Colorado’s Voucher Plan A Case Study Bridget Mullen Director 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 3 rd 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 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 ) 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 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?