Cost of college

Higher education panel wrestles with controlling tuition rates

PHOTO: J. Zubrzycki
Parents talk to Memphis Rise employees about the new charter school

For two years, Colorado college students have been protected by a 6 percent cap on tuition increases.

But a draft new policy being considered by state higher education officials looks a lot like an old system that gave colleges and universities significant flexibility in setting tuition rates. In some instances, that led to double-digit increases.

The Colorado Commission on Higher Education, meeting Thursday in Colorado Springs, gave Department of Higher Education staff the go-ahead to refine the proposal before the commission makes a final decision.

“It’s expiring,” Diane Duffy, department chief financial officer, said of the current tuition cap. “The state of Colorado is going to need to do something” about tuition.

Any new policy would amount to a recommendation, with legislators having the final say.

In broad terms, the proposed policy would work like this: Every year the department and the commission would consider the expected amount of state funding for the coming school year and affordability factors for students, plus the financial needs of individual colleges and universities, in order to recommend a tuition increase cap.

Institutions would be allowed to increase tuition above the cap if they met commission-set requirements for affordability, student completion and other factors.

The biggest factor in the tuition equation is the level of state support.

“They are so inextricably linked,” Duffy said.

What college costs

State budget cuts after the 2008 recession forced state colleges and universities to raise tuition rates to keep their budgets balanced. This year state colleges and universities are receiving about $740 million in state support but raise more than $2 billion in tuition revenue.

Higher education experts don’t believe the state can restrain tuition growth merely through cost savings at colleges and universities.

Colorado colleges have less revenue per student than institutions in most other states and “are already far more efficient than comparable public institutions” in other states, according to a cost study done for the department this summer.

That study, done by the Boulder-based National Center for Higher Education Management Systems, also noted “the share of the [higher education] budget devoted to expenditures for items other than compensation has declined substantially.”

A 2014 law requires the commission to deliver a proposed new tuition policy to the legislative Joint Budget Committee by Nov. 1. DHE staff members are continuing to work on the draft policy and will gather feedback from college and university leaders and others. The commission is expected to vote on a final version at its Oct. 29 meeting.

Tuition as a political issue

Tuition increases in recent years put pressure on student and family budgets and also came at a time when the state was trying to increase enrollment of low-income and first-generation students, for whom college costs can be a significant barrier.

Rising tuition rates sparked concern among legislators, including some who tried to make college affordability a 2014 election issue.

During the 2014 session, lawmakers increased funding for higher education by 11 percent and also set the 6 percent cap on tuition increases for resident undergraduate students.

Tuition increases have moderated a bit recently. The median percent increase in tuition was 5 percent for 2014-15, the lowest since 2006-07, when it was 2.5 percent.

Proposal echoes prior tuition flexibility law

As state funding shrank after the 2008 recessions, lawmakers threw colleges a lifeline with a 2010 law that gave institutions greater power over tuition than they had in the past.

That law set a 9 percent cap for five years but allowed the commission to approve larger increases if institutions provided detailed rationales for why they needed more money.

Most state colleges took advantage of that flexibility, and double-digit rate increases were imposed by some colleges. The legislative repealed that flexibility law in 2014.

In contrast to the 2010 law, the new proposal would be more integrated into the annual budget setting process for higher education, and the new plan would set different requirements for colleges that want to exceed the annual cap.

Commission doesn’t have the final word

Lt. Gov. Joe Garcia, who also heads DHE, reminded commissioners that they won’t have the final say on tuition, regardless of what new plan is adopted.

“What we would be adding here is a recommendation about tuition increases,” he said. “The General Assembly could elect to do something different.”

Commissioner Jeanette Garcia, an educator from Pueblo, said, “My hope is that the General Assembly starts recognizing that this body and the department are the right people to be making these decisions.”

Commissioner Paula Sandoval of Denver, a former state senator, noted, “We have to convince 35 senators and all of the representatives that what we’re doing is valid and sound.”

Bigger budget problems could derail any formula

The lieutenant governor also stressed that a tight state budget could make a new tuition policy meaningless if lawmakers have to cut support of higher education.

He referred specifically to the hospital provider fee, income that doesn’t come from taxes but which still counts against the annual state revenue limit required by the Taxpayer’s Bill of Rights. An attempt to reclassify the fee so it doesn’t count against the limit failed during the last legislative session, but the Hickenlooper administration plans to try again in 2016.

“If the hospital provider fee isn’t converted … there’s no chance there will an increase for higher education, and probably a decrease” in 2016-17, Garcia said. “And we’ll see tuition go up.”

School Finance

IPS board votes to ask taxpayers for $315 million, reject the chamber’s plan

PHOTO: Dylan Peers McCoy

Indianapolis Public Schools officials voted Tuesday to ask taxpayers for $315 million over eight years to help close its budget gap — an amount that’s less than half the district’s initial proposal but is still high enough to draw skepticism from a local business group.

The school board pledged to continue discussions in the next week with the Indy Chamber, which released an alternative proposal last week calling for massive spending cuts and a significantly smaller tax increase. The school board rejected the proposal as unrealistic and instead voted to add a much larger tax measure to the November ballot.

If the school board and the chamber come to a different agreement before the July 24 meeting, the board can change the request for more taxpayer money before it goes to voters. Some board members, however, were dubious that they would be able to find common ground.

“While I appreciate the fact that we want to continue to negotiate, I’m pretty sure that I’m at rock bottom now,” said school board member Kelly Bentley. “That initial proposal by the chamber is, unfortunately in my mind, it’s insulting. It’s insulting to our children, and to our neighborhoods, and to our families.”

Chamber leaders, whose support is considered important to the referendum passing, were skeptical about the dollar amount. In a press release, the group said the district was “taking another step towards seeking a double-digit tax increase.”

“We’re concerned that our numbers are so divergent,” said chamber president and CEO Michael Huber in the statement. “We need to study the assumptions behind the $318 million request; clearly the tax impact is significant and the task of winning voter support will be challenging.”

During the board meeting, which lasted more than two hours, district leaders discussed why schools need more money and why the chamber report is unrealistic. They also took comments from community members who were largely supportive of the tax increase.

Joe Ignatius, who mentors students through 100 Black Men of Indianapolis, said that he has seen the benefits of more funding from referendums in other communities.

“This should be a no brainer, to invest in our future for the students,” Ignatius said. “Don’t think about the immediate impact of the dollars that may come out of your pocket but more the long-term impact.”

If the district goes forward with its plan, and voters approve the tax increase, the school system would get as much as $39.4 million more per year for eight years. A family with a home at the district’s median value — $75,300 — would pay about $3.90 more per month in property taxes. (Since the initial proposal, the district reduced the median home value used in calculations on the advice of a consultant.)

The district plan comes on the heels of months of uncertainty. After the school board abandoned its initial plan to seek nearly $1 billion for operating expenses and construction, district officials spent weeks working with the Indy Chamber to craft a less costly proposal. Last month, the board approved a separate referendum to ask taxpayers for about $52 million for school renovations, particularly school safety features.

But the groups came to different conclusions about how much money the district needs for operating expenses.

The chamber released an analysis last week that called for $477 million in cuts, including eliminating busing for high school students, reducing the number of teachers, closing schools, and cutting central office staff. The recommendation also included a $100 million tax increase to fund 16 percent raises for teachers.

District officials, however, say the cuts proposed by the chamber are too aggressive and cannot be accomplished as quickly as the group wants. The administration and board members spent nearly an hour of the meeting Tuesday discussing the chamber plan, why they believe it’s methodology is wrong, and the devastating consequences they say it would have on schools.

Even if the $315 million plan proposed by the district passes, it will come with some sacrifices compared to the initial plan. Those cuts could include: reduced transportation for magnet schools, field trips, and after school activities; school closings; increased benefits costs for employees; and smaller pay increases for teachers and employees.

The district did not make a specific commitment to how much teacher pay would increase if the amount asked for in the referendum is approved, but Superintendent Lewis Ferebee said the funds would pay for consistent raises.

“We would be at least addressing inflationary increases and cost of living, but we hope that we can be higher than that,” said Ferebee. “It would depend a lot on what we are able to realize in savings.”

The school board’s decision to rebuff the chamber’s recommendation puts the district in a difficult position. The chamber has no official role in determining the amount of the referendum, but it could be a politically powerful ally.

Last week, Al Hubbard, an influential philanthropist and businessman who provided major funding for the chamber analysis, said that if the district seeks more money than the group recommended, he would oppose the referendum.

The total tax increase would vary for each homeowner within district boundaries. The operating increase would raise taxes by up to $0.28 for every $100 of assessed property value, while the construction increase would raise taxes by up to $0.03 per $100 of assessed property value.

On school finance

Facing tax opposition, Indianapolis leaders may settle for less than schools need

PHOTO: Alan Petersime

One day before the Indianapolis Public Schools Board is expected to approve a ballot measure to ask taxpayers for more funding, district officials appealed to a small group of community members for support.

Fewer than 40 people, including district staff, gathered Monday night at the New Era Church to hear from leaders about the need for more school funding. School board members plan to vote Tuesday on whether to ask voters to approve a tax hike to fund operating expenses, such as teacher salaries, in the November election. But just how much money they will seek is unknown.

The crowd at New Era was largely supportive of plans to raise more money for district schools, and at moments people appeared wistful that the district had abandoned an early plan to seek nearly $1 billion over eight years, which one person described as a “dream.”

Martha Malinski, a parent at School 91 and a recent transplant from Minneapolis, said the city appears to have a “lack of investment” in education.

“Is the money that you are asking for enough?” she asked.

Whatever amount the district eventually seeks is likely to be dramatically scaled down from the first proposal. Superintendent Lewis Ferebee has spent more than seven months grappling with the reality that many Indianapolis political leaders and taxpayers don’t have the stomach for the tax increase the district initially sought.

“We are trying to balance what’s too much in terms of tax burden with the need for our students,” said Ferebee, who also raised the possibility that the district might return to taxpayers for more money if the first referendum does not raise enough. “If we don’t invest in our young people now, what are the consequences and what do we have to pay later?”

After withdrawing their initial plan to seek nearly $1 billion over eight years, district officials spent months working with the Indy Chamber to analyze Indianapolis Public Schools finances and find areas to trim in an effort to reduce the potential tax increase. But the district and chamber are at odds over how aggressive the cuts should be.

Last week, the chamber released a voluminous list of cuts the group says could save the school system $477 million over eight years. They include reducing the number of teachers, eliminating busing for high schoolers, and closing schools. The chamber has paired those cuts with a proposal for a referendum to increase school funding by $100 million, which it says could raise teacher salaries by 16 percent.

District officials, however, say the timeline for the cuts proposed by the chamber is not realistic. The analysis mostly includes strategies suggested by the district, said Ferebee. But steps like redistricting and closing schools, for example, can take many months.

“Where we are apart is the pace, the cadence and how aggressive the approach is with realizing those savings,” he said.

Not everyone at the meeting was supportive of the administration. Tim Stark, a teacher from George Washington High School, asked the superintendent not to work with charter high school partners until the district’s traditional high schools are fully enrolled. But Stark said he is still supportive of increasing funding for the district. “It is really important for IPS to get the funds,” he said.

The chamber has no explicit authority over the tax increase but it has the political sway to play an influential role in whether it passes. As a result, Indianapolis Public Schools officials are working to come to an agreement that will get that chamber’s support.

A separate measure to fund building improvements was announced by the district in June and incorporated into the chamber plan. That tax increase would raise $52 million for building improvements, primarily focused on safety. That’s about one-quarter of the initial proposal.