A general introduction to funding for Higher Education in Colorado
Many states provide support to higher education in lump-sum allocations. However, in recent decades Colorado has enacted several tax and expenditure limitations (TELs) that significantly limit the state’s ability to raise revenues through taxes, and thus impact state higher education support. The most significant of these TELs is the Taxpayer Bill of Rights (TABOR), enacted in 1992, which places restrictions on the amount of general fund revenues that can be collected and spent by the state on non-mandatory programs such as higher education.
The complex Colorado state model for funding higher education is a response to the TABOR taxing and spending limitations, and includes two prominent features (or workarounds), the College Opportunity Fund (COF) stipend and Fee For Service (FFS):
- College Opportunity Fund Stipend (COF)
Colorado has devised a means of funding higher education that pays a stipend directly to the student, not to the Institutions of Higher Education. The student, in turn, authorizes payment to the University as part of tuition. In this way, the state allocation is excluded from calculation of general fund TELs.
- Fee For Service (FFS)
Fee For Service, or FFS, allows the state to ‘purchase’ education services, such as graduate programs, from higher education institutions. In reality, historically, FFS has plugged holes created by declining enrollments and ensured that no institution was significantly harmed or rewarded based on that year’s COF allocation. Currently, Colorado House Bill 1319, passed in 2014, places more emphasis on performance-based FFS funding (House Bill 1319 is described below).
The COF stipend funds Colorado resident undergraduate students (out-of-state and graduate students do not receive COF stipends) and results in payment to the institution per credit hour produced. In FY 2005-06, the first year of the COF program, the COF stipend was $92 per credit hour. The stipend has since dropped, and for the fiscal year of 2018-19, it is at $85 per credit hour. The COF stipend of $85 together with the MSU Denver student’s share per credit hour of $260 totals $345 tuition per credit hour. (Currently, students taking between 12 and 18 credit hours pay tuition at the 12-credit-hour level—the “tuition window,”resulting in “free” tuition for those hours.)
Nationwide, government funding for higher education has steadily decreased as appropriations are redirected to other sectors (e.g., healthcare, K-12, etc.). This decrease in funding has forced states, specifically Colorado, to be creative with appropriations and increased flexibility with institutions in regard to their tuition and fees. Figure 6 below demonstrates the dramatic shift in funding sources for institutions in Colorado and the funding environment that MSU Denver is currently in.
In 2014, Colorado House Bill 1319 promised to fundamentally change the allocation of state appropriations to Colorado IHEs. Although the bill was intended to attach financial support directly to institutional performance, to provide transparency and easily understandable distributions, its implementation has failed to live up to its promise.
The Bill’s changes to funding allocations were meant to address inequitable distribution of new funds, by acknowledging the extra services needed to educate students at institutions such as MSU Denver that serve large numbers of first-generation students, students who come from a lower socio-economic status and are therefore eligible for need-based Pell Grants, and students of color.
The negotiation and implementation process, however, resulted in only small changes in distribution of new funds; the revised funding model does not reward performance as intended. Even so, MSU Denver received an additional $6.5 million in state FFS support in the first year of the new model. The figure below shows FY2018-19 Higher Education Appropriation through this model.
It is important to note that despite this low state funding level, MSU Denver remains the most affordable four-year public Institution of Higher Education (IHE) in Colorado. Figure 10 below shows the Colorado Institutions of Higher Education’s resident tuition and fees for the most recent available fiscal year (2017-18).