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Fiscal Education Network

A project of theColorado Nonprofit Association

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Safe Spaces for Robust Conversations

• People are retreating from the public square. They don’t want to be part of a divisive debate.

• People hold conflicting values on many issues including Colorado’s fiscal crisis. People need room to sort things out.

• Conversation is the only way to do this. Need conversation conveners and leaders who aren’t perceived as partisan.

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Public Opinion v. Public WillSway Public Opinion• Protect or sway small

percentage at margin

• Short term; high intensity

• Narrow issues; drive home a single message

• Appeal to people’s preconceived view

• Mass media

Build Public Will• Move people through

stages of public thinking

• Longer term

• Broader narrative; encourage discourse

• Engage people as citizens who hold responsibilities

• Grassroots conversations

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Stages of Public Thinking

Choice/ActionAwareness Options

Time

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A Different Kind of Conversation

1. Build network of organizations and individuals to help Coloradans understand the state’s fiscal challenges.

2. Provide guest speakers to groups to convene conversations in their communities.

3. Recruit, train and support Local Conversation Leaders.

4. Provide fiscal education content and materials to the network.

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Questions to Consider

• What makes Colorado and our community a great place to live?

• What public services are important to maintain our quality of life?

• How do reductions in public services affect our community?

• What are state government’s essential roles?

Coloradans Share Many Aspirations

Plenty of jobs, good wages & economic security.

Good schools, colleges and universities.

Support for the most vulnerable in our communities.

Safe roads and safe neighborhoods.

Enjoy nature and the great outdoors.7

We need effective government

to help us reach our

shared aspirations.

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Colorado’s Fiscal Reality:A Long-term Structural

DeficitColorado is facing a long-term fiscal challenge.

The costs to maintain public services exceed the revenues to pay for them.

Colorado must implement policy changes that address the structural nature of the problem.

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Colorado’s Political Reality:The Voters Decide

Coloradans have a unique responsibility to make decisions at the ballot box.

As voters, it’s our duty to make choices about how to balance demands for low taxes and demands for robust public services.

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Colorado’s Civic ChallengeWe’re opposed to new taxes:

Proposition 103 was defeated statewide 64% to 36%. Fifty percent to two-thirds oppose any new revenue increase.

We oppose more spending cuts:67% to 80% oppose any cuts to higher education, health care, roads and transportation, K-12 education.

We believe many public services are underfunded:Majorities agree education, basic health care, public safety, senior services, highways are underfunded.

Pew Research and 2011 Election Results

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Demand for services has grown.

Revenues haven’t kept pace.

Governor Hickenlooper FY 2012-2013 Proposed Budget to JBC

General Fund

State Park Visits

K-12 Education

Higher Education

Children's Health Plan

Medicaid Enrollment

-5%

7%

7%

21%

19%

72%

Changes Since FY 2007-2008

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General Fund Money, Spending, and Reserves

Figure 1. General Fund Money, Spending, and Reserves, FY 2011-12 though FY 2013-14 ($ in Billions)

$9.0

$8.5

$8.0

$7.5

$7.0

$6.5

$8.032

$582.3 million Above Required Reserve ($59

Million to State Education Fund)

$0.281 $7.168

$8.758

$717.1 million Above Required

Reserve (All to State Education

Fund) $0.298 $7.743

$8.445

$0.312 $8.133

$6.0

FY 2011- 12 Actual F un d s (P relim in ary)

T o tal

G en eral F un d

Sp en d in g

FY 2012- 13

P ro jected F un d s

A v ailab le

Budgeted Spending

FY 2013- 14

P ro jected F un d s

A v ailab le

A llo w ab le Sp en d in g

w ith R eq u ired R eserv e

General Fund Spending Required Reserve Funds Available

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$ in

bill

ions

Figure 1. General Fund Revenue, Actual and Forecast, FY 2000-01 to FY 2013-14

$8.5 Actual Forecast $8.1

$8.0

$7.5

$7.0

$6.5

$6.0

$5.5

$6.6

$5.6 $5.5

$5.8

$6.2

$7.0

$7.5

$7.7

$6.7

$6.5

$7.1

$7.7

$8.0

$5.0

$4.5

$4.0

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General Fund Purchasing PowerDown -11% Since 2001

Revenue data from Colorado Legislative Council staff. Inflation adjustment calculations made by Bell staff based on Denver-Boulder-Greeley Consumer Price Index as reported in Colorado Legislative Council forecasts.

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$6.6

$5.5 $5.5$5.8

$6.1

$7.0$7.5 $7.7

$6.7 $6.5

$7.2$7.7

$8.0 $8.1

Actual General Fund revenue Adjusted for inflation (2001 dollars)

Billions

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$0.0

$2,000.0

$4,000.0

$6,000.0

$8,000.0

$10,000.0

$12,000.0

$14,000.0

$16,000.0

$18,000.0

$20,000.0

Other Agencies

SB 228

Big 3

GF+SEF Rev-enue

Dol

lars

in M

illio

ns

Due to Medicaid and K-12 Education Fore-casts,

the Budget Picture WorsensComparison: General & State Education Fund Revenue

with Expenditures

FY 11-12 - FY 2024-25

University of Denver; Center for Colorado’s Economic Future

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Federal Funds for Colorado in Jeopardy

• Cuts with Sequestration• Sequestration could cut $61 million from

Colorado's budget, half of which would hit schools, and continue for ten years.

• Programs in job training, low income energy assistance, food assistance and housing also to be cut.

• Over 10,000 jobs are projected to be lost in non-defense programs with sequestration.

• (Center on Law and Social Policy; US Senate Committee on Health, Education, Labor and Pensions)

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Less General Fund Support for Environmental Programs

State Parks closingCDPHE programs not cash funded in

jeopardy: pollution enforcement, carbon reduction, public health, ozone standards

Wildfire Preparedness and Coordination

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Is it just the recession?

“Even a strong recovery and sustained job growth over the next 15 years is not

enough (to solve the budget problems).”

– DU Center for Colorado’s Economic Future

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Is it waste, fraud and abuse?

“Focusing on trimming the fat fails to address Colorado’s systemic budgetary

problems.”

“Colorado must implement policy changes that address the structural

nature of the problem.”

– Independence Institute, Citizens’ Budget

Does the state misallocate funds?

K-12 Education

40%

Health Care 24%

Human Services 9%

Higher Education 8%

Corrections 9%

Judiciary 5%Everything Else 5%

General Fund ExpendituresFY 2011-12

Source: Joint Budget Committee Staff, September 20, 2012. 21

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What’s creating the structural problems?

• Demand higher than revenues• Aging population• Changing economy• 40% health care inflation over past

decade• “Shifting” K-12 education funding

system• Compounded by two recessions

DU Center for Colorado’s Economic Future

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Colorado Is Aging with the 65-99 yr segment up nearly +70% by 2025

0 to 24

35.08%

25 to 4427.52%

45 to 64

26.91%

65 to 99 10.49%

2010

0 to 24

33.98%

25 to 4426.12%45 to

6422.81

%

65 to 99

17.09%

2025

Source: Colorado Demographer’s Office; DU Center for Colorado’s Economic Future

Aging Affects Revenues

Source: Consumer Expenditure Survey, BLS; DU Center for Colorado’s Economic Future24

Patterns of Household Contribution to the Sales Tax Base

By Age of Householder

Under 25 yrs 25 - 44 yrs 45 - 64 yrs 65+ yrs

$229.83

$280.05

$397.14$413.55

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Aged Care Represents Disproportionate Share of Medicaid Cost (FY 10 Data)

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Medicaid growing 1.7 times faster than revenues

Aging population accounts for 27.2% of total expenses; $817 million dollars

40% health care inflation over past decade

DU Center for Colorado’s Economic Future

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K-12 Financing:Shifting to state sales and income tax

away from local property taxes

1993: State share of funding = 35%Typical school district mill levy =

40 mills

2010: State share of funding = 63%Typical school district mill levy =

27 millsDU Center for Colorado’s Economic Future

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The State Share of School Finance will Continue to Grow

Peaking at +70% by FY 24-25

FY 10-

11

FY 11-

12

FY 12-

13

FY 13-

14

FY 14-

15

FY 15-

16

FY 16-

17

FY 17-

18

FY 18-

19

FY 19-

20

FY 20-

21

FY 21-

22

FY 22-

23

FY 23-

24

FY 24-

2558.00%

60.00%

62.00%

64.00%

66.00%

68.00%

70.00%

72.00%

62.90%

70.19%Forecast State Share with Levy Freeze

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Colorado invests less in K-12 than most states.

Gallagher Amendment Passed TABOR

Passed

Amendment 23 Passed

-$1,809

K-12 Per Pupil Funding: Colorado v. National Average

H

Higher education funding has been declining for 30 years.

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21.1%

6.4%

Higher Education State Funding as a Percent of Total State Funds

25%

20%

15%

10%

5% 0%

31Great Education Colorado

Colorado invests less in higher education.(compared to most states)

Colorado’s commitment to Higher Education Has DeclinedState Tax Funds to Higher Education per $1,000 of Personal Income

Source: Grapevine, An Annual Compilation of Data on State Tax Appropriations for the General Operation of Higher Education Center for the Study of Education Policy, Illinois State University.

U.S

Colorado

$8.00

$6.00

$4.00

$2.00

0.00

Fiscal Year

’92 ‘93 ’94 ’95 ’96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08

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Tuition is on the rise.

College or University 5 year % increase resident tuition

University of Colorado 54%

Colorado State University 52%

Fort Lewis College 34%

University of Northern Colorado 43%

Adams State 45%

Mesa State 59%

Metro State 27%

Western State 34%

School of Mines 47%

Community College System 29%

Colorado Commission on Higher Education

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Costs to educate a student are going down.

Families and students pay more.

1983 20120%

10%

20%

30%

40%

50%

60%

70%

80%

40%

72%

60%

28%

Family Share (Tu-ition and Fees)

State Share

SOURCE: Bell Policy Center

Colorado State estimates that it educates a student for 4 percent less in inflation-adjusted dollars than it did 20 years ago. What has changed is that, 20 years ago, two-thirds of the cost of a CSU education was paid by the state.

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Figure 28. Student Loan Debt per Capita within 25-44 Age Cohort: First Quarter 2003-2012

$12,000

$10,000

$8,000

$6,000

$4,000

$2,000

$0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sources: Federal Reserve Bank of New York Consumer Credit Panel, US Census Bureau

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Demand for family services is risingFunds to support services are flat

Family Services*+ 102% increase in child poverty+ .5% increase in funds to support vulnerable

children and families - 2% decline in health care funds for special

needs children

*2001-2011

CO Children’s Campaign

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Transportation DepartmentRates Current Services at C+

Roads and Bridge Conditions:• 50% are in good/fair condition• 7% are in poor condition

128 bridges will be deemed unsafe in the next 5 years.

Governor HickenlooperColorado Department of Transportation

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Voter choice and legislative action

Strict limits on homeowner property tax(Gallagher)

Strict limits on state sales & income tax revenue

(TABOR)

Require more state funds for K-12 education

(Amendment 23)

Voter approval of any new tax increase(TABOR)

Legislature reduced taxes in late ‘90s/early ’00s

The Economy Is Changing

Source: Moody’s Economy.com; DU Center for Colorado’s Economic Future 38

23.29%

76.71%54.33%

45.67%

Personal Consumption Expenditures for Goods and Services as aShare of Total: US History and Forecast

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We used to give about 5 cents of every dollar to the General Fund.

Now we give only about 3 ½ cents.

Source: Calculated by Bell Staff based on gross General Fund revenues reported in Legislative Council documents, and state personal income data reported by the U.S. Department of Commerce, Bureau of Economic Analysis.

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2%

3%

4%

5%

6%

4.4%

4.1%

4.7% 4.5%4.2%

3.5%

3.7%3.2%

Genera

l Fund a

s s

hare

of

tota

l sta

te p

ers

onal in

com

e

We Pay Less Tax

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Colorado’s Tax Burden Is Low(compared to other states)

• Combined state and local tax burden = 39th

(Tax Foundation)

• Best states for retiree taxes = 5th

(MSN Money)

• Business tax climate = 15th

(Tax Foundation)

• State tax burden as percentage of income = 49th

(Colorado Legislative Council)

• 2nd lowest state sales tax burden(Legislative Council, Colorado Department of Revenue)

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Colorado’s Tax Burden Is Low(compared to other states)

Legislative Council High Average Colorado Low

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

$180.00$163.89

$58.50

$40.89 $37.50

Colorado State Taxes per $1,000 of Personal IncomeCompared to Nation

49 of 50

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Colorado Invests Less in Public Services(compared to other states)

Colorado Fiscal Policy Institute, 2009

Total

(47t

h)

K-12

Educa

tion

(48t

h)

Highe

r Edu

catio

n (4

8th)

Med

icaid

(49t

h)

Highw

ays

(48t

h)$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00 $140.52

$50.67

$7.16$27.74

$8.87

$106.49

$41.16

$3.52$13.11

$5.44

Spending per $1,000 of Personal IncomeColorado v U.S. Average

US AverageColorado

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FY 2013-14 Budget Request• 8.1 billion from General Fund.

– 5% increase from FY 2012-13– Still 14.4% less than FY 2007-08– $4.8 million for improving behavioral

health community capacity;– $6.5 million GF to provide services to

809 additional people with developmental disabilities;

– Increase K-12 per pupil funding to $6,659, up from $6,474;

– 1.5% provider rate increase for human services providers.

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What are the options?

Option One: No policy changes

Option Two: Permanently reduce public services

Option Three: Change the tax code

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Option one: No policy changes

Medicaid, K-12 Education and CorrectionsWill Squeeze Out Everything Else

Numbers for 2012 are Bell calculations based on data from the Colorado Legislative Joint Budget Committee’s FY 2011-2012 Companion Budget Package Summery to Senate Bill 11-209 (the Long Bill Narrative), prepared by Joint Budget Committee staff, April 5, 2011. Numbers for 2025 are staff projects by the Center for Colorado’s Economic Future at the University of Denver.

73%

27%

2012 General Fund Higher

Education, Human Services, Judiciary, and ev-erything else

90%

10%

2025 GeneralFund

K12 Educa-tion, Med-icaid and Corrections

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Public Services Must Be Cut

Agriculture

Nat'l Resources

Higher Ed

Human Services

Local Affairs

K-12 Per Pupil

Corrections

Health Care

-40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0%

- 28.8%

- 21.2%

- 16.6%

- 4.8%

- 3.7%

- 2.6%

+ 2.9%

+ 20.1%

% Change in CO 2007- 08 to 2011-12

JBC Staff Documents; Ed News Colorado

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Long-term reductions in public services will be required.

(without new revenues or changes in policy)

• 19% cuts to K-12 education for 13 of next 14 years.

• 90% cuts to the following programs after FY 2017-18.– Agriculture — Local Affairs– Higher Education — Natural

Resources– Military and Veterans Affairs — Public Safety– Public Health & Environment — Regulatory Affairs– Personnel and Administration — Revenue

Center for Colorado’s Economic Future University of Denver

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Option Two: Permanently Reduce Services

• Roll back eligibility levels for Medicaid, eliminate some coverage for low-income adults and increase fees

• Change Medicaid to a public system resembling health savings accounts

• Shorter school days for younger students

• Cut prison time for non-violent offenders

• Redirect funds from Great Outdoors Colorado to education

Independence Institute; Sen. Greg Brophy

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Option Three: Change the Tax Code

• Add personal services to the sales tax base

• Levy property taxes for schools with a statewide mill levy• Reduce state share from 63.2% to 60%

• Restore four graduated income tax brackets

DU Center for Colorado’s Economic Future

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Questions to consider

• Should K-12 Education be a state concern? Or, should every community go it alone?

• Is there value in subsidizing Colorado students to attend college?

• What kind of transportation system do we want? How important is it to keep up with growth?

• What benefits should we provide to people who can’t afford health care?

• Should only users pay for services or should we spread the costs more broadly?

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Sources of Information

• BackstreetBudgeter.com by Engaged Public — www.backseatbudgeter.com

• Bell Policy Center — www.bellpolicy.org

• Boom or Bust Colorado — www.boomorbustcolorado.com

• Center for Colorado’s Economic Future (DU) — www.du.edu/economicfuture

• Colorado Department of Higher Education — http://highered.colorado.gov

• Colorado Fiscal Policy Institute — www.cclponline.org/fiscal_policy

• Colorado Tax Tracks — www.colorado.gov/taxtracks

• Independence Institute’s Citizens’ Budget — http://tax.i2i.org/citizens-budget

• U C Denver School of Public Affairs — www.ucdenver.edu/academics/colleges/SPA

How to reach us

Colorado Nonprofit Association

Andrew Lindstadalindstad@coloradononprofits.org

303.832.5710www.coloradononprofits.org

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