Legislators Monday got some modest good news about the 2010-11 budget but some sobering forecasts about 2011-12.
The good news is that the 2010-11 budget, which goes into effect July 1, probably won’t need further major cuts beyond a $75 million adjustment by Gov. Bill Ritter in order to keep the state’s reserve at legal levels.
The bad news is that the 2011 legislature may need to make about $1 billion in cuts to the 2011-12 budget, depending on future levels of federal support for Medicaid; on inflation; on growth in the numbers of prison inmates, sick people, school kids and college students, and on how lawmakers decide to replace one-time sources of money that were used to balance the 2010-11 budget, such as federal stimulus funds.
Because state support for K-12 schools and higher education spending consumes nearly 40 percent of total state spending and more than half of the tax-supported general fund, any cuts are expected to fall heavily on education.
Some legislative leaders previously estimated that K-12 and higher ed could see cuts of $300 million each in 2011-12.
The two revenue forecasts released Monday offer no detailed hints of what education cuts might look like – it’s much too early in the game for that.
The $1 billion figure didn’t come as a major surprise. Informal estimates in that ballpark were circulating during the closing days of the 2010 session, which adjourned May 12.
But, Monday’s release of the formal quarterly revenue forecasts by legislative staff and the executive branch Office of State Planning and Budgeting mark a key point in the 2011-12 budget process and begin to focus the issue for legislators.
Executive branch departments already are refining their 2011-12 requests, another set of forecasts will be issued in late September and Gov. Bill Ritter has to submit his 2011-12 budget to the Joint Budget Committee by Nov. 1. The panel will hold budget hearings in November and December, and another set of forecasts in late December will update the situation just before the 2011 session convenes.
The national recession began affecting state government in 2009-10 budget year, which is about to end. Lawmakers last spring had to make significant mid-year adjustments in spending, including a $130 million cut in K-12 support. Creation of a balanced 2010-11 budget required significant cuts and revenue shifts.
Total program spending for K-12 schools was about $5.4 billion in 2008-09 and was supposed to rise to nearly $5.7 billion this year, before the midyear adjustments trimmed it back to just under $5.6 billion.
Using a narrow interpretation of the Amendment 23 school-funding formula, the legislature approved about $5.4 billion in total program funding for 2010-11. Full A23 funding would have been about $5.8 billion. The 2010 school finance law recommends the same $5.4 billion figure for 2011-12, although that can be changed by the 2011 legislature.
(Total program funding is the amount of state aid and local revenues used for basic classroom and administrative operations. It doesn’t include additional state aid for such things as transportation and special programs, some federal programs and district revenues from bond issues.)
School districts have responded with layoffs, wage freezes and other cuts of a magnitude Colorado schools haven’t seen in years. (See the One-Stop Budget Cuts Info Center for details.)Spending at state colleges and universities was maintained at just under $2 billion for 2010-11 – but only with the help of significant federal stimulus support and 9 percent tuition increases for resident undergraduate students. Higher ed is seen as particularly vulnerable to cuts in 2011-12. Senate Bill 10-003, the major flexibility legislation passed last spring, requires colleges to prepare reports on how they would handle a 50 percent cut in state support. Those are due next autumn.