How Malloy wants to pay for his higher education plans

With the cost of college skyrocketing and the state’s largest public college system struggling financially, Gov. Dannel P. Malloy wants the state to spend an additional $60 million next fiscal year to help boost enrollment by convincing some students to return to school.

However, while the governor spent a good part of his budget speech Thursday discussing his higher education initiatives, details of his multi-million plan don’t appear in the college and universities’ budgets he is recommending the legislature adopt. This is because Malloy is using a budget loophole to get around the state’s constitutional spending limits.

“Let’s help give our kids the experience they need to fill the highly skilled jobs of the future,” the Democratic governor told legislators in his State of the State address Thursday. “Let’s help more students graduate, and let’s help them share in Connecticut’s recovery.”

The plan – dubbed “Transform CSCU 2020” – would provide free enrollment in up to three courses at the state’s colleges for the 113,000 Connecticut residents who have left school without a degree. To qualify, they would have to pay for one course themselves for each free course they get. The funding would also help launch “early colleges” at all the state’s community colleges, where students can graduate high school with a diploma and an associate’s degree at the same time.

Malloy’s proposal for the state’s dozen community colleges and four regional Connecticut State Universities (the Connecticut State Colleges & Universities) comes a year after state lawmakers promised to boost state support by $825 million over the next 10 years to cover operating expenses at the state’s other public college, The University of Connecticut.

The UConn plan also provides $1.6 billion for construction projects to accommodate the additional 6,580 students expected to enroll at Connecticut’s flagship university by the 2023-24 school year. The “Transform CSCU 2020” plan would have the state borrow an additional $74.5 million for the state’s largest college system in the coming fiscal year for construction costs, bringing the plan’s total cost to $134 million.

“I had to laugh,” House Minority Leader Lawrence F. Cafero Jr., R-Norwalk, said after hearing Malloy’s proposal. “We did billions for UConn, and we did $134 million for [the CSCU system]. It’s pennies on the dollar.”

Cafero said he is not necessarily advocating additional money for the plan but said he’s concerned that this imbalance shows there’s no statewide approach to higher education, and so funding may be being wasted.

Decline of traditional college-age students

The plans to increase enrollment by one-third at UConn and by thousands at the state’s other public colleges and universities come as the state experiences a decline in the traditional college population — recent high school graduates.

Also, the state has one of the highest rates in the country of residents with college degrees, which means Connecticut has a smaller pool of nontraditional students to lure back to school.

Undeterred by these trends and by the steady drop in enrollment at the CSCU schools over the last several years, the system’s new president, Gregory Gray, has said he hopes enrolling these additional nontraditional students will help boost enrollment by nearly 10 percent over the next few years.

The system needs this infusion of new students, and their tuition dollars, for its long-term sustainability. In addition to declining enrollments, other fiscal challenges have forced it to cut course availability and freeze the hiring of full-time faculty for the current school year.

Budget loophole

With the year 2020 in its title, the governor is marketing his plan as a long-term strategy. But the $60 million Malloy would provide to cover the operating expenses for the early colleges rely and the buy-one-get-one-free course for dropouts would come from a “one-time revenue transfer,” according to the administration.

What Malloy has proposed commonly is known in fiscal analyst circles as an “intercept” — a loophole used to move funds off budget and outside the purview of the constitutional spending cap.

After pledging for weeks that his new budget would comply with the cap, Malloy sent lawmakers a $19 billion plan that falls a razor-thin $8 million under the cap — and that’s before the Transform CSCU 2020 initiative is included.

The Democratic governor has been loathe to approve a legal exception to the cap – having criticized his GOP predecessors for frequently going that route. That option also is more complicated, requiring a 60 percent vote of approval in both the House and Senate.

Malloy instead turned to a loophole.

The cap system technically applies only to tax receipts and other revenues assigned to the state budget. Malloy will ask lawmakers to “intercept” $60 million of those revenues – which means that before the money “arrives” in the state treasury, it has been assigned to a new purpose outside of the budget.

Effectively, there would be no difference in how the money is spent in the fiscal year that begins July 1, but the expenditure wouldn’t be counted for spending cap purposes.

Traditionally though, state payments to cover higher education costs have been included within the budget.

“This budget is another affront to the spending cap,” said Deputy House Minority Leader Vincent J. Candelora, R-North Branford. “This proposal continues to demonstrate that there is no boundary that this governor isn’t willing to cross.”

UConn released a statement Thursday welcoming Malloy’s buy-one-get-one-free course recommendation for all the state’s public colleges, but the governor recommended no extra funding to pay for it in UConn’s budget.

Bringing down college costs

A week after legislative researchers concluded that UConn is becoming increasingly less affordable for low- and middle-income residents, the governor also proposed two initiatives aimed at reducing costs.

He is asking the legislature to approve a plan in which the state would match up to $250 for families with children born or adopted after Jan. 1, 2014, who open a college-savings account. The state’s college-savings plan is the Connecticut Higher Education Trust (CHET).

Malloy’s proposed $12 million for this initiative – labeled “CHET Baby Scholars” – would be covered by funds that remain in a student loan program that is now defunct. When that money runs out, he proposes that state taxpayers be asked to make a charitable donation to further fund the program when they file their taxes.

“It can give new parents a boost right when they need it most, and it can help encourage college saving right from the start,” Malloy said in his budget speech Thursday.

Some Republican legislators question why he wouldn’t just use the money to decrease college costs now.

The governor also proposes increasing state-funded financial- and merit-aid for college student to $45 million in the coming year. This would bring the amount of state aid back to the level it was before it was cut two years ago.

“Let’s make an investment in every child that will help them afford college,” the governor said.