Phil Vaughan, president of Phil Vaughan Construction Management, Inc. in Rifle, participated in the University of Denver's 2011 Strategic Issues Panel on State Government. On Wednesday Vaughan presented the DU panel's findings to the Yampa Valley Economic Development Council at the Moffat County Fairgrounds Pavilion in Craig.

Photo by Joe Moylan

Phil Vaughan, president of Phil Vaughan Construction Management, Inc. in Rifle, participated in the University of Denver's 2011 Strategic Issues Panel on State Government. On Wednesday Vaughan presented the DU panel's findings to the Yampa Valley Economic Development Council at the Moffat County Fairgrounds Pavilion in Craig.

Yampa Valley Economic Development Council hears DU panel report on Colorado government

Vaughan: Funding reform for education key to avoiding future economic collapse in Colorado

Rethinking Colorado's Government

Quotable

“I see anarchy in 12 years in Colorado, and this is not a good thing. We either take necessary steps today, or in 12 years, state legislators are going to have their long knives out because at that point, there won’t be any more room for conversation. There will be room for massive cuts.”

Phil Vaughan, member of the University of Denver’s 2011 Strategic Issues Panel on State Government

Between fiscal years 2008 and 2010, Colorado’s general fund revenue declined by $1.3 billion, or 16.6 percent, as a result of the national economic downturn.

The declining revenue, coupled with rising program expenditures, resulted in significant budget shortfalls of $1.2 billion in fiscal year 2009, $1.7 billion in fiscal year 2010, $1 billion in fiscal year 2011 and $1 billion in fiscal year 2012.

Because the Colorado Legislature is required by law to pass a balanced budget annually, many state funds have been drastically cut in recent years.

For example, in fiscal year 2012, spending cuts included the closing of a state prison, a $230 million cut to K-12 education and an $81 million cut to higher education.

Barring a revolution in the way the state government operates, Phil Vaughan, president of Phil Vaughan Construction Management in Rifle, estimates Colorado is about a decade away from slipping into a state of economic chaos.

“I see anarchy in 12 years in Colorado, and this is not a good thing,” Vaughan said. “We either take necessary steps today, or in 12 years, state legislators are going to have their long knives out because at that point, there won’t be any more room for conversation. There will be room for massive cuts.”

In 2010, Vaughan participated in the University of Denver’s Strategic Issues Panel on State Government.

The panel was designed to be nonpartisan and comprised 20 individuals from throughout the state who represented a variety of professional sectors, including education, business, agriculture and health care.

The purpose of the DU panel was to examine the Colorado’s principles and policies as well as publish recommendations for fiscal sustainability in the 21st century.

The report was published in 2011. Since then, Vaughan has been traveling the state and leading discussions about the report.

On Wednesday, Vaughan presented the panel’s findings to the Yampa Valley Economic Development Council at the Moffat County Fairgrounds Pavilion in Craig.

Although the DU panel analyzed the state’s spending trends in regard to transportation, health care and employee compensation, Vaughan contends funding for education is one of the biggest hurdles the state needs to navigate to realize fiscal sustainability.

Vaughan said there are certain Constitutional impediments that mandate increased expenditures regardless of available of revenue.

The most glaring example, according to the DU panel report, is Amendment 23.

“You get the budget back under control by looking at the tax dollars coming in, the tax dollars going out and understanding that we must have, under Amendment 23, a certain percent dedicated to K-12 education,” Vaughan said. “Amendment 23 is one of the main drivers of the state’s spending.”

Amendment 23 was passed by Colorado voters in 2000 and required the state to increase K-12 funding at the rate of inflation plus 1 percent through 2011 and keep up with the rate of inflation thereafter.

In fiscal year 2011, 63 percent of the state budget went to K-12 education. By 2025, K-12 spending is estimated to increase to 70 percent of the state budget, according to the DU panel report.

The panel, therefore, recommended a repeal of Amendment 23, not simply because it draws funds away from other state programs but because it also draws money away from higher education.

Between fiscal years 1990 and 2012, funding for higher education dropped from more than 20 percent to 7 percent of the budget, according to the DU panel report.

But the DU panel does not think a percentage of K-12 funds should be reappropriated to higher education should Amendment 23 be repealed. Instead, the panel recommended the state promote higher education through a system of stipends, scaled to reflect financial need, and allow Colorado’s institutions to succeed or fail based on the value they create for students.

In other words, funds would go to students, not college institutions.

“I can assure that within a week after this report came out, the presidents of many western Colorado institutions said we were insane and that ‘You are going to run Western State out of business, Adams State is going to die,’” Vaughan said. “This is hard medicine folks. There are going to be some deaths in this operation.”

Vaughan admits most people think the recommendations outlined in the DU panel report are extreme, including Colorado Secretary of State Scott Gessler and Gov. John Hickenlooper.

But Vaughan said if the state Legislature doesn’t begin making tough decisions in the next 12 years, like the ones the DU panel outlined for education, there will be enough revenue in the Colorado budget to fund only three state programs.

“Understand in 12 years, spending on K-12, corrections and Medicaid are going to have to be controlled,” Vaughan said. “K-12 can be controlled. We added 150,000 people to the Medicaid rolls in the last three years, and that spending can only be controlled with additional funding from the federal government, which is currently $16 trillion in debt.

“Corrections spending is something we can control to a certain extent, but is it OK to remove people who have committed certain types of crimes from the inmate population because of budget problems? That’s going to be problematic for a lot of folks.”

Joe Moylan can be reached at 875-1794 or jmoylan@craigdailypress.com.

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