1
Fiscal Education Network
A project of theColorado Nonprofit Association
2
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.
3
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
4
Stages of Public Thinking
Choice/ActionAwareness Options
Time
5
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.
6
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.
8
9
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.
10
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.
11
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
12
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
13
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
14
$ 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
15
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
16
$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
17
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)
18
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
19
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
20
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
22
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
23
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
25
Aged Care Represents Disproportionate Share of Medicaid Cost (FY 10 Data)
26
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
27
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
28
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
29
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.
30
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
32
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
33
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.
34
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
35
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
36
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
37
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
39
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
40
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)
41
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
42
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
43
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.
44
What are the options?
Option One: No policy changes
Option Two: Permanently reduce public services
Option Three: Change the tax code
45
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
46
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
47
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
48
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
49
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
50
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?
51
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 [email protected]
303.832.5710www.coloradononprofits.org
52