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Funding Higher Ed in the Post Recession Era: CO, TX and VA Offer Recommendations

November 10, 2010

With the end of federal stimulus funding for higher education on the horizon, states are considering proposals to retool current funding formulas for colleges and universities and looking to alternative funding sources to sustain their programs and services in the coming years. Ahead of the 2011 legislative session, groups commissioned by governors in Colorado and Virginia recommended a voter-approved tax and more stable funding streams from the state, respectively. In Texas, the Higher Education Coordinating Board endorsed a method in which a percentage of university funding would be based on student outcomes. The proposals were submitted to Gov. Rick Perry and the legislature last week, reports the Austin American-Statesman.

Colorado should take the issue of higher education funding to the voters next year with a ballot question proposing a new tax, finds a task force charged with proposing funding solutions for Colorado's institutions of higher education. The Higher Education Strategic Planning Task Force delivered its report to Gov. Bill Ritter last week identifying $760 million as the minimum amount of state funding needed by higher education to provide the current level of service, reports The Pueblo Chieftain. However, in order to move Colorado from second-last in the nation in its investment in higher education to the top one-third, the sustained funding level would need to reach $1.5 billion annually, the article states.

In addition to a voter-approved tax on Coloradoans, the task force recommends implementing a 1 percent surcharge on oil and gas extraction, which they say could raise $15 million. Other tax proposals include restoring the income tax level from 4.63 percent to 5 percent and expanding sales tax to specific services.

With only weeks left in office, Gov. Ritter proposed level funding for higher education in his FY12 budget. However, federal stimulus funds directed to higher education last year will end in 2011 making it more difficult to sustain higher education's current funding level. Gov.-elect John Hickenlooper promises to review the recommendations set forth by the task force and bring together public and private leaders from across the state to "create a vision for Colorado higher education," according to his campaign website. An article in The Pueblo Chieftain reports that during his campaign, Hickenlooper said he would ask oil and gas companies to voluntarily pay higher severance fees and reach out to wealthy philanthropists to generate scholarship funds.

Universities and community colleges would have to compete for 10 percent of their base funding, reporting performance measures tied to student outcomes under a cost-savings proposal set forth by the Texas Higher Education Coordinating Board. Some of the performance measures universities would be evaluated on include number of degrees awarded, number of degrees awarded to students from low-income families, number of degrees awarded in science, technology, engineering or mathematics fields, and graduation rates, reports the Austin American-Statesman. Community colleges would be evaluated on degrees awarded, certificates completed and college-level math courses completed, among others, according to the article.

Another major recommendation the article points to is giving priority to low-income students with strong academic credentials over students with weaker academics in allocating the state's main financial aid award, the Texas Grant. The board submitted the proposals to Gov. Perry and the legislature last week.

Gov. Bob McDonnell will introduce legislation in the upcoming session that aims to award 100,000 college degrees over the next 15 years and restructure the state's funding formula for higher education based on recommendations from the Commission on Higher Education Reform, Innovation and Investment. To provide a more stable and predictable funding stream for schools, colleges, universities and their students would be awarded financial incentives to fulfill state higher education goals such as graduating more students in four years and awarding more degrees in high-demand fields, reports The Washington Post. Gov. McDonnell estimated an additional funding outlay that could range from $30 million to $100 million if the universities make better use of their facilities, according to the article.

Gov. McDonnell is expected to unveil his Virginia Higher Education Opportunity Act of 2011 when the session convenes in early January.

Colorado, Texas, Virginia