1. Fiscal Education Network A project of the Colorado Nonprofit Association 1

2. Safe Spaces for Robust Conversations People are retreating from the public square. They don’t want to be part of a divisive debate. People hold conflicting values on many issues including Colorado’s fiscal crisis. People need room to sort things out. Conversation is the only way to do this. Need conversation conveners and leaders who aren’t perceived as partisan. 2

3. Public Opinion v. Public Will Sway Public Opinion Protect or sway small percentage at margin Short term; high intensity Narrow issues; drive home a single message Appeal to people’s preconceived view Mass media Build Public Will Move people through stages of public thinking Longer term Broader narrative; encourage discourse Engage people as citizens who hold responsibilities Grassroots conversations 3

4. Stages of Public Thinking Choice/ActionAwarenessOptions Time 4

5. A Different Kind of Conversation 1.Build network of organizations and individuals to help Coloradans understand the state’s fiscal challenges. 2.Provide guest speakers to groups to convene conversations in their communities. 3.Recruit, train and support Local Conversation Leaders. 4.Provide fiscal education content and materials to the network. 5

6. Questions to Consider What makes Colorado and our community a great place to live? What public services are important to maintain our quality of life? How do reductions in public services affect our community? What are state government’s essential roles? 6

7. Coloradans Share Many Aspirations Plenty of jobs, good wages & economic security. Good schools, colleges and universities. Support for the most vulnerable in our communities. Safe roads and safe neighborhoods. Enjoy nature and the great outdoors. 7

8. We need effective government to help us reach our shared aspirations. 8

9. Colorado’s Fiscal Reality: A Long-term Structural Deficit Colorado is facing a long-term fiscal challenge. The costs to maintain public services exceed the revenues to pay for them. Colorado must implement policy changes that address the structural nature of the problem. 9

10. Colorado’s Political Reality: The Voters Decide Coloradans have a unique responsibility to make decisions at the ballot box. As voters, it’s our duty to make choices about how to balance demands for low taxes and demands for robust public services. 10

11. Colorado’s Civic Challenge We’re opposed to new taxes: Proposition 103 was defeated statewide 64% to 36%. Fifty percent to two-thirds oppose any new revenue increase. We oppose more spending cuts: 67% to 80% oppose any cuts to higher education, health care, roads and transportation, K-12 education. We believe many public services are underfunded: Majorities agree education, basic health care, public safety, senior services, highways are underfunded. 11 Pew Research and 2011 Election Results

12. Demand for services has grown. Revenues haven’t kept pace. Governor Hickenlooper FY 2012-2013 Proposed Budget to JBC 12

13. General Fund Money, Spending, and Reserves 13

14. 14

15. General Fund Purchasing Power Down -11% Since 2001 Revenue data from Colorado Legislative Council staff. Inflation adjustment calculations made by Bell staff based on Denver- Boulder-Greeley Consumer Price Index as reported in Colorado Legislative Council forecasts. 15

16. University of Denver; Center for Colorado’s Economic Future 16

17. 17 Federal Funds for Colorado in Jeopardy Cuts with Sequestration Sequestration could cut $61 million from Colorado's budget, half of which would hit schools, and continue for ten years. Programs in job training, low income energy assistance, food assistance and housing also to be cut. Over 10,000 jobs are projected to be lost in non- defense programs with sequestration. (Center on Law and Social Policy; US Senate Committee on Health, Education, Labor and Pensions)

18. 18 Less General Fund Support for Environmental Programs State Parks closing CDPHE programs not cash funded in jeopardy: pollution enforcement, carbon reduction, public health, ozone standards Wildfire Preparedness and Coordination

19. Is it just the recession? “Even a strong recovery and sustained job growth over the next 15 years is not enough (to solve the budget problems).” –DU Center for Colorado’s Economic Future 19

20. Is it waste, fraud and abuse? “Focusing on trimming the fat fails to address Colorado’s systemic budgetary problems.” “Colorado must implement policy changes that address the structural nature of the problem.” –Independence Institute, Citizens’ Budget 20

21. Does the state misallocate funds? Source: Joint Budget Committee Staff, September 20, 2012. 21

22. What’s creating the structural problems? Demand higher than revenues Aging population Changing economy 40% health care inflation over past decade “Shifting” K-12 education funding system Compounded by two recessions 22 DU Center for Colorado’s Economic Future

23. Colorado Is Aging with the 65-99 yr segment up nearly +70% by 2025 Source: Colorado Demographer’s Office; DU Center for Colorado’s Economic Future 23

24. Aging Affects Revenues Source: Consumer Expenditure Survey, BLS; DU Center for Colorado’s Economic Future 24 Patterns of Household Contribution to the Sales Tax Base By Age of Householder Under 25 yrs25 - 44 yrs45 - 64 yrs65+ yrs $229.83 $280.05 $397.14 $413.55

25. Aged Care Represents Disproportionate Share of Medicaid Cost (FY 10 Data) 25

26. Medicaid growing 1.7 times faster than revenues Aging population accounts for 27.2% of total expenses; $817 million dollars 40% health care inflation over past decade 26 DU Center for Colorado’s Economic Future

27. K-12 Financing: Shifting to state sales and income tax away from local property taxes 1993: State share of funding = 35% Typical school district mill levy = 40 mills 2010: State share of funding = 63% Typical school district mill levy = 27 mills 27 DU Center for Colorado’s Economic Future

28. The State Share of School Finance will Continue to Grow Peaking at +70% by FY 24-25 28

29. 29 Colorado invests less in K-12 than most states. Gallagher Amendment Passed TABOR Passed Amendment 23 Passed -$1,809 K-12 Per Pupil Funding: Colorado v. National Average H

30. Higher education funding has been declining for 30 years. 30 21.1% 6.4% Higher Education State Funding as a Percent of Total State Funds 25% 20% 15% 10% 5% 0%

31. 31 Great Education Colorado Colorado invests less in higher education. (compared to most states) Colorado’s commitment to Higher Education Has Declined State Tax Funds to Higher Education per $1,000 of Personal Income Source: Grapevine, An Annual Compilation of Data on State Tax Appropriations for the General Operation of Higher Education Center for the Study of Education Policy, Illinois State University. U.S Colorado $8.00 $6.00 $4.00 $2.00 0.00 Fiscal Year ’92 ‘93 ’94 ’95 ’96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08

32. Tuition is on the rise. College or University5 year % increase resident tuition University of Colorado54% Colorado State University52% Fort Lewis College34% University of Northern Colorado43% Adams State45% Mesa State59% Metro State27% Western State34% School of Mines47% Community College System29% 32 Colorado Commission on Higher Education

33. Costs to educate a student are going down. Families and students pay more. SOURCE: Bell Policy Center Colorado State estimates that it educates a student for 4 percent less in inflation-adjusted dollars than it did 20 years ago. What has changed is that, 20 years ago, two-thirds of the cost of a CSU education was paid by the state. 33

34. 34

35. Demand for family services is rising Funds to support services are flat Family Services* + 102% increase in child poverty +.5% increase in funds to support vulnerable children and families - 2% decline in health care funds for special needs children *2001-2011 35 CO Children’s Campaign

36. Transportation Department Rates Current Services at C+ Roads and Bridge Conditions: 50% are in good/fair condition 7% are in poor condition 128 bridges will be deemed unsafe in the next 5 years. 36 Governor Hickenlooper Colorado Department of Transportation

37. Voter choice and legislative action Strict limits on homeowner property tax (Gallagher) Strict limits on state sales & income tax revenue (TABOR) Require more state funds for K-12 education (Amendment 23) Voter approval of any new tax increase (TABOR) Legislature reduced taxes in late ‘90s/early ’00s 37

38. The Economy Is Changing Source: Moody’s Economy.com; DU Center for Colorado’s Economic Future 38 23.29% 76.71% 54.33% 45.67% Personal Consumption Expenditures for Goods and Services as a Share of Total: US History and Forecast

39. We used to give about 5 cents of every dollar to the General Fund. Now we give only about 3 ½ cents. Source: Calculated by Bell Staff based on gross General Fund revenues reported in Legislative Council documents, and state personal income data reported by the U.S. Department of Commerce, Bureau of Economic Analysis. We Pay Less Tax 39

40. Colorado’s Tax Burden Is Low (compared to other states) Combined state and local tax burden = 39 th (Tax Foundation) Best states for retiree taxes = 5 th (MSN Money) Business tax climate = 15 th (Tax Foundation) State tax burden as percentage of income = 49 th (Colorado Legislative Council) 2 nd lowest state sales tax burden (Legislative Council, Colorado Department of Revenue) 40

41. Colorado’s Tax Burden Is Low (compared to other states) Legislative Council 41

42. Colorado Invests Less in Public Services (compared to other states) Colorado Fiscal Policy Institute, 2009 42

43. FY 2013-14 Budget Request 8.1 billion from General Fund. –5% increase from FY 2012-13 –Still 14.4% less than FY 2007-08 –$4.8 million for improving behavioral health community capacity; –$6.5 million GF to provide services to 809 additional people with developmental disabilities; –Increase K-12 per pupil funding to $6,659, up from $6,474; –1.5% provider rate increase for human services providers. 43

44. What are the options? Option One: No policy changes Option Two: Permanently reduce public services Option Three: Change the tax code 44

45. Option one: No policy changes Medicaid, K-12 Education and Corrections Will Squeeze Out Everything Else Numbers for 2012 are Bell calculations based on data from the Colorado Legislative Joint Budget Committee’s FY 2011-2012 Companion Budget Package Summery to Senate Bill 11-209 (the Long Bill Narrative), prepared by Joint Budget Committee staff, April 5, 2011. Numbers for 2025 are staff projects by the Center for Colorado’s Economic Future at the University of Denver. 45

46. Public Services Must Be Cut 46 JBC Staff Documents; Ed News Colorado

47. Long-term reductions in public services will be required. (without new revenues or changes in policy) 19% cuts to K-12 education for 13 of next 14 years. 90% cuts to the following programs after FY 2017-18. –Agriculture — Local Affairs –Higher Education — Natural Resources –Military and Veterans Affairs — Public Safety –Public Health & Environment — Regulatory Affairs –Personnel and Administration — Revenue 47 Center for Colorado’s Economic Future University of Denver

48. Option Two: Permanently Reduce Services Roll back eligibility levels for Medicaid, eliminate some coverage for low-income adults and increase fees Change Medicaid to a public system resembling health savings accounts Shorter school days for younger students Cut prison time for non-violent offenders Redirect funds from Great Outdoors Colorado to education 48 Independence Institute; Sen. Greg Brophy

49. Option Three: Change the Tax Code Add personal services to the sales tax base Levy property taxes for schools with a statewide mill levy Reduce state share from 63.2% to 60% Restore four graduated income tax brackets 49 DU Center for Colorado’s Economic Future

50. Questions to consider Should K-12 Education be a state concern? Or, should every community go it alone? Is there value in subsidizing Colorado students to attend college? What kind of transportation system do we want? How important is it to keep up with growth? What benefits should we provide to people who can’t afford health care? Should only users pay for services or should we spread the costs more broadly? 50

51. Sources of Information BackstreetBudgeter.com by Engaged Public — www.backseatbudgeter.com Bell Policy Center — www.bellpolicy.org Boom or Bust Colorado — www.boomorbustcolorado.com Center for Colorado’s Economic Future (DU) — www.du.edu/economicfuture Colorado Department of Higher Education — http://highered.colorado.gov Colorado Fiscal Policy Institute — www.cclponline.org/fiscal_policy Colorado Tax Tracks — www.colorado.gov/taxtracks Independence Institute’s Citizens’ Budget — http://tax.i2i.org/citizens-budget U C Denver School of Public Affairs — www.ucdenver.edu/academics/colleges/SPA 51

52. How to reach us Colorado Nonprofit Association Andrew Lindstad alindstad@coloradononprofits.org 303.832.5710 www.coloradononprofits.org 52