Colorado Legislative Council Staff

STATE and LOCAL

REVISED CONDITIONAL FISCAL NOTE

(replaces Fiscal Note dated March 12, 1998)

TABOR Refund Impact

State General Fund Expenditure Impact

State Cash Fund Revenue Impact

Local Revenue and Expenditure Impact

TITLE:            CONCERNING THE ACCEPTANCE OF COLORADO NORTHWESTERN COMMUNITY COLLEGE INTO THE STATE SYSTEM OF COMMUNITY AND TECHNICAL COLLEGES, AND, IN CONNECTION THEREWITH, APPROVING THE CONTINUATION OF THE RANGELY JUNIOR COLLEGE DISTRICT AND THE MOFFAT COUNTY AFFILIATED JUNIOR COLLEGE DISTRICT FOR SPECIFIED PURPOSES, AND MAKING AN APPROPRIATION THEREFOR.

Summary of Legislation

             *Cash fund tuition and fee revenue includes current receipts of $1,254,500 plus the projected increase in tuition revenue of $537,500.

            This bill, provides for the approval by the General Assembly of a plan submitted by Colorado Northwestern Community College (CNCC) to join the state system of community and technical colleges (SBCCOE). CNCC would join the state system upon the enactment of an appropriation to fund CNCC as part of the state system and approval of the plan by the voters of the Rangely Junior College District and the Moffat County Affiliated Junior College District at the November 1998 General Election.

            If the plan is approved by the voters, and moneys are appropriated, CNCC would enter the state system effective on the date of the appropriation. Upon entry into the state system, CNCC would be under the management and control of SBCCOE; the assets and liabilities of CNCC would be transferred to SBCCOE; and the educational facilities of CNCC would be immediately eligible for state controlled maintenance funds.

            The Rangely Junior College District would continue to collect property tax and specific ownership tax. In addition to the mill levy required for debt service on outstanding general obligation bonds previously approved by the voters, beginning in December 1999, the district would levy a property tax in the amount of 5.0 mills. The purpose of the mill levy would be to assist residents of the district in defraying increases in tuition that would result from entry into the state system; to provide supplemental funding to the state for operating costs; to erect new or renovate existing facilities; and to provide capital funding for technology enhancement and supplemental equipment for CNCC. The Moffat County Affiliated Junior College District would continue to collect property taxes for a period not to exceed ten years in the amount of 3.0 mills. The property taxes would be used for the same purposes as those identified for the Rangely Junior College District.

            If the plan for CNCC is approved, an advisory council for CNCC would be established consisting of seven members, including three members of the Rangely Junior College District Board of Trustees, three members of the Moffat County Affiliated Junior College District Board of Control, and one member at large appointed by SBCCOE from within the service area of CNCC.

            Since enactment of the appropriation to fund CNCC as a part of the state system is contingent upon approval of the plan by the voters of the Rangely Junior College District and the Moffat County Affiliated Junior College District, the bill is assessed as having a conditional fiscal impact on the state and the two districts. The bill would become effective upon signature of the Governor.

State Revenues

            During the 1996-97 academic year, there were 836 student FTE attending Colorado Northwestern Community College. CNCC currently charges a three-tiered tuition structure, including in-district, in-state, and out-of-state, with property tax revenue subsidizing the in-district cost for students. When CNCC joins the state system, the fee structure would have to be approved by SBCCOE, and tuition would be adjusted to the regular community college tuition rates ($54.30 per credit hour for in-state residents). Current tuition and fee revenue identified as part of the 1997-98 CNCC budget is $1,254,500. The increase in tuition is estimated to generate an additional $537,500 in tuition revenue annually. This includes $431,200 from in-district students, $43,800 from other in-state students, and $62,500 in out-of-state tuition. The increase in tuition is considered a state cash fund revenue source for purposes of calculating state fiscal year spending. The total projected increase in state cash fund revenue is projected to be $1,792,000 beginning in FY 1999-00.

TABOR Refund Impact

            Section 20 of Article X of the Colorado Constitution, limits the maximum annual percentage increase in state fiscal year spending. Once total state revenue from all sources that are not specifically excluded from fiscal year spending exceeds these limits for the fiscal year, the state constitution requires that the excess shall be refunded in the next fiscal year unless voters approve a revenue change as an offset. Based on the current Legislative Council economic forecast, it is projected that the state will be in a TABOR refund position during each of the next five fiscal years. Any increase or decrease in state revenue from changes in fees, fines, licenses, or other revenue sources, including total tuition revenue, will affect the amount of the state revenue to be refunded.

State Expenditures

            Operating Expenditures. In response to action taken by the Rangely Junior College District Board of Trustees and the Moffat County Affiliated Junior College Board of Control, CNCC has presented a plan to (SBCCOE) to join the state system. The operating budget of CNCC for FY 1997-98 includes revenue from the sources identified in Table 1 below:

Table 1. CNCC Operating Budget Revenue Sources

            If CNCC were to join the state system, the expenditure of additional state General Fund moneys would be required to offset several changes in the structure of revenues and expenditures for CNCC beginning in FY 1999-00:

            •   The current property tax collections of $5,280,000 currently used in the operations of CNCC would be reduced by $4,780,000 to $500,000. The remaining $500,000 in property tax support by the property owners within the Rangely Junior College District would continue.

            •   Employees at CNCC are currently not in the state classified employment system. It is anticipated that salaries at CNCC will increase when staff members’ salaries are matched with positions and salaries in the state personnel system by approximately $125,000 annually.

            •   Funding is requested by CNCC for additional administrative computing and telecommunication costs at amounts that are comparable to other state system community colleges in the amount of $300,000.

            •   CNCC currently charges a three-tiered tuition structure, including in-district, in-state, and out-of-state, with property tax revenue subsidizing the in-district cost for students. The in-district tuition rate for the 1997-98 academic year is zero for Rangely Junior College District residents with student fees of $470. The Moffat County Affiliated District tuition rate is $528 per year with student fees of $168. When CNCC joins the state system, the fee structure would have to be approved by SBCCOE, and tuition would be adjusted to the regular community college tuition rates ($54.30 per credit hour for in-state residents). The increase in tuition is estimated to generate an additional $537,500 in tuition revenue annually.

            As identified in Table 2, the projected need for additional state General Fund moneys for operating purposes beginning in FY 1999-00 is $4,985,460.

Table 2. State General Fund Expenditure Requirements, FY 1999-00

            Capital and Controlled Maintenance Expenditures. Table 3 identifies the projected capital and controlled maintenance expenditures for CNCC for the five-year period from FY 1999-00 through FY 2003-04. CCHE indicates that capital expenditures will be requested initially through the state capital construction process, but property tax support from the two districts may also be requested. The controlled maintenance will become a state funded obligation if CNCC comes under the management and control of SBCCOE.

Table 3. CNCC Capital and Controlled Maintenance Expenditures

FY 1999-00 through FY 2003-04

Local Government Impact

            It is anticipated that a property tax levy of 1.4 mills would be necessary for the Rangely Junior College District for the retirement of outstanding general obligation bonds through 2006. As of June 30, 1999, the district will have $1,695,000 in outstanding general obligation bonds. In addition, the bill would authorize the Rangely Junior College District and the Moffat County Affiliated Junior College District to levy a property tax mill levy for the purpose of assisting residents of the district in defraying increases in tuition that would result from entry into the state system; to provide supplemental funding to the state for operating costs; to erect new or renovate existing facilities; and to provide capital funding for technology enhancement and supplemental equipment for CNCC. The current mill levy of 17.466 mills for the Rangely Junior College District would be reduced to an initial mill levy of 5.0 mills. This levy would raise approximately $1.0 million annually, and would be continued indefinitely. The current mill levy for the Moffat County Affiliated Junior College District of 3.5 mills would be reduced to 3.0 mills, and would raise $1.0 million annually. This levy would be discontinued after a ten-year period on January 1, 2009.

Spending Authority

            The fiscal note would imply that no appropriations or spending authority are required in FY 1998-99 to implement the provisions of the bill. The amount required to be appropriated for FY 1999-00 includes a General Fund appropriation of $4,985,460.

Departments Contacted

            Colorado Commission on Higher Education