Colorado Legislative Council Staff
REVISED NO FISCAL IMPACT
(replaces No Fiscal Impact dated January 31, 1998)
February 16, 1998
Janis Baron (866-3523)
TITLE: CONCERNING THE PREPAID POSTSECONDARY EDUCATION EXPENSE TRUST PROGRAM.
Summary of Assessment
This fiscal note is revised to provide additional information. The bill includes the following provisions related to tuition assistance and the Prepaid Postsecondary Education Expense Trust Program:
• to the extent possible, tuition assistance for dependents of slain or disabled national guardsmen, law enforcement officers, and firefighters shall be provided through the purchase of advance payment contracts from the Colorado Student Obligation Bond Authority (COSOBA);
• if sufficient funds are unavailable, the Colorado Commission on Higher Education (CCHE) is required to provide assistance from other appropriations for student financial assistance;
• upon learning the existence of an eligible dependent, CCHE is directed to purchase, on behalf of the student in the name of the state, an advance payment contract for four years of tuition;
• if the eligible dependent has not used or is not then using the tuition assistance when the dependent reaches the age of 25, CCHE is directed to request a refund of the advance payment contract for deposit into the General Fund; and
• establishes the confidentiality of certain records in the program and limits which records COSOBA may release.
The bill is effective at 12:01 a.m. on the day following the ninety-day period after adjournment sine die of the General Assembly, or on the date of the official declaration of the vote of the people as proclaimed by the Governor, if a referendum petition is filed pursuant to Article V, Section 1 (3) of the State Constitution.
Background. The Veterans’/Law Enforcement/POW Tuition Assistance Program currently receives $50,747 in General Fund support annually. In FY 1996-97, 15 students received tuition assistance totalling $22,245. Through the fall semester for the 1997-98 academic year, 13 students have received tuition assistance totalling $13,286. The current recipients have an average of five semesters of eligibility remaining. Unexpended funds do not remain in the program, but revert to the General Fund at the end of each fiscal year.
At this time, CCHE cannot assess the cost benefit of funding the program through the purchase of advanced payment contracts versus the traditional “pay-as-you-go” method. It is assumed that the purchase price of a full four-year contract, at the time of the officer’s death or disability, will range from $7,500 to $9,300 per dependent (as noted in the chart below). This would cover tuition for some future time period until the dependent reaches the age of 25. Timing of the purchase of the advance payment contract is key in determining overall cost. The bill allows CCHE to fund tuition assistance to students 16 and over from appropriated student financial assistance funds.
Colorado Prepaid Tuition Fund — allows individuals and organizations to invest toward future college tuition through the purchase of tuition units. Each unit is equal to one percent of one year of average tuition at Colorado’s four-year public colleges and universities and state community colleges. The average tuition purchases today, becomes an amount equal to the average tuition in the year the student goes to college. According to the Fund’s “Guide to Tuition Units”, average tuition for one year is equal to 100 units. In the 1997-98 school year, 100 units would be sufficient to cover tuition at most of Colorado’s public colleges and universities. Attendance at the Univeristy of Colorado at Boulder, Colorado State University, Colorado School of Mines, and the University of Colorado — Health Sciences Center would require additional units for one year of tuition.
Cost of 400 Tuition Units —
Four Years Average Tuition
1 Year Old
2 Year Old
3 Year Old
4 Year Old
Kindergarten - 5 Year Old
CCHE indicates that in the short-term, it may be less costly to fund the current students through the existing mechanisms; which the bill allows. The bill provides that if the full tuition is not covered by the advanced payment contracts, CCHE must pay the difference out of other appropriations for student financial assistance. The bill does not require additional resources; it does require a reallocation of moneys in the event full tuition cannot be covered by the advanced payment contracts. CCHE indicate that the administrative costs of the program can be absorbed within exisiting staff resources. Therefore, the bill is assessed as having no fiscal impact.