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Colorado Schools, Universities Could See Major Budget Cuts Amid Coronavirus

Colorado schools and universities could see dramatic budget cuts, as the severe measures taken to combat the spread of coronavirus have caused state revenue to plummet.

Budget documents prepared by legislative analysts and made public on Monday lay out a range of scenarios, the worst of which could threaten funding for full-day kindergarten, enacted statewide just last year, and endanger the solvency of some public universities.

Even the best-case scenarios mean the loss of millions in grant funds that paid for everything from school construction to social workers and tuition increases for students who may be struggling financially themselves.

Lawmakers cautioned that no decisions have been made yet, and pledged to try to protect education. But legislators also have to pass a balanced budget while facing a revenue shortfall of somewhere between $2 billion and $3 billion. Spending on K-12 schools takes up roughly 36% of Colorado’s general fund, meaning it will be hard to deal with major revenue losses without touching it.

“We all recognize that education is a top priority, and education was never made whole from the last recession,” said state Sen. Rachel Zenzinger, an Arvada Democrat who sits on the Joint Budget Committee. “With that in mind, we are all aiming, to the degree possible, to mitigate these cuts and keep them at arm’s length. To the degree that we can.

“Our funding has always been near the bottom. This budget crisis is unlike anything we’ve seen.”

The Colorado General Assembly has been in recess and plans to return to session in late May to pass the budget and other essential legislation.

Lawmakers will get a better sense of just how big a hole they’re facing on May 12, when analysts will present a new economic forecast. The previous forecast in March was grim but also assumed that the impact of the coronavirus might be short-lived. That now seems unlikely.

Businesses that closed in response to stay-at-home orders might not reopen, and job losses may continue. People who are unemployed won’t be spending as much. All of this cuts into the sales and income tax revenue on which state government depends. Oil and gas prices are also at historic lows, further reducing taxes paid by that industry.

Another big question is how much federal assistance Colorado will get and how much flexibility the state will have in deploying it. Colorado expects to get $121 million for K-12, $139 million for higher ed, much of which must go directly to students, and $44 million in a governor’s discretionary fund from the most recent federal stimulus package. The money can’t be used to backfill budget cuts, though states can seek a waiver. And while helpful, the federal money won’t cover the expected shortfall.

For K-12 schools, analysts set a priority of holding the budget stabilization factor flat. That’s the amount Colorado lawmakers hold back each year from education, compared to constitutional requirements, to meet other budget needs. Over the last decade, that’s added up to more than $8 billion. This year, it’s $572 million.

To avoid cutting base education funding even more, analysts recommended taking money from the BEST program, which pays for building repairs and construction in cash-strapped districts, and rolling back many newer grant programs to address particular needs. These range from getting more students of color to take advanced math classes to building relationships with ninth-graders to reduce drop-out rates, from improving bullying prevention programs to putting more social workers in elementary schools.

Analysts recommended keeping, if possible, programs that serve particularly vulnerable students, such as grants to improve early literacy instruction and instruction for English language learners and to pay for behavioral health professionals in schools.

The budget document lays out more than $70 million in potential cuts. But if general fund revenues were to drop further — by as much as 10% to 20% — those trims wouldn’t be enough. In that case, analysts laid out more painful options: increasing the budget stabilization factor, reducing funding for kindergarten, preschool, and fifth-year high school students taking college classes; and reducing allowances districts get for cost of living and size.

Going back to covering just half the cost of a kindergarten student would save $220 million. Cutting state-funded preschool slots would save $1 million for every 237 students. An escape clause in the bill implementing full-day kindergarten would allow districts to charge tuition again if the state cuts funding.

Zenzinger had been a rare Democratic skeptic of full-day kindergarten precisely because she feared the state couldn’t afford it over the long term, but she also said it would be hard to go back.

“While our state budget has gaps and holes, so do people’s individual’s budgets,” Zenzinger said. “When you think about the amount of unemployment and job loss and families really struggling, we know how important free kindergarten is to families’ budgets.”

Making kindergarten free to families was one of Gov. Jared Polis’ top campaign promises. Asked Monday about the possibility of cutting kindergarten, Polis suggested that overall student count might decline — saving the state money — if families opt to home school in light of the ongoing coronavirus threat.

However large the cuts are, districts will have to adapt as schooling is costing them more than ever.

“There is this idea that we’re doing cost savings because we’re not doing physical school,” said Matt Cook of the Colorado Association of School Boards. “When you look at everything that schools are doing with food distribution or technology or even continuing to pay our staff, we don’t have any cost savings.”

For Colorado’s colleges, the budget documents spell out potentially crippling impacts for some schools.

Under March revenue projections, the state’s funding of higher education would be flat. Under that scenario, Colorado tuition increases are not expected to exceed 3% in the 2020-21 school year. The cap would limit schools’ ability to raise money, but also mitigate the tuition burden for many families struggling financially.

“It’s not very practical for them to increase it beyond 3% because you start to get into a place where these costs cannot be transferred to the student without losing students,” Zenzinger said. “We could tell them to increase it 6% but I don’t know any university that could support that.”

Public university students in Colorado already carry a higher tuition burden than in most other states. But if general fund support for colleges decreases 10% to 20%, colleges would need untenable double-digit tuition increases to maintain their current budgets.

Even beyond state funding questions, colleges face significant financial uncertainty. It’s not clear whether students will return to in-person instruction next semester or next school year, and many students may delay higher education.

The impacts on colleges and universities could range from “significant but manageable to devastating,” according to the budget document.

The state’s $139.2 million in CARES Act funds for higher education likely would not fully cover financial losses, and about half the money must be used for student grants. Some institutions are expected to receive more or less money based on their enrollment.

The legislature’s budget staff is especially concerned about what would happen to the state’s smallest institutions, which provide relatively affordable education closer to home for students outside the Front Range. It’s unlikely Adams State and Western State universities could sustain a 10% cut, while none of the cuts to the University of Colorado “are likely to threaten its viability,” according to the document.

Carol Hedges, executive director of the Colorado Fiscal Institute, a left-leaning think tank, said the budget situation has serious implications for the state’s higher education institutions.

“I think it is going to force some of them to think about whether they can keep operating or not,” Hedges said.

Jason Gonzales covers higher education for Chalkbeat Colorado, in partnership with Open Campus.

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