Vouchsafed: Colorado's New Take on College Spending

Colorado has set up a voucher program for higher ed. The new law also creates the nation's first fee-for-service system, in which colleges will contract with the state to provide various academic programs. The state will provide students with vouchers worth about $2,400 a year, which they can spend at any public college or university in the state. If they choose to attend one of the three eligible private institutions, they receive a voucher worth about half as much. (In June, the Colorado Supreme Court ruled the state's K-12 voucher law unconstitutional.)

In order to make up the difference between $2,400 and the state's traditional share of per-student costs, colleges and universities will enter into contracts with the state to provide programs of study. The Colorado School of Mines, for instance, which now receives about $8,000 per student from the state, will contract with the state to provide courses and receive in return the missing $5,600 per student. In another complicated side effect, the program skirts Colorado's spending-limitation laws by creating new money middlemen in the system. Colleges will now be considered semi-independent "enterprises" that receive their money from students and the Colorado Commission on Higher Education, rather than directly from the state. Colleges will be able to raise tuition by higher percentages than would be allowed under the normal spending cap, but legislators will have to sign off on the increases.

Critics of the program complain that limited funds for public institutions will be diluted by private schools. "Once you allow the toe in the door to allow private institutions to have access to public funds, the demand will only increase," says state Senator Sue Windels.