I_HigherEd_2019A 07/22/2019 10:00:46 AM Committee Summary

Dr. Angie Paccione, Executive Director, Colorado Department of Higher Education (CDHE), introduced herself to the committee and gave an overview of the higher education system.  She discussed several resources that are available to students to assist them in preparing for a post secondary education, as well as financial resources for students, including a new federal grant for apprenticeships. She discussed the discrepancy in attainment of under represented minorities in higher education and the department's plans to increase equity in higher education.

Jason Schrock, Chief Financial Officer, CDHE, and Emily Burns, Lead Finance Analyst, CDHE, introduced themselves to the committee and began their presentation on higher education funding and the higher education allocation formula. Their presentation can be found on the committee's website here: http://leg.colorado.gov/sites/default/files/images/committees/2017/dhefinance_interim_committee_slides-final_use_7_22_2019.pdf.

Mr. Schrock discussed higher education funding generally, and noted that since 2000, higher education funding from the general fund has declined significantly. Factors leading to this decline include expenditure pressures from other programs, conflicting constitutional fiscal policies, such as the Gallagher Amendment and Taxpayers Bill of Rights (TABOR), and the fact that higher education funding is discretionary, unlike funding K-12 education. He also discussed the decline in state funding per student, which was a result of the legislature balancing the budget in a time of declining revenue, causing student shares of higher education costs increase. Currently, students pay approximately two-thirds of the cost of higher education.

Mr. Schrock discussed how Colorado compares to other states in funding higher education. Currently, Colorado ranks 48th in funding higher education. Conversely, tuition is among the highest in Colorado compared to other states. Mr. Schrock discussed the difference between published tuition and the cost of attendance for students. Mr. Schrock responded questions from the committee regarding the quality of faculty at higher education institutions and using cost per student as a way to measure expenditures amongst institutions. He also answered questions from the committee about the discrepancies in revenues that institutions receive.

Mr. Schrock further discussed higher education costs and answered questions from the committee.

Emily Burns discussed the state's role in higher education funding and gave a brief overview of the budget request process for the department. Ms. Burns discussed the funding allocation formula.  Per Senate Bill 19-095, the the Colorado Commission on Higher Education (commission) is directed to evaluate the formula and submit a report on recommended changes by November 1, 2019.  Ms. Burns stated that through the review of the formula, the commission heard that the formula should have a better recognition of equity goals, increased alignment with the goals outlined in the CDHE master plan, and more predictability and transparency. She explained the framework of the current funding allocation model as outlined in House Bill 14-1319. There are three major components of the allocation model: the Colorado Opportunity Fund (COF) stipend; role and mission; and outcomes.  COF stipend funding makes up 52.5 percent of the appropriations flowing through the formula.  Role and mission funds are flat amounts by institutional class, and include money for the number of Pell Grant recipients at a particular school and individual institution adjustments.  Money appropriated for outcomes takes into account completion of degree or certificates, retention, and institutional productivity.  This component of the formula is volume-driven, forcing institutions to compete with each other.

Ms. Burns discussed the draft of the newly developed allocation formula. All new investment made would be subject to performance metrics with emphasis on Pell Grant students, under-represented minority students, and existing completions metrics, such as degree level weight. Mr. Schrock answered questions about the draft of the allocation formula. The department is presenting this draft to the commission at the end of July 2019. Ms. Burns clarified that the new draft of the formula is in the very early stages of development. Ms. Burns discussed the department's development of an accountability dashboard as a part of the draft of the allocation formula and the development of a grant fund administered by the commission to measure key goals outlined by the legislature. Ms. Burns discussed state funded financial aid, which is decentralized in Colorado, meaning that institutions package state aid for individual students. Ms. Burns answered questions from the committee.

Kim Poast, CDHE, came to the table and discussed the department's master plan, which can be accessed here: https://highered.colorado.gov/Publications/CDHE-Master-Plan-2017.pdf.  Ms. Poast responded to committee questions.

The committee recessed.

The committee came back to order, and Amanda Bickel, Chief Legislative Analyst, Joint Budget Committee Staff, came to the table. Her presentation can be accessed on the committee's website here: http://leg.colorado.gov/sites/default/files/images/committees/2017/presentation_to_affordability_group.pdf.  Ms. Bickel also distributed information on CDHE from the the JBC appropriation document (Attachment A) and charts on institutional tuition and general fund revenue (Attachment B).  Ms. Bickel gave a brief background on the higher education system and funding, including background on the ten state governing boards, which include the Colorado Community College System, the University of Colorado System, Area Technical Colleges, and local district colleges.  She noted that there are large variations in education and general revenue between each board and the education and general revenue excludes several costs of education, such as housing, books, and other costs.  Ms. Bickel answered questions from the committee regarding the cost of athletic programs.

Ms. Bickel discussed how general fund dollars are distributed, noting that 80 percent of general fund moneys that are allocated to higher education are put towards governing board supports. She explained ways in which the General Assembly can help keep student costs down through, citing supports for the governing boards, tuition caps, and increasing financial aid support. She talked about recent trends in governing board support, which has declined as a share of total funds. At that same time, institutional flexibility has increased, and the institutions increasingly act like private entities, competing for student enrollment and tuition. She also discussed the impact of non-resident enrollment on institutions, the decentralization of state financial aid, and student fees being used as a way to increase revenue and navigate around state around tuition caps. Ms. Bickel responded to questions from the committee.

Ms. Bickel discussed revenue and expense trends in the state, noting that declines in state support are a major, but not the sole, driver of cost increases for students. She stated that total revenue per student from tuition and state aid has increased generally and that cost drivers vary at each institution. She explained Bowen's Theory of Cost, which argues that colleges and universities will spend all of their revenue, so if revenue is increased, costs will also increase.

Ms. Bickel discussed the difference between cost of attendance versus published tuition, noting that living costs for students are often more significant than tuition. She also talked about the different sources of financial aid, including federal Pell Grants, state financial aid grants, institutional grants, and federal loans. 67 percent of students receiving a baccalaureate degree use federal loans as a source of financial aid. Ms. Bickel answered questions from the committee.

Ben Boggs and Marilyn Villalobos, National Conference of State Legislatures (NCSL) introduced themselves to the committee and distributed their presentation (Attachment C), along with nine issue briefs on various higher education topics (Attachments D through L). Mr. Boggs and Ms. Villalobos talked about where Colorado stands among states in terms of enrollment, and discussed rates of attainment in Colorado as compared to the rest of the country. Ms. Villalobos reviewed data pertaining to state support for higher education per capita and answered questions from the committee.

Mr. Boggs spoke about two models of attainment that states are using, which are free college programs (called Promise Programs) and outcomes or performance based funding. 44 states currently have some sort of Promise Program. Mr. Boggs talked about two state promise programs. Indiana's 21st Century Scholars program, which as been in operation for 30 years, costs an average of $60 million per year and awards four years of tuition costs to eligible students attending participating schools. Oregon's Promise Program offers two-year grants for every student attending a two-year community college. The cost of Oregon's program is $20-25 million per year. Mr. Boggs also discussed the two Colorado based promise programs: the Aims Community College Promise Program, funded by the Aims Foundation, and the Denver Scholarship Foundation Scholars Program.

Mr. Boggs discussed performance based funding in higher education, which allocates a part of a state's overall appropriation to its post secondary institutions based on student outcomes rather than on enrollment or historically standard allocations. In Indiana, the funding formula was changed to include metrics for specific institutional missions and at-risk students that were connected to student success and economically in demand or "high impact" degrees. In 2015, the formula was refined to be more inclusive of other specific institutional missions with specific goals. In Tennessee, the legislature passed a law, which established that all postsecondary funding would be based on an outcomes based model. This figure was reduced to 85 percent in 2016.  Mr. Boggs and Ms. Villalobos answered questions from the committee.

Ms. Villalobos gave an overview of other types of programs in other states to increase postsecondary enrollment, including Virginia's Fast Forward Credentialing Program and Credit for Prior learning.

The committee recessed.

The committee came back to order.

Katie Zaback and Michael Vente, CDHE, introduced themselves to the committee. Their presentation can be accessed here: http://leg.colorado.gov/sites/default/files/images/committees/2017/2019-interimcommittee_0.pdf. Ms. Zaback talked about the department's master plan and stated that the department has a goal for Colorado to reach 66 percent attainment by 2025. Other goals of the master plan include increasing completion, erasing equity gaps, improving student success, and investing in affordability and innovation. She talked about cost of attendance, and how those costs impact the affordability of obtaining a post secondary degree or certificate. She also noted that most students do not pay the full cost of attendance, through grants and other aid. The average cost of attendance for students in Colorado is approximately $19,000 at a two-year institution and $25,600 at a four-year institution.  She explained how financial aid helps bring down the total cost of attendance, but pointed out that a majority of students still graduate with student debt. She discussed student loan debt of Colorado residents.

Ms. Zaback talked about work the Colorado Commission on Higher Education did in establishing an "affordability framework."  The guiding principles for this framework include cost containment, equal opportunity, reasonable debt, accelerating the time to obtain a degree through concurrent enrollment and similar programs, and public investment. 

Mr. Vente began a discussion of linking credential completion data, or degree data, to earnings outcomes and the return on investment of higher education in the state. CDHE has been working with national organizations around linking degree completion and unemployment insurance data to show the earnings outcomes of individuals who obtain credentials from Colorado institutions. Mr. Vente provided examples using a model prepared by the CDHE Post secondary Earnings Tool. House Bill 18-1226 directed CDHE to annually release data on the return on investment of post secondary education by institution and by program. The first report will be released by July 31, 2019, and will provide data on various topics, including price, debt, and choice.

Ms. Zaback talked about 2019 legislative outcomes for the department, and answered committee questions.

Josh Abram, Legislative Council Staff, and Conrad Imel, Office of Legislative Legal Services, explained the bill request and approval process for interim committees.

The committee discussed next steps and possible future agenda items.