Bell Policy Center raises concerns over cuts to financial aid programs

At the most recent meeting of the Colorado Commission on Higher Education, the Bell Policy Center voiced strong concerns about Gov. John Hickenlooper's proposed $30 million in cuts to the state's need-based and work-study financial aid programs in his FY 2012-13 budget request. Such cuts could reduce post-secondary educational opportunity for many low- and middle-income Coloradans.

Among the major General Fund cuts proposed for the Department of Higher Education are $24.6 million (out of a total $74.9 million) to state need-based financial aid and $5.5 million (out of a total $16.6 million) to work-study programs. Documents accompanying the budget request indicate that the combined $30 million in cuts could result in 22,500 fewer students receiving awards or receiving lower awards. An additional cut of $29.1 million (out of a total $519 million) to general operating revenues for colleges and universities is also part of the request.

Senior policy analyst Frank Waterous, in comments to the commission, acknowledged the governor's and the commission's desire to find a balance between access and affordability for students and the ongoing operational viability of the state's public colleges and universities. But he also said that the Bell strongly believes that cuts to these two important state financial aid programs take us in the fundamentally wrong direction for three key reasons:

• Over the last several years, more and more of the responsibility of financing our public higher education system has shifted from the state and onto students and their families. Cutting state financial aid resources when tuition and other college costs continue to significantly increase only amplifies that trend, and could lead to reduced post-secondary educational opportunity for many low- and middle-income Coloradans – especially those who do not qualify for federal financial aid dollars.
• The proposed cuts to state financial aid programs are not consistent with the recommendations in the final report of Colorado's Higher Education Strategic Planning Steering Committee. The report is one of the foundational documents for the commission's ongoing Master Planning process. In it, the steering committee specifically recommends that if state funding for higher education continues to erode, and difficult decisions must be made between funding institutions or funding students, "any available funds should be targeted to financial aid."
• Administration representatives believe that many of the negative impacts of state financial aid cuts can be offset by increasing institution-based financial aid. Such increases would be accomplished by earmarking additional tuition revenues generated by institutions through the tuition flexibility granted them under Senate Bill 10-003. However, such an approach fundamentally undercuts the very financing model on which that legislation was based. The Bell reluctantly supported SB 10-003 and warned in our testimony to the legislature that a strong state financial aid program was crucial to the policy's success in avoiding adverse impacts to low- and middle-income Coloradans. Specifically, we cited a National Center for Public Policy and Higher Education report, which noted that, as states increase tuition to replace lost General Fund revenues, they must "increase or maintain funding for state need-based financial aid programs, even if this means reallocating funds from colleges and universities. ... Do not place the burden of expanding aid on students through tuition increases."

In concluding his remarks, Waterous noted that the Bell understands that difficult choices must be made in balancing the state's budget. However, we hope that as the FY 2012-13 budget process unfolds, a variety of alternatives and funding options will be seriously explored by the governor and the legislature in order to avoid or mitigate the proposed cuts to state financial aid.

The Bell will continue to be engaged in this important issue as a strong voice for post-secondary access and affordability for all Coloradans. In addition, this topic will undoubtedly spur some lively conversation at our Dec. 7 "Voices of Opportunity" event featuring Patrick Callan, president of the National Center for Public Policy and Higher Education.