THE TRANSFORMATION OF PUBLIC HIGHER EDUCATION IN COLORADO
The Owens-Benson Report
January 10, 2003
A New Model for Higher Education Policy in Colorado
Proposed Changes at Odds with State Constitution:
"first in the nation to fund students rather than institutions"
Basis for Subsequent Higher Ed Legislation
CU President Benson Declines to Respond to Questions
The charge from the governor
On August 2, 2001, Colorado Governor Bill Owens issued an
Executive Order creating the
Governor's Blue Ribbon Panel on Higher Education for the Twenty-First Century.
The Panel was empowered to examine and report on:
- What changes might increase participation of all Colorado's citizens in higher education;
- Whether existing financial resources provide opportunities and access to higher education for all Colorado citizens;
- What effect existing funding methods have on institutions' ability to recruit students; and
- Whether alternate forms of financing can allow more opportunities for Colorado's citizens.
Additionally, the Panel was empowered to join with the members of the Colorado Commission on Higher Education to amend as necessary the role and mission statements of each state institution of higher learning.
(Governor's Executive Order, p. 3)
The panel consisted of 17 persons serving as voting members. Of the 17, six were to be members of the Colorado Legislature. The remaining voting members were to be appointed so as to reflect the geographical, ethnic, professional, political, and educational diversity of the State of Colorado.
The Panel's chairperson was Bruce Benson, a longtime activist in the Colorado Republican Party, and owner and chairman of Benson Mineral Group, Inc., an oil and gas exploration and production company with a wide variety of other interests.
The panel submitted its
final report on January 10, 2003 ("The Owens-Benson Report") and a
letter transmitting the report to the governor on January 24, 2003.
The Panel's report recommended "that Legislators dramatically change the way Colorado's higher
education enterprise is funded. If these recommendations are accepted, Colorado will be the
first in the nation to fund students rather than institutions." (Report, p. 2)
The letter of transmittal to the governor concluded:
It is our belief that these changes will help to encourage
- increased access for students from the lowest income levels;
- increased participation in higher education for all students;
- a more market-like approach and greater responsiveness by institutions to student needs;
- increased flexibility to allow for world-class institutions in this state.
Background Data and The Panel's Findings
Choices Available
After the Blue Ribbon Panel reviewed demographic and financial data, six funding concepts were considered.
An updated version of the Re-exam of the base concept:
- The current Re-exam is a complex model that provided for differentiation in funding based on institutional mission;
- The new proposal would focus on general fund and a specified number of factors, such as: graduate/undergraduate mix; special missions; high demand/cost; research; rural access; and physical plant.
A centralized financial aid system:
- Elements of this system included: a centralized system which could assure standardized allocations based on need;
- Need-based financial aid packages determined by the ability to pay;
- Merit-aid based on index scores;
- Funds could be allocated to student in state-identified fields;
- State financial aid, together with general funds could be allocated to students.
Allocate state general funds to students not institutions:
- Educational savings accounts could be flat, modified for specified institutions or modified for financial aid purposes;
- Savings accounts would shift emphasis from funding institutions to funding students;
- This funding scenario would provide for a flat amount per student with hold harmless provisions for institutions receiving less tuition.
Performance funding system:
- Expand present indicators that could include graduation and retention rates,
faculty productivity, academic quality, administrative costs and other areas.
Enhanced graduate education:
- Graduate programs are offered at ten institutions. Graduate enrollments, however, have declined during the past five years. This model created a separate graduate funding system.
Capital construction funding:
- Under this system each student would be assessed a facility fee to create a
revenue stream to support higher education facilities.
(Report, pp. 17 -18)
The new concept chosen
The Blue Ribbon Panel decided to pursue the student educational savings account concept.
The Major Provisions of The New Model would be
"Educational Savings Accounts"
This concept of funding students would be a significant change from the existing allocation formula that appropriates state funding to institutions through their governing boards.
Instead of appropriating state general fund support to institutions, this concept would establish a system of directly funding students. (Report, p. 19)
"Market-driven Approach"
If funds were given to students in the form of educational savings accounts, the students' purchasing power would ultimately determine the future viability of institutions.
Institutions would operate under more of an entrepreneurial model. (Report, p. 19)
The creation of a more market-driven approach can also serve to improve quality at the state's higher education institutions. (Report, p. 23)
"Tuition Flexibility"
The major provisions of the new model are stated in terms of euphemisms.
"Educational saving accounts" are better known as vouchers.
"Market-driven approach" and "entrepreneurial model" refer to privatization.
"Tuition flexibility" of course means the ability to raise tuition.
Value of the new model
The report discussed the implications of the new model.
Instead of appropriating state general fund support to institutions, this concept would establish a system of directly funding students. If funds were given to students in the form of educational savings accounts, the students' purchasing power would ultimately determine the future viability of institutions. Institutions would operate under more of an entrepreneurial model. While the state government (CCHE) would still establish broad-based policies and set basic criteria for eligibility for both institutions and students, operational oversight could be avoided if a real student-centered model were to exist. The Commission would provide objective consumer information (graduation and retention rates, tuition and costs) so students could make informed comparisons in deciding which institution(s) to consider. (Report, p. 19)
"It is our belief that these changes will help to encourage
- increased access for students from the lowest income levels;
- increased participation in higher education for all students;
- a more market-like approach and greater responsiveness by institutions to student needs, and
- increased flexibility to allow for world-class institutions in this state."
(Letter to Governor)
The new model could:
- Shift power within higher education from institutions to students.
- Introduce competition into Colorado higher education to enhance quality for both students and institutions.
- Exempt parts of higher education from TABOR restrictions.
- Increase access by lower-income students.
- Allow for greater flexibility by institutions as they work to respond to more market-driven forces.
(Report, p. 20)
Apparent justification for choice of specific new model
The panel leaned heavily on the results of focus groups conducted with Colorado high school students and parents by a national marketing firm as justification for its recommendations.
While members of the Blue Ribbon Panel worked to refine the concept of providing state funding for higher education directly to students, a national marketing firm, Sterling Rice Group, tested the concept with high school students and parents. The Sterling Rice Group conducted focus groups for juniors and seniors in high school whose families had incomes less than $60,000 with the goal of assessing interest in the proposed funding mechanism. The target audiences were low-to-moderate income students and parents, Hispanic students and parents, and male students and parents. (Report, p. 18)
Several themes evolved from these groups
- they expressed hope and enthusiasm for the new concept.
- even knowing that higher education would be receiving the same amount of state support under the current system, most participants believe that money going to students would be a motivator.
- parents and students who never before believed that college was possible left the focus groups believing that they would and could really consider going to college.
- the weakest link in higher education access is high school counseling - low-income students do not talk to counselors about continuing their education.
- money is a key barrier to going on to further education, but fear and peer pressure play a role.
- participants believed that a more market-like approach would make the institutions more responsive to them.
(Report, p. 18)
Both students and parents, for the most part, had little knowledge of higher education funding. While most groups understood that tax revenue supported institutions, few knew the extent of state funding totaling nearly $800 million or about $4,000 on average per resident student. The amount of state subsidy was a revelation to these participants and encouraged many to consider higher education as a part of their future. (Report, p.19)
The focus groups underscored that there is great interest in changing the way higher education in Colorado is funded. (Report, p.19)
Specific Recommendations of the Panel
The panel officially recommended the following:
"The Blue Ribbon Panel recommends that the Governor and General Assembly consider the creation of educational savings accounts for all Colorado residents attending Colorado public institutions with the following assumptions:
- Undergraduate stipend of $4,000 per year or $133 per credit hour
- Graduate I (Master's Level) stipend of $8,000 per year or $267 per credit hour
- Tuition increase of up to 5% for four-year institutions for implementation of the model over and above any other allowed tuition increases
- Community college tuition reduction of 25%
- State financial aid will likely increase to four-year institutions as a result of the net price decrease to two-year institutions""
(Report, p.21)
Conclusion
Preparing Colorado for the 21st Century
The educational savings account can serve to increase access and participation in higher education of all kinds for Colorado residents. The creation of a more market-driven approach can also serve to improve quality at the state's higher education institutions. At the same time, world-class research institutions will require additional financial resources. If the educational savings account allows for greater tuition flexibility for the research universities, they may be more able to thrive in an increasingly international, competitive environment. This new idea may prove to energize Colorado's citizens as they meet the demands of the new knowledge-based world. (Report, p.23)
Unanswered Questions from the Report
The report left a number of questions unanswered.
1. The Colorado constitution states:
"ARTICLE VIII, State Institutions.
Section 1. Established and supported by state.
Educational, reformatory and penal institutions, and those for the benefit of insane, blind, deaf and mute, and such other institutions as the public good may require, shall be established and supported by the state, in such manner as may be prescribed by law."
Yet the Panel's report recommended "that Legislators dramatically change the way Colorado's higher education enterprise is funded. If these recommendations are accepted, Colorado will be the first in the nation to
fund students rather than institutions [emphasis added]." (Report, p. 2)
Did the Panel solicit any legal opinions regarding its recommendation of 'dramatic change' in the way state educational institutions are funded?
2. The letter of transmittal to the governor concluded: "It is our belief that these changes will help to encourage a more market-like approach and greater responsiveness by institutions to student needs . . . ."
What does a "market-like approach" mean for public higher education?
What were the "student needs" not being responded to by Colorado higher ed institutions?
3. Addressing the changes to be brought by the new model, the panel concluded:
"The new model could:
- Shift power within higher education from institutions to students.
- Introduce competition into Colorado higher education to enhance quality for both students and institutions.
- Allow for greater flexibility by institutions as they work to respond to more market-driven forces."
(Report, p. 20)
Yet these anticipated changes raise a number of questions:
What kind of "power" is to be shifted to students?
What is the benefit of 'shifting power within higher education' to students and away from experienced faculty and administrators?
What does it mean to introduce competition to Colorado higher ed? Wasn't there already competition among Colorado colleges, as well as competition from colleges outside of Colorado?
How would this new kind of competition "enhance quality" at universities?
What would be the new "market-driven forces" being brought to bear on universities?
What would be the mechanisms to "respond to market-driven forces" and how would these compare to existing governance mechanisms of higher ed institutions?
What is the "greater flexibility" that would be allowed in the new model beyond what was then available?
Bruce Benson, the chair of the Blue Ribbon Panel that produced this report, and currently the President of the University of Colorado, declined to respond to these questions.
The Owens-Benson report became the basis for major changes in Colorado public higher education policy enacted in subsequent legislation by the Colorado General Assembly.
This article is the first in a series on the Transformation of Public Higher Education in Colorado.
