'76 Blog

('76 Contributor) According to a Denver Post story on Nov. 22, “The reduced stimulus money means that the general fund appropriation for higher education will have to increase to $555 million, the same amount the state provided in 2005-06 and the point below which the state can’t cut funding and still receive stimulus funds.” Which should remind us of some pithy phrases reflecting the common sense that the American people have learned from experience—not books in gilded classrooms at expensive public colleges and universities. “It’s time to face the music,” is one of those phrases as is “Fish or cut bait” meaning “are you going just to sit there or are you going to start fishing?” Another favorite is “A stitch in time saves nine,” which I attribute to Ben Franklin’s Almanac. A Google search reveals that the originator of that phrase was first recorded in Thomas Fuller’s Gnomologia, Adagies and Proverbs, Wise Sentences and Witty Sayings, Ancient and Modern, Foreign and British, 1732. Another favorite of mine is “an ounce of prevention is worth a pound of cure.”  I could come up with more of these phrases, but it IS time to face the music.  Colorado higher education is poorly organized, too expensive for its own good, outfitted with accouterments we can’t afford and costing more—not less—every year. Raising donations for a state-run institution goes only so far to close the budget gap. And raising tuition—even if only for wealthy out of state students—defeats the purpose of a “public” education. A “public” education should provide an education at costs the general public—meaning the lower middle class and the poorest—can afford. So something has to be done to reduce operating costs. What can be done?  In essays published at the Yorktown Patriot and in private communication with at least two presidents of state universities in Colorado and numerous members of the Colorado state legislature, I have argued that Colorado higher education needs a workout and radical reforms, as follows: 1. Start by commissioning a Core Curriculum of general education for credit college level courses delivered via the Internet at cost to Junior and Senior high school students. Enable them to earn up to two years of college credits while in high school and give them preferred admission to any four year public college or university in Colorado. 2. Four years in to this effort when the first high school students who earn college credits online begin to arrive as full Sophomores, close admissions at four year colleges to new Freshmen and begin to grow our four year colleges into Senior colleges. In fifteen years, every four year college will only offer Junior and Senior level courses. 3. Place all Faculty on a two tier compensation program. Lower compensation for those with tenure and lesser compensation for the non-tenured. Grant no more tenure. 4. Place all Faculty on term contracts with Bench Marks at 3, 5, 10 and 15 years that must be met if their contracts are renewed. 5. Commence annual outcome based audits that evaluate which programs are self-supporting and which programs exist at the sufferance of taxpayers or are supported by other programs or research grants rather than tuition. Shut down those programs not deemed absolutely necessary for a college education. 6. Apply the principle “every boat on its own bottom” to the graduate divisions of all postgraduate institutions. If a program cannot manage and support itself, shut it down. Those that can support themselves should be free to manage their own programs without central administration interference, but each will contribute 60% of its income to the general fund. 7. Make a public commitment, call it the “Education Contract for Colorado,” to lower tuition costs at public institutions by 5% annually for the next fifteen years. These steps will enable Colorado to provide a college education for every citizen qualified for college level work. Though these steps will radically change the face of Colorado higher education, remember that there are an equal number of non-public institutions licensed to operate in Colorado. They will be challenged to meet market demand for football, cheerleading squads, basketball teams, climbing walls, gourmet food courts and provide those niceties to those willing to pay for them. All the others will hunker down and start lowering their tuition costs in order to compete with the state university system. Many more Internet programs will become available and Colorado’s very good Liberal Arts colleges will continue to offer a superb classical education to those who want an education as opposed to a degree. Here’s the bottom line: Colorado’s public education costs are out of control, the leadership of state colleges and universities and their Faculty are living in the past, and Coloradans have no more money to support the costly and unnecessary ways that Colorado state colleges and universities do business.  It’s time to face the music. Richard J. Bishirjian, Ph.D. is President of Yorktown University, an online, for-profit institution of higher education, on whose Yorktown Patriot blog this article first appeared.  

It's becoming a ritual at the State Capitol: a committee is meeting to study the competing pressures of spending mandates and spending limits on the state budget. Like those before them, this year's panel has heard from a litany of experts and special interests, almost all of whom will complain about the Gordian knot in which the state budget is entangled. Yes, Colorado's budget is complicated and elected officials are often asked to make difficult, sometimes incoherent, fiscal choices.  Like it or not, the people of Colorado have, in exchange for their tax dollars, insisted on external checks and balances which sometimes become unbalanced themselves. What's missing in these studies is a big picture discussion of the desirable size, role and cost of our state government.  Do our families, businesses and communities exist to serve our government or does our government exist to serve us?  Also, how much government do we want compared to how much do we want to pay for? If we exist to serve government, then the state is entitled to a sustainable revenue stream to support the functions that lawmakers and voters have instituted.  Voters will inevitably be squeezed for more taxes as the economy slows, which is when we can least afford it. If government exists to serve us, then the state's authority to tax and spend must be confined within limits that don't impose a hardship on families or impair job creation.  Lawmakers must prioritize spending and acknowledge that some programs simply cannot be funded. Recently, the University of Denver released a study that concluded, "[T]here simply is not enough money to pay for the government we have created."  That is, "we" want more from government than we are willing to pay. Advocates of more social welfare spending contend that the demand for government services is greatest during an economic downturn — precisely when tax revenues are declining.  For this counter-cyclical concept of budgeting to be successful demands something lawmakers have seldom proven willing to do: save money when the economy is growing so it can be spent when the economy falters. Saving even meager amounts will always remain difficult for legislators because "tax-receivers" exert more influence over fiscal decisions than do taxpayers.  Taxpayers elect legislators and might reasonably expect that those they elect will make the taxpayers' interest in keeping more of what they earn their top priority. However, tax receivers spend millions on lobbyists who cajole legislators to direct more spending toward their preferred programs.  That's why the voice of tax-receivers — who speak loudest at the very moment when tax dollars are appropriated — is always louder than the voice of taxpayers — who speak loudest in November, several months removed from key spending decisions. Think about it another way:  If a family of three has $75,000 in gross income, it pays about $5,700 for all state taxes and fees in one year.  For every $1 million state government spends, the cost to this family is about 64 cents.  Taxpayers won't expend much effort to save 64 cents, but the program that hopes to receive that $1 million will certainly spend thousands on lobbyists to secure it. That's why the "concentrated interests" of tax-receivers have an inherent advantage over the "diffused interests" of taxpayers. For that very reason, it is entirely reasonable for taxpayers to limit the state's taxing and spending authority and to expect those they elect to abide by those limits. In the past three years, that hasn't happened.  Governor Ritter and the Democrat majorities in the legislature have used raw partisan power to deny voters a voice on some $1 billion in higher property taxes and new "fees" on drivers, hospital patients and more.  That the activist Colorado Supreme Court approved these tactics simply adds insult to taxpayers' injury. Nobody said balancing a budget is easy — especially during a recession.  However, politicians ask for this responsibility when they campaign for office.  When they then use raw partisan power to ignore the voters, they can hardly expect those voters to loosen the few taxpayer protections that remain. Mark Hillman served as Senate majority leader and state treasurer.  He is now a Centennial Institute Fellow. To read more or comment, go to www.MarkHillman.com.

Impending mortality tends to focus the mind, and looming elections tend to focus politicians' ears on vox populi.  But just as theologians debate the sincerity of "deathbed conversions," voters should be skeptical of lawmakers who find religion as elections near. Although 15 months remain until the 2010 elections, Democrats are learning — just as Republicans discovered after their 2004 victory tour — how quickly the political winds can shift for the party in power. In less than a year, Governor Bill Ritter has seen his favorable/unfavorable margin flip from plus-13 to minus-8, according to Public Policy Polling.  Newly imposed vehicle licensing "fees," championed by Ritter, won't make Coloradans with cars or trucks any more charitable, either. Ritter's beneficiary, appointed Senator Michael Bennet, hasn't impressed many outside his own party during his eight months in office.  Bennet's approval/disapproval rating stands at minus-7 (34%-41%) among all voters, but even worse (minus-11) among unaffiliated voters. Nationally, the trend is no more comforting for vulnerable Democrats:  Rasmussen shows the generic congressional ballot favoring Republicans 43% to 38%, while Gallup says voters are souring on President Obama's health care push with 50% disapproving and 44% approving. Not coincidentally, both Ritter and Bennet sought to induce a bit of voter amnesia recently with tough talk on taxing and spending. Ritter told a gathering of municipal leaders that he won't ask for a tax hike in 2010.  The AP report didn't mention whether Ritter's proclamation was met with audible laughter or just snickering. Here's a governor who convinced the legislature and the state supreme court that legislation increasing property tax revenue isn't really a tax increase and therefore doesn't trigger the constitutional requirement for a public vote.  As a result, property owners will pay some $200 million more this year than they would have without Ritter's "tax freeze." In the wake of that ruling, Ritter and the Democrat legislature used a new loophole manufactured by the supreme court to enact an additional $125 million in tax increases — also without a vote of the people. Just this year Ritter championed two new "fees" so large as to make taxes superfluous.  First he enacted his famous vehicle fee to raise an estimated $250 million by increasing the cost of licensing almost every vehicle in the state by $41 to $51 annually.  Then he signed a "hospital provider fee" that will, when fully implemented, raise $600 million a year from new charges on patient services. With fees like that, who needs taxes? Note that Ritter didn't vow to veto any tax increases sent to him by the legislature; he merely vowed not to ask for them. Bennet's charade is pathetically weak, too, introducing the so-called Deficit Reduction Act of 2009 in an attempt to build credentials as a "fiscal hawk." Remember that Bennet cut his senatorial teeth by voting for President Obama's $787 billion stimulus package — the one that stimulated very little and really costs $3.7 trillion, including $1 trillion in interest. Bennet also helped kill a measure that simply sought to limit new federal debt over the next 10 years to no more than the old federal debt accumulated in the previous 220 years.  That's right, the amendment would have allowed for a doubling of the federal debt but no more.  Even that medicine was just too strong for Colorado's appointed junior senator. Bennet's fiscal hawkishness is so feeble that he doesn't even bother to suggest that the federal budget should be balanced — only that overspending should be capped at 3% of GDP, not this year or next year or the year after that but by 2013.  By that miserly standard, President Bush succeeded at least half the time. No, Colorado's big spenders aren't changing their ways — just their words. Mark Hillman served as Colorado senate majority leader and state treasurer.  To read more or comment, go to www.MarkHillman.com.

When it comes to the outrageous expansion of the federal debt, neither political party comes out unscathed.  In January of 2001, the debt was $5.7 trillion.  Now, after 8.4 years of a Bush-Obama spending spree, it stands at $11.4 trillion, with Congressional Budget Office estimates putting it at 82% of GDP by 2019 if the current course is sustained.  The threat of fiscal calamity is now undeniable, revealing to every American, with stark clarity, the necessity to address the nation’s fiscal crisis. Entitlement programs, such as Social Security and Medicare, are those social welfare programs provided to all, irrespective of the circumstances.  They represent the single largest component of the budget, at more than 42%, and their 2007 costs alone totaled $1.2 trillion—more than double the defense budget.  And as the baby boomer generation enters into the forefront of Social Security and Medicare, those programs will take an even larger bite out of the budget than they do now. Entitlements have long been known as the “third rail of American politics,” for they could electrocute an individual’s candidacy when touched.  But in order to stem the tide of the ever-increasing federal debt, serious action must begin by way of entitlement reform.  We must fix the third rail to prevent fiscal calamity. Social Security: Social Security is on the road to bankruptcy. Last year then-Treasury Secretary Henry Paulson declared the program “financially unsustainable” and in dire need of reform.  And it needs it.  Badly. Modifying Social Security is both essential and complex. In sum, the program should first become means-tested, where individuals have to qualify for benefits. Next, Americans who meet certain criteria should be eligible to opt out and instead build up their own individual retirement accounts (IRAs), such as 401K’s. Given the current direction of Social Security, the chances of younger Americans, particularly those under the age of 45, having anything left and therefore wishing to continue to benefit from the program will be virtually nonexistent, enabling it to be phased out. Medicare: Medicare provides medical services to America’s senior citizens regardless of income.  In 2003, President Bush and Congress instituted additions which will swell costs by as much as $1.2 trillion in ten years, according to the Washington Post.  These additions constitute what is known as the Medicare Part D prescription drug benefit which, in short, provides a subsidy to the prescription drug costs of the nation’s seniors. The layman’s solution to Medicare lies in slapping a grandfather clause on Part D, meaning that those who are currently not on the program will not receive expansionist Part D benefits; in making Medicare means-tested; and in allowing qualified individuals to opt out of the program if they so choose.  After all, why should Bill Gates get his healthcare paid for by the government after he turns 65? Whether or not a person qualifies for entitlement benefits should rely upon several factors, principally income level but perhaps also including yearly expenses, savings and the number of dependents.  The switch to a means-tested structure should pertain solely to those who are currently under the age of 45 or 50; that way, those who are already anticipating on receiving Medicare and Social Security benefits soon or who paid into the system for years will get them. Greater reform in the healthcare industry must then occur for those under that age through free-market approaches, not a brand-new entitlement program, and IRAs must be greatly encouraged. These are just a few starting points, but if the government takes serious action to implement the above proposals, we will at last be able to see a glimmer of hope for the debt—and for the next generation—without damaging the economy with tax increases or cutting benefits for those in need.

Grappling with declining state revenues makes for some very unpleasant budget choices, as Gov. Bill Ritter and the Democrat majorities in the state legislature learned over the past 12 months. It's fair to criticize those choices, including the governor last year denying for several months that a problem existed.  Yet anyone who has shouldered the responsibility of balancing a budget during a recession understands that learning from your own mistakes is inevitable. Learning, however, is essential - both to sound fiscal policy and to political credibility.  That's why it was astonishing to hear Governor Ritter and leading Democrats dismiss the need for a special session of the legislature on the very day they acknowledged that the state will start the new fiscal year nearly $400 million in the hole. Anticipating further economic deterioration, legislators gave Ritter the authority to "borrow" up to $500 million from next year's budget to pay this year's bills. Based on new projections by Legislative Council economists, about half that amount will be needed. Moreover, legislative economists forecast tax revenues for the new budget year, beginning July 1, to be $135 million less than budgeted and $874 million short over three years. Those economists prudently expect the recession to continue into 2010 in Colorado and foresee possible recovery "at least a year after that." That's the point at which this scenario takes on an incredible aura of déjà vu. Economists in the Governor's Office of State Planning and Budgeting (OSPB) paint a much brighter picture, forecasting a recovery later this year.  That outlook enables OSPB to expect an additional $1.3 billion to spend over the same three-year period. Last September, Legislative Council sounded the alarm early enough for the governor and legislature to call a special session just three months into the fiscal year - ample time to revise the budget and mitigate the shockwaves to affected programs and participants. Instead, the governor boldly proclaimed, "One of (the forecasts) is pretty significantly wrong," and according to the Denver Post, he "made it clear" that the error wasn't in the projections from his office.  Days later when the Wall Street financial crisis struck, Ritter ordered a "hiring freeze" which, it turns out, wasn't nearly as frigid as advertised. In December, with half of the fiscal year passed, Legislative Council pegged the budget shortfall at $631 million.  Ritter's OSPB forecast a mere $70 million deficit.  Two weeks later, OSPB admitted it had used "outdated information" and issued a new estimate of $230 million in red ink. By the time the legislature convened in January, the remaining choices were severe cuts, exacerbated by months of inaction, or accounting gimmicks that postponed the day of reckoning and made balancing the 2009-10 budget even more difficult. Choosing to procrastinate, legislators tried yet another dodge by attempting to extort $500 million which employers had paid into the state's fund for injured workers. Then they wiped away budget caps that restrain spending in good years - as if that would somehow create more money amid a withering economy. Finally, after raiding trust funds, re-imposing a property tax on senior citizens, and accepting a federal bailout, they proclaimed the budget balanced. With prescience, Republican leader Sen. Josh Penry observed, "This budget will be out of balance on June 20." And so it is. Incredibly, Governor Ritter and Democrat legislators seem headed for another year of budgetary brinksmanship, placing all their bets on a quick economic recovery. For five years, Democrats have controlled the legislature and for three years the governor's mansion. Colorado taxpayers are right to expect that, after blundering through a year of budgetary mayhem, Ritter and Company will learn from the past and make prudent choices this time.