Colleagues —
I admit I’ve been delaying sending this message, each week thinking that some scheduled event would provide us with more clarity about the budgets for fiscal year 2026-2027 that begins in a scant 3 months. But each important event (revenue forecasts, Joint Budget Committee meetings) seems to come and go without leaving behind a clearer picture of what’s ahead.
Bottom-line up front for those of you who know how long these emails can be: the state has yet to set the higher education budget for FY27, and they don’t set our tuition limits until they’ve completed the budget. There remains substantial uncertainty around the entire state budget, and higher ed, sadly, is often one of the most prominent balancing factors when our elected officials find themselves in a budget bind. So … we find ourselves running up against routine budget planning deadlines within our campuses without the information we need to finalize our decisions.
Now, let’s take a step back and review what we know – and what we don’t.
The state’s budget is looking at a substantial deficit, and I think it’s always tempting in such situations to try and figure out who did what wrong to land us in this spot. For whatever it’s worth, I’d suggest a dose of grace as we analyze how we got here. In my experience, our legislators are well intended. When they initiate new programs, it’s because they see a need within our community and their spirit of service calls them to address it. As is often the case, many new programs begin with legislators working from economic forecasts around a growing economy delivering more tax revenues into the state coffers to cover program expansion. Right now, that hasn’t played out as hoped (for various reasons that economists and politicians will debate for some time), and our legislators find themselves with difficult choices in balancing the budget. There are pros and cons to every fiscal policy approach, of course, and people who care about Colorado can, I think, arrive at different priorities reflected in differences of opinion about what our legislators do or don’t value.
And it’s not as simple as the state using reserves to balance today – those reserves are critical for stability in the event that recession risks come to fruition. Our legislators must worry about the economy of today and tomorrow, just as our decisions are about today’s CSU System campuses and about leaving them healthy for the future.
And having mentioned the future, I’d toss in this perspective. It’s trendy right now to cite all the negative aspects of the economy – risk factors. And that’s fair, there are plenty. But every coin has two sides, and I see reason for optimism as well. Our revenue forecasts show the state soon being back into a TABOR surplus and returning, under current law, rebates to taxpayers. That may not help us as higher ed institutions, but it’s a better sign for the state’s economy than being below the TABOR limit. Colorado will be electing a new governor and a new general assembly in a few months. Each administration brings with it different perspectives and new ideas. Let’s see what that looks like. And compared to the situation in quite a few of our fellow states, we balance the state’s budget every year, giving us a nice financial foundation. Our campuses are all well-attuned to their section of the national higher education ecosystem; I think there’s reason to believe we’ll be very effective even in an increasingly competitive marketplace. But many of the state’s policy decisions do impact us, so please, when you vote this fall (and everyone should vote this fall and every chance we have), keep an eye on well-intentioned ballot measures that propose to set aside portions of the state’s general fund to pay for something we all agree is a priority. These are approaches to consider carefully because while we may all want the outcome that is proposed to be funded by the ballot measure, taking blocks of dollars out of the general fund simply makes our elected officials’ jobs harder as they balance the budget – thus putting higher ed more at risk.
But that’s for tomorrow. Back to today. The Legislature’s Joint Budget Committee needs to trim around $700M from the existing budget – a budget in which higher ed is kept flat. As the reality of that difficulty sets in, it’s hard to see a balanced budget that doesn’t take at least a little cut from everyone. How much is “a little”? That’s really hard to answer because the level of cuts needed also depends on whether some creative budget approaches can be utilized. And higher ed, as a rather large balancing lever for the state, will probably be completed near the end of the process. After higher ed’s budget is set, they authorize our tuition caps. And tuition, as we all know, is a two-edged sword. We’d all prefer it be kept as low as possible, but we frequently trade a subjectively labelled affordable increase for the financial health and stability of our universities. Nothing new in that discussion, sadly, except that the market limits tuition increases every bit as effectively as our governmental caps.
The time for all of this to be resolved is approaching; the JBC is scheduled to meet today. But even if they introduce a budget later this week, it’ll take another couple of weeks after that to clear both chambers, then perhaps time for a conference committee to reconcile differences. At the end of the day, the general assembly has to get the Long Bill containing the budget to the Governor by the end of the session (May 13).
Will we get the state’s budget numbers – and will they be close enough to what we’ve been planning around – to allow our Board to act on our proposed budgets at their May Board meeting (the 7th and 8th)? I hope so. But we should acknowledge there have been many years when that wasn’t possible, and the Board couldn’t approve a budget until June. I recall a year 2+ decades ago when the state didn’t finish its budget until the very end of June and the Board had to approve contingent budgets for us to move ahead. And while all of that is possible (obviously, we’ve done it), it puts a great deal of pressure on the administrative staff of the System and campuses, so please give a little grace here as well – no one wants to wrap these budgets up in a timely manner more than our dedicated financial staff.
If things get really out of the ordinary, we could consider contingent budgets. Our colleagues at CU have used this approach, passing budgets that contained various increases that didn’t begin until after fall census was in and when meeting certain enrollment thresholds that triggered budget action. We’ve never done that, but it’s an available approach.
But none of these explanations or options really resolves the budget uncertainty – uncertainty your administrations have been struggling with as they try hard to be transparent and accountable amid unpredictable circumstances. And as these things progress and rumors swirl, I’m reminded of Steven King’s observation: what scares us the most is what we imagine. Uncertainty certainly feeds the anxiety that exists around this year’s budgets.
I wish I could snap my fingers and take that away. But I’m not able to do that. I can simply assure you that we’re doing everything possible via governmental relations and careful planning to position each of our campuses to be in a healthy position to continue to deliver on their role and mission. And in that should lie some measure of comfort because what our institutions do matters – it’s important. And every legislator I speak with understands that and understands how efficient Colorado’s system of higher ed is (2nd in the nation in terms of taxpayer dollars invested per degree or credential granted).
I also wish I could tell you this situation is new, and once we’re through this, I don’t imagine we’ll see it again. Unfortunately, I’ve seen 3 or 4 of these cycles in my time in administration, and if I had to bet on anything, I’d bet this isn’t the last one. But a key is that these are cycles, and cycles have upswings, and my gut tells me the next one of those isn’t far off, and that we should keep that in mind so we’re prepared to respond to it when it arrives, armed with the knowledge that the value of what we do is known and that we’ll still be providing that value in the future, just as we have over a past marked by innovation and progress amidst up and down budget cycles.
We’ll inform you as soon as we get information that delivers more clarity to our budget processes. In the meantime, please continue to engage with your campus planning efforts and know that the campuses are doing their best to model the right scenarios.
With my gratitude for all that you do
– tony
Chancellor Tony Frank
Colorado State University System