Higher education on the line
April 11, 2009
SILVERTHORNE ” A quartet of Democratic legislators beat the drum for a state budget fix Saturday, holding a community forum to answer questions about their plan to siphon $500 million from a workers’ compensation fund to pay for higher education.
Without a short-term fix, tuition at many state schools could increase dramatically, and some community colleges could be forced to shut down, said State Rep. Christine Scanlan, joined at the meeting by State Sen. Dan Gibbs, Speaker of the House Terrance Carroll and State Rep, Mark Ferrandino, a member of the joint budget committee.
At stake is a $2 billion reserve fund held by Pinnacol Assurance, an insurance entity that exists in a no-man’s land between being a private enterprise and a quasi-governmental institution. Pinnacol was created in 1915 to provide insurance of “last resort” for high-risk jobs in the mining and timber industries.
The State Legislature, controlled by Democrats, wants to use part of that reserve to cover significant budget gaps.
The Colorado Attorney General’s office, headed by Republican John Suthers, released a legal analysis stating that the plan is unconstitutional.
Concerns from the public focus on the potential for higher insurance costs,
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but Ferrandino said Pinnacol’s reserves provide an adequate buffer against rate hikes.
There are also discussions about selling Pinnacol and putting the proceeds in a trust fund to provide a steady source of dollars to higher education.
“We’re focusing on the budget. There’s nothing more important that we’re working on right now,” said Scanlan. “In this harsh, challenging economic reality, we’re having to make some trade-offs,” Scanlan said.
“If we don’t find a way to access the dollars from Pinnacol, there could be a 20 to 30 percent increase in tuition and a $300 million cut to the state’s higher education budget,” Scanlan said, adding that there are between four and nine community colleges around the state at risk of closing.
“Adams State, Mesa College, Fort Lewis … They don’t have the resources to sustain themselves if we don’t have the general fund support, they could really be in trouble,” said Ferrandino.
The rescue plan didn’t sit well with Lisa Knobel, vice-chair of the Summit County Republicans.
You don’t get out of a financial mess by spending your way out of it,” Knobel said, suggesting that lawmakers look for budget savings by cutting government expenses. Knobel said the effort to use Pinnacol’s reserve fund was a raid on money that belongs to businesses that have paid into the fund.
Knobel suggested rebating the money to businesses and letting them use it tohire new workers as an alternative private investment plan to government stimulus funding.
Other audience members chastised the lawmakers for seeking a short-term fix rather than grappling with long-term structural budget issues. Speaker of the House Carroll said he understands the need to deal with structural budget issues, and said there could be a move to put forth a ballot measure to fund higher education at some sufficient level going forward.
As background, the lawmakers explained that the state’s hands are tied when it comes to cutting costs in the key areas where most of the general fund expenses are: K-12 education costs, Medicaid and other health and social programs, and corrections. That’s why higher education always takes the biggest hit, with Colorado’s spending in that area already lagging behind almost every other state.
“Pinnacol is not on the top of my list of things to do, but we have to make some hard choices in this economy,” Carroll said. “But if it comes down to closing community colleges, I’ll take it any day.”
Carroll said the state has even looked at shortening the prison sentences of non-violent offenders by 90 days to save about $20 million, one item on list of “unthinkables” the legislators have been forced to consider as state revenues plummet even while demand for state-funded services increases because of the economic downturn.
Bob Berwyn can be reached at (970) 331-5996, or at email@example.com.