The long-term fiscal implications of Colorado's higher education funding model: an analysis and policy proposal

Abstract

This paper examines the events, policies, and political circumstances that resulted in Colorado’s current model for funding higher education and analyzes the ongoing effects of that model on the future of the state's economy and workforce. Through expert testimony, extensive research, and data collection and comparison, this paper also aims to serve as a roadmap for policymakers and higher education administrators. Accordingly, it provides a policy solution designed to mitigate those effects and promote the continued prosperity of Colorado workers, consumers, and postsecondary institutions. The findings of the first section of this paper detail three original causes of the state's current higher education funding model: the Taxpayer's Bill of Rights (TABOR), demographic-specific population growth within Colorado, and sector-specific inflation within Colorado. The paper elaborates on each and showcases the compounding budgetary challenge facing state legislators, policymakers, and postsecondary administrators when all three coexist. The paper then goes on to detail the effects of the state’s budgetary issues on higher education, explaining that the lack of state funding creates a cyclical effect in which Colorado's public postsecondary institutions are unable to offer tuition rates or student experiences to compete with institutions in peer states. Thus, enrollment rates, endowments, state funding, and state-permitted tuition increase caps all fail to keep Colorado institutions competitive. This contributes to what is known as the Colorado Paradox—a growing dichotomy in which Colorado educates the workforces of other states, while Colorado's economy depends on a consistent influx of out-of-state educated workers. The paper then argues that this poses a significant threat to the economic prosperity of the state, as fewer prospective postsecondary students opt to attain their degrees in Colorado. To add to this, immigration to Colorado is expected to decline and Colorado's population is predicted to age significantly in the coming decade—further worsening the paradox. The paper concludes with a two-stage policy proposal. In the first stage, the paper recommends referring a de-Brucing measure to Colorado voters that would loosen some TABOR-imposed revenue constraints on higher education, allowing the state to better fund postsecondary institutions. In the second stage, the paper recommends that these extra funds be earmarked for programs that the state deems beneficial to industries integral to the future prosperity of Colorado's workforce and economy. This allows the solution to be framed as a measure to economically and professionally benefit Colorado workers, consumers, and voters through the avenue of higher education. It should be noted that this paper does not include a traditional methodology section, as it focuses on providing a narrative analysis to better serve as a roadmap for policymakers in addressing the issues faced by higher education in Colorado. All content that otherwise would be found in a methodology section can be found integrated throughout the paper.