Photo: Adams State U.

Colorado’s Shift to a New Higher Education Funding Formula Focuses on the Student

For years, Colorado has funded its public higher education institutions primarily by how many students they can enroll. Now the state instead will weigh more heavily how well an institution is serving its students.

The shift, expected to go into place in the 2021-22 school year, will reward schools for educating different types of students — especially those who are disadvantaged — by providing money based on seven metrics that include those who are of color, low-income, the first to go to college in their family, and from Colorado.

College leaders say the change will align resources to state goals and help encourage institutions to provide resources for the neediest students to complete their education.

Adams State University President Cheryl Lovell said the current funding formula mostly weighs enrollment — more than 80% of funding is dependent on overall student population.

“This new formula is about access and affordability. It’s about recognizing first-generation and underrepresented students,” Lovell said.

The state is required to revisit its higher education funding formula every five years, said Angie Paccione, Colorado Department of Higher Education executive director. Lawmakers must approve changes for them to go into effect, and the bill has easily moved through the state legislature.

Colorado Community College System President Joe Garcia said the state has shifted over the years toward adding performance-based goals for schools. The state is falling in line with some of the changes nationally in looking more at overall performance, although each state varies in how they allocate funds to schools.

“I’ve always said that the students on whom we’re spending the most money are the students who are most likely to be successful anyway,” Garcia said.

“I think this new formula goes a long way to recognizing the needs that our students bring with them.”

Planners hope the formula will push the state toward creating a workforce where 66% of residents have a degree or credential. The formula also could close gaps in college attainment among students of color, boost graduation rates, and make college more affordable, Paccione said.

Reallocating state money could boost the budgets of smaller schools, which now struggle to compete with Colorado State University and the University of Colorado Boulder. The two schools have the highest enrollment in the state and traditionally could attract more students.

The change will allow the state to measure schools on their own performance. Schools that benefited from high enrollment might lose some state appropriation, although gradually, said Megan McDermott, higher education department spokeswoman.

Despite possibly coming at a cost to large institutions, leaders from every Colorado public university and college support shifting the funding formula.

Colorado State University Chief Financial Officer Henry Sobanet said administrators from across the state spent hours working toward a model that is fair for schools. The change focuses on quality, he said.

“I was excited that we were able to connect the dots from the ongoing operations of schools to the completion of students,” Sobanet said.

Here’s how much factors weigh in the funding formula:

• 20% for underrepresented minority students
• 20% for retention rate
• 20% for graduation rate
• 20% for students from low-income families
• 10% for Colorado resident enrollment
• 5% for credentials awarded
• 5% for students who are first in their families to attend college

For example, while Adams State has traditionally struggled with its overall graduation rates of students and might get less money for that metric, the formula will reward the school for enrolling many low-income and first-generation students, Lovell said..

The formula would give the school extra dollars to teach those students.

She said the school would use the additional money to target support for groups of students who aren’t graduating at as high a rate as their peers. That, in turn, could then help the school meet its graduation goals.

“The students who need the most support need more money,” she said. “The new formula allows a broader look at your enrollment and the cost necessary to educate the variety of students.”

The formula might not be able drive down college costs immediately because the coronavirus pandemic is expected to dampen the economy for years, Paccione said. What state lawmakers put into higher education in coming years will inevitably affect college affordability.

This year, public colleges and universities face a 5% loss in funding. That comes from a 58% decline — or $493 million — in state support, which is being offset by $450 million in federal funds for coronavirus economic relief directed to colleges by Gov. Jared Polis.

If state lawmakers impose further cuts, colleges could lose more money even with the new formula and might have to increase tuition.

“Higher education has always been the ‘budget balancer’ in difficult economic times in Colorado,” Lovell said. “Sadly, there is no indication this pattern of low funding for higher education in Colorado will change and the impact of COVID just makes it even more unpredictable and concerning.”

Student tuition already makes up on average 71% of educational revenue at public colleges and universities.

Paccione said college officials hope the cost of college doesn’t rise, in part thanks to the formula, because students, she said, “can’t afford to pay more than what they’re already paying.”

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

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