Tuition flexibility bill in legislative home stretch
By Marianne Goodland
The Colorado Statesman
May 7, 2010
The Senate Wednesday gave near unanimous approval to Senate Bill 10-003, the bill to grant the state's colleges and universities greater flexibility in setting tuition rates and to free them from state fiscal regulations. On Friday, the House gave its initial approval to SB 3; the bill is headed for a final House vote on Monday. But the bill as amended by the House and Senate put strict limitations on just how long institutions would be able to raise tuition rates, in response to concerns about runaway tuition increases.
The vote on SB 3 in the Senate was 34-1, with Sen. Paula Sandoval, D-Denver, casting the lone "no" vote.
During second reading debate in the Senate on May 4, senators expressed reservation over allowing the governing boards of the colleges and universities the latitude to set tuition rates without legislative oversight, but they also said the state's fiscal crisis left them with no other options.
The version of SB 3 passed by the Senate Education Committee last week was a second strike-below substantially different both from the original bill and a strike-below version released earlier in the month. Under the amended version of SB 3, public colleges and universities would be allowed to raise tuition rates by 9 percent annually. If an institution wants to raise tuition rates by more than 9 percent, it must submit a plan to the Colorado Commission on Higher Education that would show how the institution would make sure lower- and middle-income students would still be able to afford to go to school.
Colleges and universities also would be required to come up with a plan later this year showing how they would remain affordable with a 50 percent reduction in general fund revenues. Senate sponsor Sen. John Morse, D-Colorado Springs, said the state will probably have to cut $300 million in general fund support for colleges and universities in 2011-12 in part to address a $1.7 billion shortfall predicted by the Legislative Council economists. The $300 million cut represents more than half of the general fund support that will go to the institutions in the 2010-11 budget.
SB 3 grants the University of Colorado permission to enroll more international students, up to a maximum of 12 percent of its student population. Currently, Morse said, the institution's international student population is about 4 percent of its enrollment.
As to fiscal rules, SB 3 exempts institutions from some of the oversight of the state controller and from certain fiscal rules "in an effort to cut costs if they need to cut costs," Morse said.
SB 3 was further amended in the Senate Tuesday to allow Colorado State University the same permission to enroll more international students as is granted in the bill to CU.
A Morse amendment adopted by the Senate, also on Tuesday, changed the amount of time institutions could have to raise tuition without legislative oversight. Under SB 3 as amended by Senate Education, institutions would be allowed to raise tuition for a total of four years, although the tuition plans must be submitted to the CCHE for approval. The CCHE could okay the plans for two years, with another two years conditional on a governing board's success in implementing financial and accountability measures. The bill was amended both by the Senate and House to expand that authority to five years; two years upon the first approval and conditional for the last three. After that, the authority to increase tuition sunsets on July 1, 2016, under a Senate amendment also adopted on Tuesday.
Another amendment, sponsored by SB 3 co-sponsor Sen. Josh Penry, R-Grand Junction, dealt with the tuition authority for the Colorado School of Mines. Under his amendment, which was adopted by the Senate, Mines would operate under the 9 percent tuition cap for five years, but after that would have "broad autonomy to set its own tuition policies," according to Penry. He explained that the trustees at Mines have wanted to put Mines on the path to operating more like Penn State University, and "this represents a step in that direction.
Sen. Greg Brophy, R-Wray, suggested an amendment that would add renewable energy facilities to the enterprise statutes that govern auxiliary facilities in higher education. Brophy explained that the institutions could borrow money to build facilities such as childcare, recreation or athletic buildings that could use solar, hydroelectric or biofuels, for example. Morse congratulated Brophy for his idea, saying the amendment was the "classic example of 35 heads better than one." But a second amendment offered by Brophy got a less enthusiastic response - to require institutions to abide by state statutes allowing for concealed weapons. That amendment was dismissed because it did not fit under the bill's title.
"We are at a juncture in Colorado to allow for greater tuition increases because we do not have adequate support for higher education," said Sen. Bob Bacon, D-Fort Collins, chair of the Senate Education Committee. "This is a stopgap measure...it is with sadness that we have to vote for this bill."
Penry added that there are three options in dealing with higher education funding - do nothing, try to get a significant tax increase or "get innovative and creative," which is what SB 3 embodies.
Another reluctant "yes" was cast by Sen. Pat Steadman, D-Denver, who said he would vote for it because of an amendment that would bring the bill back in five years for another look. "I'm very concerned that by turning over authority on tuition to the governing boards the General Assembly is abdicating its responsibility on tuition rates," Steadman said. With the bill amended to add a five-year review "we will have an opportunity to have this debate again and look at where tuition rates are."
"This isn't a fix," said Sen. Rollie Heath, D-Boulder. "We're last in the country on funding higher education." SB 3 will give get the state through another year, he said, but the revenue problems that caused the need for the bill still remain. "We need to deal with the long-term problem," Heath said.
On Thursday, the House Education Committee held a very brief hearing on SB 3, with only three witnesses testifying in favor of the bill.
Frank Watrous of the Bell Policy Center had testified in opposition to SB 3 when it was in the Senate, but said the Center now supported the bill, based in part on the amendment to limit to five years the authority of institutions on increasing tuition rates. The bill's efforts to provide protection for access and affordability, and to reduce student debt load, also won the center's favor. Watrous said the Center still had concerns about the 9 percent tuition "floor" which in the past had been a "ceiling," and that a state model of high tuition, high aid doesn't work when the aid comes only from the institutions. "The state still has to provide additional aid," he said.
The Bell Policy Center is not alone in its concerns over some of the provisions of SB 3.
During the Senate debate, it was pointed out that asking institutions to show how they would deal with a 50 percent general fund cut would result in very different answers. A 50 percent reduction in general fund support at CU, which receives about 6 percent of its total budget from general fund dollars, will not look the same as a 50 percent cut at a community college or at Metropolitan State College of Denver, which relies on general fund support for almost 40 percent of its budget.
Steve Jordan, president of Metropolitan State College, told The Colorado Statesman the 50 percent reduction should be looked at on a system-wide basis, i.e. for all institutions across the state rather than on an institution-by-institution basis. The plan for the reductions, which he said should be done by the CCHE, should also look at the impacts a 50 percent reduction would have on each institution. At Metro, he said, it could mean the end of student support services provided by its student affairs division.
Jordan's views are backed by the National Center for Higher Education Management Systems (NCHEMS), which is working with the governor's strategic taskforce on higher education. Aims McGuinness of NCHEMS, in an e-mail sent this week to several legislators, said a 50 percent "one-size fits all cut across all institutions would totally ignore the dramatic variations in institution's reliance" on general fund support. At institutions that serve the state's poorest students (e.g., Metro and Adams State, and the Community College of Denver), general fund support per student is more than 50 percent of the institution's total funding. Hence, a 50 percent cut in general fund at Metro would be a 25 percent cut in their total funding, but a 50 percent cut in general fund at CU-Boulder would be less than 10 percent cut in total funding, McGuinness said.
SB 3 also starts the state on a path to move to a means-tested COF. Currently the state provides the same per-hour stipend, through the College Opportunity Fund, to every undergraduate student who goes to a two- or four-year institution and to Colorado resident undergraduates who qualify for Pell grants at three private schools (the University of Denver, Regis University and Colorado Christian University). During testimony on SB 3 in Senate Education Committee, Penry said the state should move to a means-tested COF, where students from families with high-income levels would pay more of their tuition costs, and institutions could shift the COF funds to students at lower- and middle-income levels. Students at the lowest income levels get their tuition and fees paid for in full by federal aid, such as the Pell grant, Penry said, and those COF dollars also could shift to middle-income students and those slightly below that.
But the notion of a means-tested COF doesn't take into consideration variances in student income levels nor the institutions' commitments to serving low-income students, McGuinness told The Statesman. NCHEMS analyzed the enrollment of Pell-eligible students at the state's public colleges and universities, which showed that the community colleges were serving a much-higher percentage of low-income students than were the four-year institutions. The lowest percentage of Pell-eligible students were enrolled at Mines, CSU and UCB. McGuinness and Jordan explained that as a result institutions like UCB, Mines and CSU can take advantage of the means-tested COF and shift those dollars to lower- and middle-income students, but community colleges could not because they serve much more lower-income students and have far fewer students at the higher end of the income scale.
"We need a financing system that encourages institutions to do the right thing and no amount of regulation will get them to do things that aren't in their self-interest," McGuinness said this week. "This bill needs to be amended to ask the CCHE to come back to the legislature on the future of COF, fee-for-service and tuition rather than solving them on the run."