Time:09:09 AM to 05:01 PM
Place:HCR 0112
This Meeting was called to order by
Senator Heath
This Report was prepared by
Josh Abram
X = Present, E = Excused, A = Absent, * = Present after roll call
Bills Addressed: Action Taken:
Call to Order - Opening Comments
Commission Discussion: Transportation
Continuation of Transportation Discussion
Commissioner of Education

09:09 AM -- Call to Order, Opening Remarks, Conclusion of Discussion from September 19

Following opening remarks, Senator Heath provided a recap of the last part of the conversation from September 19.

Representative Court began the conversation by revisiting the relationship between the core functions of government and the vision we have for what kind of government we want. She remarked that one of the core functions desired by her constituents is the provision of a safety net as part of the base expectations in a civil society, and that a focus on health care is related to the long term discussion of the state's economic and fiscal stability.

Representative Gerou responded that we need not be tied into providing services simply because of our dependance on federal grants. This is a result of trying to be everything to all people. We could rely more on the people of our state and less on the federal and state government.

Senator Heath asked Senator Morse if there is a good middle ground in the way Senator Morse's vision for the state had been articulated during yesterday's discussion. Senator Morse responded by recognizing that all public efforts are collective; they are a collaboration of the community in the solving of public problems. This is the basis of his vision of what the state should be with respect to justice, opportunity, and the American dream. He believes that all the state's citizens can be provided justice and opportunity.

09:29 AM

Representative Court related a story about a discussion concerning universal health care. The point being that prevention is a core value of good government functions.

Senator Heath asked Ms Lynne about health care. She responded that access to quality health care is one issue, but that how we create an environment that encourages healthy behaviors via education, information, health care tools, etc., is another important part of good policy. It isn't about how to provide insurance; rather, how to provide actual care (preventative and otherwise) to those who cannot provide for themselves. How do we have an adequate supply of health care professionals in the state? How do we provide the right information, education, and tools? How do we provide health care to those who cannot provide for themselves? These are the important questions.

Ms. Cooke remarked that she never wants the government to tell her, as a parent, what is appropriate for her or her children. There should be no mandates on health care. She does not believe health care is a core function of government; however, she has no objection to the state taking care of those who cannot care for themselves, such as the adult disabled. She reiterated that it should not be a function of government to make sure that an individual is healthy.

09:44 AM

Mr. Conway commented that one size doesn't fit all: government cannot be everything to everybody. This approach becomes inefficient especially when we become dependent on federal assistance. There are opportunities, via waivers or other innovations, to bypass some of the requirements of federal dictates linked to federal grants. Senator Heath asked whether we should walk away from federal money. Are we willing to leave that money on the table and forego the assistance? Mr. Conway answered that this should be a case-by-case decision, but that there are ways we can to do it more efficiently. We can question the rule and requirements of federal assistance when those rules are cumbersome and the return on that investment will not be maximized.

09:51 AM

Ms. Cooke asked if there is any way to study what the impact will be of the infusion of federal money. Will it require that we maintain these expenses even after the federal money is spent? Will we be committed to continue programs that are initiated with this federal money? Senator Heath answered that the money is designed to meet interim needs and for projects that won't necessarily have to continue. In the case of higher education this may not be the case, but overall the money is one-time assistance as a backfill to current shortages.

Natalie Mullis clarified that most programs are receiving only one time money, however some moneys will go for ongoing projects, such as corrections. Senator Morse asked if the one time money is accounted for in the upcoming economic forecast? Will we know where the infusion of all these funds will plug permanent gaps, and where it will need to be replaced at some point with state funds. Ms Mullis responded that, indeed, we are tracking where this money goes. Renny Fagan remarked that the governor will also be tracking this very closely. Mr Fagan continued that if the state gave up the 50% of federal dollars in Medicaid, how would we provide the same services with half the money. This has been discussed by legislators in the past.

10:05 AM

Carol Boigon asked how much money would the state like to leave on the table, because Denver would be willing to take it. The question becomes what strings are attached. The county struggles with caseload allocations, but may have a federal constraint. At the city, much of the constraints were created administratively, at the state level, and can be untangled without jeopardizing the federal assistance. Ms Boigon summarized some of the commonalities that the group has been discussing and Senator Heath tried to carry on that thread of discussing common themes, including the government's role in fostering economic development.

10:25 AM

Senator Brophy remarked that keeping taxes low and reducing the regulatory burdens on business will improve our ability to cultivate economic development.

10:29 AM


10:45 AM -- Commission Discussion: Transportation

Russell George, Executive Director of the Colorado Department of Transportation addressed the commission and provided an overview of the department and a review of the blue ribbon commission report, the 2035 Statewide Transportation Plan, and the Transportation Deficit Report. The full report can be found at:

The director provided a brief history of funding sources for the state highway system beyond the county level. This started as a 1 penny tax on gasoline in 1933, and this fuel tax was the only source of funding for several years. In the beginning, the tax was able to keep pace with the need. Beginning in the 1950s, the federal interstate system also provided a fuel tax. Today, funding is still primarily from the fuel tax, and the revenue is shared by the state, counties, and cities.

Beginning in 1992 with TABOR, any increase in the fuel tax has to be approved by voters. The citizens have twice rejected an increase. Senate Bill 1 in 1997 allocated a portion of the sales tax to transportation, subject to triggers. We also draw funds from federal transportation fund (federal fuel tax) that the states contribute to collectively. This money is then prioritized back to the states for various projects. These different sources of revenue, with differing constraints, must be managed by the state's Department of Transportation.

In 2007, the department hit its historical funding high. This has dropped off afterwards, from about $1.5 billion in 2007 to roughly $750-800 million currently. Fuel tax revenue is likely the only sustainable source of revenue, however the buying power today is roughly the same as it was in 1983. Federal dollars are not predictable. The Governor's blue ribbon transportation panel suggested that the state work from what the public has told us it wants, and attempt to put a cost on these needs. The panel concluded that 500$ million each year must be spent to maintain the current system, and that an additional $1.5 billion for each of the next 20 years is necessary to meet the demand of the department's 2035 plan.

11:22 AM

Senator Heath summarized that, given the current budget shortfalls, reduced revenues, and the recommendations of the blue ribbon commission, approximately $3.5 billion a year is needed. Representative Court asked how FASTER is calculated in these estimates. Mr. George responded that the dollars from FASTER are part of each annual budget and the deficiencies in the budget will be a little smaller than it would be otherwise, without having passed FASTER. Mr. George then discussed the ARRA funding.

11:27 AM

Jonathan Coors asked what the percentage of the cost of capital projects is, as compared to the maintenance cost of that project. Mr George answered that future maintenance costs are not part of the budgeting of new projects. The transportation commission appropriates the budget for transportation, not the General Assembly. These appropriations of maintenance are prioritized separately from the construction of new projects.

Mr. Coors asked how long it can take between the decision to begin a project and when it actually can begin. Mr. George answered that this is dependant on each circumstance. Some projects are decades away, some only a few years away. Much of this is dependent on federal requirements for an Environmental Impact Statement.

Mr. Coors asked if there is a difference between state and federal roads and how maintenance for these roads is divided among the responsible (state or federal) authority. Mr. George answered that these decisions are not distinguished between the federal road and the state road. For example, the state is responsible (subject to approval from the federal government) for Interstate 25, which is essentially a local road, even though this is a federal highway.

11:37 AM

Senator Brophy wondered if our longer horizon of 20 years for the Interstate 70 corridor can be shortened. Mr. George discussed the I-70 corridor and the unique challenges of getting construction for this section planned and executed. Senator Brophy wondered what percentage of the cost is related to the National Environmental Protection Act process for Environmental Impact Statements (EIS). Mr .George responded that we have already spent $30 million on the programmatic EIS and that we are now ready to design and build. Therefore, should funding be available, things should move quickly.

11:42 AM

Renny Fagan asked if there is bonding included in the DOT budgeting for the future? Mr. George answered that all kinds of leveraging are on the table for discussion, including public/private partnerships, but the department must find sustainable and predictable revenue sources to back the leverage.

Representative Gerou asked if the department ever calculated the money we don't collect from tourist travellers? Mr. George answered yes, however tourists do pay fuel taxes. The blue ribbon panel and the department did explore tolling, even though this is unpopular in the west. Vehicle miles traveled (VMT) is another principal that is being discussed frequently. Systems can be designed that charge folks on the specific distances traveled and at what times. These ideas were in the first drafts of the FASTER bill but came out fairly quickly. VMT will continue to be discussed nationwide and, in time, may become more attractive because, as a user fee, it charges those travellers who use the system most.

11:54 AM

Senator Heath summarized the morning session. He reiterated that approximately $3.5 billion is needed each year for our infrastructure needs. Our foreseeable revenue will cover perhaps only a third of that. Our task is to find a predictable revenue stream. At each of the next several meetings, the commission will engage in a similar process for other types of state services.

11:58 AM


01:25 PM -- Continuation of Transportation Discussion

Senator Heath called the committee to order and talked about the earlier discussion about the differences between wants versus needs. He asked Mr. George what the state needs to provide in order to have a safe highway system. Mr. George estimated that for FY 2011 about $1.3 billion is needed to keep the state in its current state. He calculated this by adding the Highway Users Trust Fund (HUTF), which stays relatively stable at about $500 million, with the FASTER dollars that will be about $200 million, with the federal funds that he expects to be at least $100 million. Those numbers total $800 million. He explained that at $800 million, the department would do only maintenance projects. Mr. George said that an additional $500 million more would allow the state to maintain the system as it was in 2007.

01:34 PM

There was a discussion about the state gas tax, which is 22 cents a gallon for regular and 24 cents for diesel. The federal tax is 18 cents a gallon. Senator Brophy calculated that if 22 cents a gallon generates the state about $500 million a year, then the 18 cent federal tax should generate more than the $100 million Mr. George expects the state to receive this year. Mr. George stated that the funding is front-end loaded over a 5-year period, and that the numbers were higher at the beginning of the federal program. Mr. George said the current federal legislation expires in September and will be renewed at that time for 5 years. Mr. George explained that it may be more than $100 million, but they will not know until this legislation is passed. Mr. George also explained that the only piece of the money that can be bonded against is the $100 million for bridges from federal funds.

01:49 PM

Senator Heath pointed out some suggestions to address the $500 million shortfall from page 37 of the 2008 blue-ribbon report, including a motor fuel tax increase, a sales and use tax increase, a severance tax increase, a visitor fee, or a highway maintenance fee. There was a discussion about vehicle miles traveled (VMT) versus fuel usage as a source of revenue. Ms. Cooke talked about prioritizing projects and maintenance and then funding them from the top down using the $800 million. She talked about potentially looking at outsourcing the remaining projects. Mr. George explained that the current transportation budgeting system does use prioritization to determine what gets funded with the money they receive.

02:13 PM

Senator Heath asked the commission if it feels that the $800 million is sufficient for transportation. Representative Court asked the department to list its priorities within the categories provided on page 37. Representative Gerou said Colorado does not spend money on revenue drivers, such as roads. Senator Brophy added that the commission should focus more long term than on fixing the current budget. He offered an idea of taking the money dedicated to K-12 that will be freed up in FY 2011, the plus the 1 percent inflation piece, to fund transportation. Senator Morse suggested finding the bottom line for each of the big departments before figuring out how to pay for them.

02:27 PM

Senator Heath explained to the committee that they are trying to figure out what to fund and then they will determine how to pay for those things at the November meetings. There was a discussion about talking about how to fund programs while they determine need rather than at the last two meetings. Ms. Neilson asked Mr. George about privatizing maintenance. Mr. George explained that contracts are used in certain circumstances and that they try to contract out based on cost savings. Mr. Conway talked about his concerns regarding the highway fund and asked whether Mr. George feels it is sustainable and what ideas, if any, he has heard about to replace it if the fund were to become insolvent. Mr. George said that the American Association of State Highway and Transportation Officials is advocating a gas tax increase, a federal infrastructure bank funded by federal general funds, and VMT. Ms. Cooke asked Mr. George what $1.3 billion would provide the state.

03:07 PM

Ms. Boigon urged the commission to talk about innovative changes as opposed to maintaining the current system. Mr. Hume brought up looking at neighboring states.

03:13 PM

Senator Heath wrapped up the discussion on transportation.

03:34 PM -- Commissioner of Education

Senator Heath explained that the commissioner would be giving an overview of the education funding system and then at the next commission meeting the commission would have a discussion over the cost of education similar to the one today on transportation.

03:36 PM --
Commissioner Jones, Colorado Commissioner of Education, introduced Vody Herrmann, Assistant Commissioner on Financing Public Schools, Robert Hammond, Deputy Commissioner, and Rich Wenning, Associate Commissioner on Legislation and Policy, and distributed a handout (Attachment A). Commissioner Jones explained that the state needs to ensure an education system that provides every student with access to a high quality school.


Commissioner Jones talked about the positive proficiency levels in the state and mentioned that the state needs to work on issues related to at-risk students, who can be minority or low income children. He listed other key roles the state needs to take regarding education, including:

Commissioner Jones talked about some legislation in education, including Senate Bill 212, the CAP for kids bill, that is attempting to realign content standards by looking at common core standards. He said teachers have said that the standards that were used over the last 10 years are too broad. Lastly, the bill includes grade-level specific standards and the commissioner talked about the problem of unbundling standards in order to determine what to teach children and when. The Commissioner also talked about Senate Bill 163 that aligns the three accountability systems: School Accountability Reports (SAR), the accreditation system, and the federal requirements of No Child Left Behind. Finally, the Commissioner discussed House Bill 1065, the teacher identification bill that connects teachers to the achievement of the children in order to ensure there is a high quality work force.

Mr. Jones said the department needs to find a way to assess programs. He also talked about the federal government's role and the race to the top. He said teachers are fearful that there will not be enough training to roll out these new systems.

03:56 PM --
Vody Herrmann, Assistant Commissioner on Financing Public Schools, walked through the school finance formula. She explained that the formula allows for base per pupil spending and once per pupil funding is determined, an average is taken and the lowest districts are taken up to a 95 percent funded level. Ms. Herrmann also talked about the free lunch program and its funding. As the economy gets worse, the number of free lunches tend to increase. She said that in 1994, 44 percent of funding was local and 54 percent state, about 60 local and 40 state. Now, it is about 65 percent state and 35 percent local. Ms. Herrmann talked about the impact of the residential rate dropping. She also talked about the increase in the number of students. In 1994, there were 612,488 students. Today, there are 787,065 students, an increase of 28.5 percent, or 11,600 students per year for each of the 14 years. The other growth they have seen is in the free lunch program. In 1994 there were 138,836 in the program and now there are 250,722, an 80.6 percent increase. Ms. Neilson asked why there is only a 28 percent growth in enrollment and an 80 percent growth in free lunch.

04:13 PM

Robert Hammond, Deputy Commissioner, talked about the make-up of education funding. He explained the department received $4.7 billion in total appropriations, of which general fund dollars made up 69 percent, or 3.3 billion, cash funds 17 percent, or $810 million, reappropriated funds 0.5 percent, or $22.7 million, and federal funds 13 percent, or $621 million. He explained that 1.1 percent is issued for management and operations of the department.

04:21 PM

Mr. Coors asked for a projected increase in the number of students over the next 5 to 10 years. Ms. Herrmann estimated about a 1.5 to 1.6 percent increase in population each year. Representative Court asked which regions in the state have the most growth. Ms. Herrmann said that on-line schools are increasing the most and mentioned some counties, including Douglas County and the Fort Carson area. Mr. Fagan asked how the state is doing on class size and teacher experience. The commissioner explained that there are many factors that relate to schools that achieve good outcomes. Commissioner Jones said the new "School View" program will track a number of factors so they can better answer that question. The new system will allow for comparisons between the number of minority students to similar districts, and he explained that sometimes you can have a large class size and still achieve good outcomes. Mr. Fagan talked about the voters allowing the legislature to float the mill levy to adjust the 65/35 state and local share and whether that would adjust those numbers. Ms. Herman said she believes this would work if certain caps are put in place.

04:36 PM

Mr. Conway talked about the trends in population throughout the country, lower birth rates, and low migration.

Natalie Mullis, Chief Economist, Legislative Council, explained that there is still a high migration to Colorado even though there is a reduction in inflation. There was a discussion about factors in the growth of students in the state. Ms. Herman talked about the addition of preschool. There was a discussion about the increase in military troops at Fort Carson and the impact that has on student numbers. A discussion ensued regarding federal funds for those troops. Ms. Boigon asked about funding for special education and its make up. Ms. Cooke talked about her experience teaching American history in college and the lack of writing knowledge.

04:53 PM --
Mr. Wenning, Associate Commissioner on Legislation and Policy, was asked to talk about school assessment.

04:59 PM

Senator heath wrapped up the meeting and explained that the next meeting will be in September with the Department of Education. The committee adjourned.