Higher ed seeks relief from TABOR

With the promise of another round of deep state budget cuts

looming, higher education officials are looking to lawmakers for

relief from the Taxpayer’s Bill of Rights. The future of public

higher education in Colorado, university officials and budget

experts said, is at stake.

The Colorado General Assembly starts its next session in early

January, and higher education officials are pressing for changes in

the fiscal policies that govern public universities and

colleges.

“We are making our budget problems clear to state lawmakers,”

said Peter Nicholls, CSU’s provost and academic vice president. “I

feel the urgency strongly, all the higher university

administrations officials are concerned.”

Two options for CSU to escape TABOR restrictions, Nicholls said,

are a voucher system and enterprise status.

A bill being considered for introduction in the 2004 legislative

session would give each in-state full-time undergraduate student a

$3,000 stipend to be used for tuition. The aim is to find a legal

loophole around TABOR restrictions. The stipends would be

considered payments, not state grants, so they would not be subject

to TABOR restrictions.

A similar bill was killed in the Colorado General Assembly last

year.

State institutions that gain enterprise status are free of TABOR

restrictions. To qualify, CSU would have to get less than 10

percent of its funds form the state. The University of Colorado was

denied enterprise status when it applied last year.

“CSU is exploring ways in which we can get enterprise status,”

Nicholls said.

Under TABOR restrictions, public universities such as CSU and CU

are strictly limited in setting tuition rates because tuition is

considered state income, just like tax revenue. So when these

universities face big cuts in state funding they are unable to

raise tuition to offset the revenue loss.

Though the economy is rebounding, higher education funding will

likely take another big hit. Joint Budget Committee Staff Director

John Ziegler told lawmakers on the JBC that the 2004-05 state

budget would have to be trimmed by $285 to $330 million.

Since higher education funding is not protected by the state

constitution, it is one of the first places lawmakers look to make

budget cuts.

On Nov.17, state legislators on the JBC heard from university

presidents and other higher education officials during a daylong

budget hearing for the Department of Higher Education and the

state’s 28 public colleges and universities. The main topic was

TABOR and how public universities and colleges could find relief

from the law’s strict spending limits.

“We are not seeking to repeal TABOR in any such way or form. We

just want to get the message out that there are unintended

consequences of the law,” Nicholls said.

Higher education funding dropped by $158.6 million between the

fiscal years 2001-02 and 2003-04, and budget analysts predict more

cuts are likely over the next two years. Because of the complicated

mechanisms of TABOR and other state laws, it is almost impossible

for higher education to regain these funding cuts in the future,

legislators and budget experts said.

During the hearing, CU President Betsy Hoffman warned her

university may have to become a “private university” if the state

cannot change the fiscal policies restricting higher education.

“We are preparing for the possibility that we’ll have to be a

private university by 2010,” Hoffman told state lawmakers. Hoffman

predicted that without relief from TABOR restrictions higher

education’s share of General Fund dollars — now at $686 million —

would fall to nearly zero.

After the hearing, Hoffman told reporters that she doesn’t want

CU to become privatized, The Rocky Mountain News reported. “But

people need to wake up,” she said. “It has to be said. We have to

address the limitations imposed by TABOR, the Gallagher Amendment

and Amendment 23, or take higher ed out of TABOR. It’s one or the

other.”

Eric Kurtz, a JBC staff member who deals with higher education,

said Hoffman’s prediction was fairly accurate. CU’s prediction that

General Fund support of higher education would disappear is made by

using historical data and projecting it into the future, Kurtz

said.

If no changes are made to the current fiscal restraints on

higher education, then, in 10 years, state general fund support of

higher education would be “virtually eliminated”, Kurtz said.

This is because of the “crowding-out effect” of TABOR.

Constitutionally protected spending items such as K-12, Medicare

and prisons take more and more of the General Fund revenue, leaving

less and less for unprotected spending items like higher

education.

“I’m optimistic 10 years from now CSU will still be a world

class university,” Nicholls said.