Investing in Higher Education and Equity for Colorado

By Martha Snyder, HCM Strategists

In Colorado, eleven companies land on the Fortune 500 list of the most valuable companies, nationally - companies like Arrow Electronics, DaVita and Dish Network. That is why when the terms equity and finance are co-mingled, the first thing one conjurs is “assets” or shares held in a company.

On the other hand, in the sphere of your role as trustees of Colorado’s public colleges and universities, equity usually means impartial or fair. You apply these terms to oversight for the institutions’ policies, approval of tenure and promote policies, and the annual review of your college president.

I suggest that the triple pandemics this state and nation face - racism, the economy and public health - necessitate thinking about postsecondary finance from a student-centered equity lens. This means committing and targeting resources in ways that support more equitable access and success for populations traditionally underserved by postsecondary education.

As a steward of the Colorado taxpayers’ investments in your institution, applying a student-centered equity lens means better serving native Coloradans, particularly Latino, Indigenous, Black and low-income populations and those that are first generation. Additionally, this means to recognize that achieving equity for these populations requires serving both traditional age (those coming from high school directly into college) as well as those non-traditional age students.

When you take this student-centered equity lens and apply it to postsecondary finance, there are three critical features that make for a strategic, equity-focused funding approach for postsecondary. These features reflect the reality that both “how much” as well as the “how” make a difference in building a postsecondary environment that fosters equitable access and success for all students.

First, states must implement an investment approach that reflects a commitment to postsecondary education as critical to more equitable and sustained economic prosperity.  This is the “how much” of the equation.

States that have been more successful in closing equity gaps have a historical commitment to supporting postsecondary education. This is reflected in relatively high levels of support to institutions (that help keep tuition prices low for all students), and targeted support to low-income students (through investments in need-based financial aid).

Unfortunately, Colorado ranks poorly on these indicators. Colorado ranks last, and is significantly below the national average, on state investments to its colleges and universities. As a result, students in Colorado are carrying 71 percent of the cost of education, putting Colorado at number 46 in the nation. The state invests in need-based aid but not at an amount that offsets the costs to students. Taken together, this fosters deep inequities for how, when and where individuals can access postsecondary education.

Understanding there are existing structural barriers, such as TABOR, that limit how much Colorado can invest in postsecondary, it is critical to recognize that even the best designed, most student-equity aligned formula can’t make up for overall insufficient levels of funding.

With that being said, how states invest also matters. Historically states did not invest in postsecondary on factors that connected to students or to the types of students various institutions serve and were often misaligned or agnostic to state goals. Instead the core of institutional funding had more to do with when institutions were established and, honestly, their ability to influence budget negotiations. These approaches built up overtime to result in significant disparities in funding across institutions and at best minimally responsive to changing conditions and needs within the state.

The second and third features of an investment approach recognize these factors and distributes resources through a funding model that makes adjustments for institutions serving higher need/equity populations, while aligning to state goals for increased completions and more efficient pathways for students.

The funding model recently proposed for Colorado, in response to House Bill 20-1366, reflects many of these features, but requires some critical reflection.

We will start with the strengths of the proposed funding model, which center largely around how the model aligns to state goals.

●     The funding model reflects the need to address equity in the types of students institutions serve. Part 1 of the funding model directs base-building resources to institutions and prioritize institutions that are serving high numbers of first-generation students. This is critical as it provides support for these institutions that have traditionally served as critical access points to postsecondary for underserved populations and the fact that these institutions serve proportionally larger share of these populations and are often less well resourced overall.

●     The performance component of the model advances equity in access. The performance funding component (Part 2) reflects the need to focus on equity - with priorities for increasing the enrollment of low-income students and certain underrepresented minoritized student population and first generation students. This will help provide for more equitable access across all of the state's postsecondary institutions.

The funding model prioritizes student success and completion with inclusion of retention and credential completion.

●     The performance funding component is a central feature of the overall funding strategy. Rather than relying on a new money only approach that signals outcomes only matter when you have new money or as a separate strategy to the core funding approach the state adopts for postsecondary.

However, for this funding model to truly realize student-focused equity, the following areas should be considered:

●     Follow the steps of the legislation. As currently structured the prior base-funding for institutions is the starting point for the performance component (Part 2) of the funding model. This will result in funding shifting slowly over time, but does nothing to address the historic funding disparities across institutions, the need to consider how institutions have been historically resourced and the types of students they serve. The state should invest in Part 1, while implementing Part 2 to ensure inequities are not further exacerbated.

●     Focus not only on increasing enrollment, but increasing the success of underserved populations. The performance component of the funding model rewards institutions for increasing enrollment of underserved populations but not their completion. Increasing access is critical, but there should be a clear commitment (and financial incentive) to ensure these students complete as well. The best funding models provide “extra funding” for these students throughout the pathway from enrollment to completion.

●     Prioritize, or at least balance, total completions over use of rates. Rates may be desirable to include as a way to protect the funding model from drastic changes in enrollment or to ensure smaller institutions can gain. However, calculating rates naturally limits which students are counted, can be increased by restricting which, or how many, students are enrolled, and does not reflect the states need to progress toward increased attainment for its residents. If the inclusion of rates is necessary, the weighting associated with overall student completion should be prioritized.

Colorado’s businesses, including its Fortune 500, look deeply at how to maximize its human resources in order to drive value. As trustees, looking deeply at institutional and state higher education finances through a student-centered equity lens will help the state rebound from COVID-19 and “build back stronger”.