Colorados Colleges Opportunity Fund - Assignment Example

For the purpose of higher education, funds to be spent by family are generally under-rated and people often overlook the actual costs involved. Most people only focus on tuition fee whereas accommodation, travel, books, supplies and food also adds up to the budget which is utilised for higher education. There are essentially three fold measures which are undertaken by families to counter this difficulty. The first of these is taking loans from federal programs. Sometimes, families also turn towards private agencies for loans which have their own security requirements and accounts for the second form of measure undertaken by various people. Other than these, a few also use their credit card to pay for sundry expenses like food, travel etc. which adds up to credit card debt. Those who have planned about educating their children at an early stage and have pre-planned funding, also turn to the 529 savings program. A few of the students who seek admission look forth to grants and scholarships extended on basis of their merit, field of study, membership of particular group or special talent. The student aid in the State of Colorado is appropriated by the legislature and devoted by the Department of Higher Education. The colleges/universities then allocate these awards to the potential students who fill the criteria so determined. Despite all this, there is a specific need for the state to generate funds for Higher Education. In the FY 2008, while the tuition fee in the state of Colorado saw an increase of 9.93%, the financial aid was increased by only 8.44%.1 Consequently when such a scenario is witnessed, higher education for lower income groups and middle income groups faces a natural setback. A look at the data provided by the department of higher education clearly shows that ever since 2003, in every FY there has not been an appropriate increase in financial aid vis-a-vis the increase in tuition fee. The situation was particularly sad in FY 2003-04 where the tuition fee was increased by almost 8% whereas the financial aid saw a dip of 17%. In FY 2005-06, again, where tuition fee increased by a whopping 16%, the financial aid only coped up with a 3% increase. In these years from 2003-2008, the only time when the situation seemed good and under control was for the FY 2006-07 when the tuition fee increased by a mere 4%, while the financial aid went up by almost 10%. However, the situation could not be maintained in FY 2007-08 when financial aid again lacked from the percentage increase in tuition fee. Estimates from the Annual Survey of Colleges indicate that for the approximately 60% of 2006-07 bachelor’s degree recipients who graduated with debt, average total debt was about $22,7002. Similarly, 63% of all Colorado students completing a bachelor’s degree graduated with loan debt. The average debt of graduates in Colorado is $20,196 putting the state just below the national average. Colorado's higher education system is on shaky financial ground and students could be clobbered with stiff tuition hikes or program cuts if the system collapses, state leaders say. According to Berny Morson of the Rocky Mountain News, contributing to the problem are the following facts2: * Under Amendment 23, passed in 2000, public schools are guaranteed a share of the budget intended to bring them up to the national average in per-pupil spending - even if the Colorado economy tanks. In a recession, public schools will get a bigger slice - and higher education a smaller slice - of a shrinking budgetary pie. * Legislators are bound by a law capping the annual overall budget increase at 6 percent. If revenue increases by more than 6 percent, the excess goes to capital construction and transportation - it can't be used for higher education. * Legislators can't repeal the 6 percent cap because of the Taxpayer's Bill of Rights, a constitutional amendment added by voters in 1992. It requires a referendum on any measure that changes state fiscal policy. In 2004, the State of Colorado set up the College Opportunity Fund which was a voucher based financing system-the first ever to be attempted by any state in the United States. The reason as to why this COF was adhered to was the TABOR- Taxpayers Bill of Rights (TABOR). Enacted in 1992, it is a constitutional amendment. The biggest drawback of this legislative action was that it restricted the state’s general fund collections and expenditures, and it began severely restricting state resources during the recession early in the new century. The result is that funding levels for higher education in Colorado have ranked near the bottom among all states.3 Now tuition revenue was also within the ambit of this Bill of Rights and hence the increasing tuition expenses could not be countered. The aggravation to this dismal situation came in the form of the 2001 recession which killed the state fund. Overall undergraduate enrollment in Colorado’s COF‐eligible public higher education institutions experienced a sharp decline as the stipend became effective in fall 2005. Within the first two years of the stipend, total fall enrollments statewide fell by 4,567 students (2.9 percent). Community colleges bore the brunt of this decline, dropping by 5,952 (9 percent) over that same time frame before recovering slightly in fall 2007. Meanwhile, four‐year institutions experienced ongoing increases in their total enrollment, climbing by 1,385 students (1.5 percent) in the first two years of COF’s implementation.4 If the state of Colorado goes ahead with this COF voucher system, there would be no real hope of achieving the goals related to access or performance which were the original aims of this system. And if, they come back to the direct appropriation program which was in force earlier, then that would bring it under the TABOR which would again cut back the funds and bring back the finances to same dismal position which existed prior to COF. The only option left with the State would be to amend the existing set of policies which concentrate on new ways for generation of funds. Among other measures which could be utilized according to Metropolitan State College of Denver President Stephen Jordan, one of the ways of ensuring that recession did not take a massive toll on the quality of education was by retaining full-time faculty members as opposed to part timers when it came to cutting down of jobs in view of the financial crunch. This, according to him would prove beneficial as students were more likely to get motivated by faculty which kept in constant touch with them and knew them to a better extent. Law makers like Beuscher who is the JBC chairman feel that the funds which the state gets from mining leases should be appropriated to the cause of higher education in the state of Colorado.5 Read More