Colorado’s Voucher PlanA Case Study

Bridget MullenDirector of Policy, Planning and Financial Analysis

University of Colorado

The Colorado Environment

Colorado’s population is well-educated.

Colorado is one of the wealthiest states as measured by per-capita personal income.

Colorado was the 3rd fastest growing state in the 1990s and its population is becoming more diverse.

The Politics of Colorado

Weak state and strong local governments.

The state ranks in the bottom 5 in state government taxes per $1,000 of income.

In 1992, voters adopted a constitutional limit on spending for both state and local governments – known as the TABOR.

Governor’s Blue Ribbon Panel on Higher Education

Created in summer 2001 to review the state’s public higher education system and to explore new funding options.

Initial focus on state economics, demographics and education participation both K-12 and post-secondary.

Access and participation issues – low-income students not graduating from high school.

Colorado Paradox – college participation rankings not close to adult population’s educational achievement level.

TABOR Implications

Taxpayer’s Bill of Rights restricts state and local spending to previous year base plus population and inflation changes.

Tuition made part of state spending limits in implementation legislation.

General Assembly kept tuition increases at or below inflation after TABOR.

Voucher Approach Concept

Market-approach philosophy: student-centered, increased competition.

Greater transparency in state support for higher education.

Enterprise Status

TABOR allows for the declaration of “enterprise status” if a district – in this case an institution – receives less than 10% of total revenue from state and local government.

Vouchers would be given to resident undergraduate students, not institutions.

Other state support would be funded through “fee for service” contracts – supporting graduate students, Health Sciences Center, etc.

Pro/Con on Voucher Approach

Pro Would this increase competition and thus

lower costs? Would this make it more difficult to cut

higher ed budgets as students would know how much voucher was reduced?

Would this increase awareness of state support for lower-income students?

Pro/Con on Voucher Approach

Con Would this turn into an entitlement

program? Would some institutions increase tuition

so high as to diminish low-income enrollments?

Would this weaken the historic ties between state government and institutions?

Convergence of Policymakers and Institutions

Blue Ribbon Panel recommends vouchers titled Educational Savings Accounts in January 2003.

Bill dies in committee over entitlement concerns as higher ed absorbs $125 M in cuts over two fiscal years.

New bill “College Opportunity Fund” is adopted in spring 2004 with support by institutions.

College Opportunity Fund Overview

The COF Bill (S.B. 04-189) has four components:

College Opportunity Fund Stipends Performance Contracts Fee-for-Service Contracts Enterprise Status

Implementation of COF

Resident undergraduate students sign up online – limited to 145 credit hours

Institutions sign performance contracts to participate in COF funding - $2,580 in FY 2007 ($86 per credit hour)

Fee-for-service contracts account for remaining state funds – graduate, specialized programs

Available for Pell-eligible students at three non-profit private institutions at one-half the rate as the publics

Performance Contract Objectives SB 04-189 provided the framework through the

development of a performance contract that would allow institutions additional management flexibility in return for meeting certain accountability measurements.

Accountability measures should be structured around:

Improving Colorado resident’s access to higher education;

Improving quality and success in higher education;

Improving the efficiency of operations; and

Addressing the needs of the state

Future Course of COF

Program began in fall of 2005 – still too early to assess impact

Will institutions be given greater flexibility to determine their future?

Will governing boards be given tuition freedom now allowed under enterprise designation?

National Implications

Will more students become aware of state support for higher education, especially low-income students? Will this lead to higher participation rates?

Will the COF, plus enterprise status, lead to greater institutional flexibility and creativity?