allowed the state to meet its constitutional obligations amid the economic downturn. The top priority for school leaders is to see the negative factor repealed. In addition, there is a push to get the per pupil expenditure (PPE) back to pre-Great Recession levels (the average PPE is roughly $250 below the pre-recession level).³

Higher Education⁴

In 2014–2015 the improved fiscal situation facing the state allowed Colorado to slightly increase funding to higher education by 7.6% in the 2015–2016 budget. The increase of $95M is smaller than last year’s ($103M) but again provides some hope that the state will continue to increase funding to the sector. Moreover, while the 2015 legislative cycle saw a number of bills considered, only a handful of adopted bills relate to higher education financing. Three bills⁵ impacted public institution’s finances by 1) extending in-state tuition status to children of active-duty military with significant time in either the elementary or secondary education system; 2) providing income tax credits to for projects that create at least five jobs and are qualified partnerships with state institutions and; 3) requiring institutions set-asides for depreciation/project costs related to capital projects from the general or capital construction fund.

Changes to funding formula

P-12

The legislation enacted into law impacting public education in Colorado amounted to a collective increase to the state contribution to school districts of $306 million.⁶ As a result, the PPE has increased statewide by $344 for FY 2015–2016. These increases went toward categorical programs throughout the state, facility maintenance, early childhood education, support for counselors, and library aid.

Higher Education

Of note, is that the 2015–2016 fiscal year was the first to employ the state’s new Performance Funding Formula. The fee-for-service component of this formula (the Colorado Opportunity Fund is the other), sets operating allocations for state institutions using more refined outcome measures and specialty program delivery to determine funding levels. The legislation related to the adoption of this formula also allows a sort of workaround for Colorado’s restrictive TABOR tax law such that tuition and fees revenues are exempt from these provisions. This same legislation also allows institutions to remain exempt from any requirements related to TABOR that stipulate a state payment of refunds.

Pressing state issues affecting funding

P-12

In FY 2014–2015 grassroots efforts were able to reduce the negative factor by roughly $100 million statewide.⁷ Public education advocates continue to lobby for a complete repeal of the negative factor, but little progress was made in the most recent legislative session. In addition, the ongoing lawsuit challenging the legality of TABOR, Kerr v. Hickenlooper, continues to be bogged down in procedural challenges.⁸

Higher Education

In 2015, two pressing finance issues were highlighted.⁹ First, was rising tuition and fees at public institutions. In its report the JBC noted that Colorado’s tuition and fee levels have risen yearly above the rate of inflation, while underscoring the impact this could have on the ability of students to access state higher education. In...