The Colorado Promise

Transcription

1 The Colorado Promise The Colorado Promise ensures that every Coloradan who is willing to work for it can develop the skills they need to find opportunity in the new economy. The Challenge Ahead We find ourselves in one of the most profound and disrupting moments in our nation s history. Our economy is changing before our eyes, and it is leaving too many of those without the necessary skills behind. Almost half of today s American jobs won't exist in 15 years and 74% of jobs of the future will require postsecondary education. That means Coloradans will need much more skills training spread out over many parts of their careers. At the same time, the massive technological shifts in society present opportunities for innovation and progress. The Solution The Colorado Promise is as simple as it is bold: if you are willing to work hard and be of service to your neighbors, your community, and our great state, you will be given an opportunity to build the skills necessary to thrive in the 21st century. Everyone will be able to serve their communities and to earn two years of debt-free tuition for education and training that can connect them to good jobs and greater economic opportunity. How It Works The Colorado Promise will help Coloradans identify what skills and potential they currently have, what jobs are in high demand in Colorado, what gaps in skills they need to fill, and what training programs can develop those skills and fit their lifestyle. The Colorado Promise will ensure that participants get debt-free tuition for up to two years of training in exchange for providing meaningful public or community service. We will require programs to share student outcomes data and steer participants and aid toward the outcomes that best help their graduates. Lowand moderate-income students eligible for federal Pell grants will get up to $1,000 a year for books, fees, transportation and other expenses that could otherwise keep them from graduating. As members of the Colorado Promise Corps, participants can remain full time students or workers while serving. At scale, this program will help more than 70,000 Coloradans get training every year, and deliver two million hours of important service in communities across the state. How We Pay For It The Colorado Promise will provide any Coloradan debt-free tuition for training programs all the way up to, and including, two years of public community college through a combination of federal, state, and local funding. The Colorado Promise integrates visionary federal programs like the Pell Grant and American Opportunity Tax Credit, existing state scholarships, state savings from Colorado Promise Corps, state allocation of online sales tax, and state workforce development funding; this collective funding ensures up to $8,200 for tuition assistance towards skills training programs over a two-year period, which is enough to cover two years of tuition at a public community college. The plan also provides up to $1,000 a year to support additional expenses for Pell-eligible students. The new economy is a global war for talent and the winner will determine which states and countries thrive in the decades ahead. The next Governor must help build a new workforce for the new economy and make sure that opportunity is equally accessible to all hardworking Coloradans. 1

2 Table of Contents 1. The Challenge Ahead 2. The Solution 3. How It Works 4. How We Pay For It 5. Conclusion 6. Appendix: Budget at Scale in Year Six 1. The Challenge Ahead We find ourselves in one of the most profound and disrupting moments in our nation s history. Our economy is changing before our eyes, and it is leaving too many behind. For most Americans, real wages have not gone up in the last forty years. The advent of automation and globalization means more and more industries will be overturned and more and more Americans will be left struggling to seek new skills and to find new jobs in a changing economy. This change is accelerating, and will impact nearly every person and industry. There are three overlapping trends that are driving the transformation of the American economy. Almost 40% of today s American jobs won t exist fifteen years from now- they will be replaced with new roles that require a new set of skills; 74% of Colorado s jobs of the future will require postsecondary education; and today s young people will have an average of different careers over the course of a lifetime, many in industries that are only just emerging. Additionally, higher education and other career training opportunities are just too expensive, and the prices keep rising as state funding drops. This means the opportunities to grow with the economy and prepare for the jobs of the future are out of reach for too many Coloradans. This is all happening against the backdrop of the Colorado paradox: Colorado s high school graduates, especially students of color, attain degrees at a rate far lower than transplants to the state. The Colorado economy is the strongest in the nation, with booming opportunities in healthcare, technology, clean energy and many other sectors, but we have too many talented youth and adults who aren t getting the education and skills needed to succeed in many of these jobs. Absent a plan to address this, we are heading toward an entire generation of displaced workers without the skills to find their next career and without the resources required to pay for the preparation they need. Those who do pull together the loans to get training or attend college are too often left without a degree and with debt that can hamper them for a lifetime. Excessive student debt bankrupts families, reduces home ownership, diminishes entrepreneurship, and holds us all back. Too many Coloradans enter the workforce with a couple years of higher education with no degree, too few skills, and thousands of dollars in debt. What s more, identifying the training programs that will actually lead to jobs is too hard. Our workforce development and education systems have largely the same structure they did 100 years ago. In light of rapid economic and workforce shifts, there is little alignment between the skills our employers are looking for and the courses our colleges are teaching. For an employer, there is no clear market signal that the programs people enter will prepare them with the skills they need for jobs that are in demand. For an employee, there is little reason to take the financial and personal risk of entering a training program, especially without the certainty that it will lead them to a real job. There is still far more focus on earning degrees than gaining skills, widening the divide in a world where employers are looking for people with specific skills, but 2

3 colleges are producing people with degrees unaligned to those skills. This is why the training programs of the future must focus on acquiring the skills you need for the job you want, and getting that training faster and cheaper than the full degree programs of the past. The entire world has changed, but many of our schools and training opportunities have not. Without a new plan for workforce development we will continue to see a world where workers find themselves unemployed or underemployed, which will leave too many without the purpose and dignity that comes from meaningful work. At the same time, businesses stagnate because they can t find the workers they need to fill the jobs of the future. Without charting a new course we will see more of this dislocation at a time when we so desperately need all our talent to help grow the economy of the future. We need tens of thousands of Coloradans to help transition us to a green energy economy by We need the medical personnel to provide high quality healthcare to our families. We need the next generation of construction workers and technologists to build our state infrastructure of the future. The new economy is a global war for talent and whoever wins that war will determine which states and countries thrive in the decades ahead. If Colorado is to win that war for talent, the next Governor will have to help build a new workforce for the new economy, and make sure that opportunity is equally accessible to all Coloradans. 2. The Solution The Colorado Promise is as simple as it is bold: if you are willing to work hard and be of service to your neighbors, your community, and our great state, you will be given an opportunity to build the skills you need to thrive in the 21st century. Everyone will be able to serve their communities, earn debt-free education and training, find the perfect job and training for their interests and potential, and launch more prosperous paths. Whether you re an eighteen-yearold just leaving home, a 20-something struggling to pay for college or start your career, or a fiftyyear-old already feeling the pain of a changing economy, this promise is to you. The Colorado Promise unites all industries, sectors, and political parties across our state to leverage resources and create opportunities so that every Coloradan has access to affordable training and education to find and maintain a great job. This program will let us all share in the promise of our changing economy and build prosperous and purposeful lives. It is time to create a new model for workforce development that is built on the financial realities of the new economy; this means moving away from the old system -- where a high school diploma or college degree is an educational inoculation shot you get at age 18 that is supposed to keep you financially secure until retirement. Instead, we need to build a new system that works the way modern medicine works: regular check-ups, healthy eating, exercise, and booster shots that keep you healthy as the world changes. For some, The Colorado Promise could be the first step on the way to a four-year institution or other advanced training. For others, it will be the support they need to access the community college or alternative training pathway for their next career. The Colorado Promise will ensure every Coloradan has the chance to get all the skills they need, whenever they need them, to make the most of Colorado s economy. The Colorado Promise is designed to address three core needs: ensuring that everyone has access to the training they need for the jobs they want regardless of their income; reducing college debt for the next generation of students; and making sure employers have workers who are prepared with the skills they need to grow their companies in rapidly changing industries. 3

4 3. How It Works Step 1: Assess skills and potential strengths The first step of the Colorado Promise is helping participants determine what skills and career interests they already have, and what strengths they can leverage moving forward. We know many of the skills from our existing industries will be transferable to new industries -- heavy manufacturing skills, strong critical thinking skills, great customer service, and more. We know Coloradans, even those facing career dislocation, have many strengths that matter for the new economy; but we need to help them identify and showcase those key strengths. We will partner with existing efforts, including Skillfull, who help people determine their current strengths, skills, talents and untapped potential. For those joining the Colorado Promise straight out of high school, this process will focus more on identifying areas of career and academic interest. Step 2: Select a career pathway The second step entails building and maintaining a database that identifies what the growing industries and high demand jobs are in Colorado and what specific skills those jobs require. As a Senator, Mike co-sponsored the bill to create this database, and he will expand it as Governor. Through a public private partnership between the Colorado Bureau of Labor Statistics, Colorado Department of Labor and Employment, State Workforce Development Council, Academic Centers of Excellence, and companies, we will supply the best possible data about jobs and wages of the future. In addition to analyzing the current data, our systems will also help predict what new skills will be needed. Businesses and industries will work together to determine what skills are needed for the jobs they have so we can closely align these desired skills to the training workers receive. These skills will include everything from 3D printing to artificial intelligence to advanced manufacturing, as well as other exciting jobs of the future, allowing workers to identify which high demand job is of greatest interest to them, best matches the skills they have now and is aligned to the skills they want to grow. Step 3: Select an effective training pathway Colorado will create an education and training marketplace that provides participants with all the options that will help them acquire the skills needed to get from the careers they are leaving to the ones they have identified as the next step. These options could include community college, online programs, apprenticeship programs, work based training, union partnerships, or nonprofit training programs. Training will take different forms based on the career path, interests, and preferences of individuals. For each type of training, the state will also gather best evidence on the outcomes of those who ve opted for a given path -- employment rates, wages, career trajectories, and more. The participants can use this information to select the job that best fits their needs and the training program that fits their lifestyle and budget, while alerting them to the predatory programs that offer lots of debt and no skills. Some will opt to attend traditional institutions of higher education, and others will choose new alternative training and skill development. Still others will opt for on-the-job-training, such as apprenticeships with employers or unions. We will help link prospective employees to these programs and build partnerships between training programs and private employers to ensure there is strong alignment between what is being taught and what is needed in the economy. The Colorado Promise will help strengthen the training ecosystem by providing a $10 million fund during the initial phase that supports modernization and improvement at participating community colleges and alternative pathway training programs. These grants can be applied to 4

5 a variety of areas that will improve outcomes for students: supporting teaching training, modifying class schedules to support working students, building new partnerships, improving completion programs, and more. These will be competitive grants and will go to schools that demonstrate deep commitment to improving student employment outcomes. In addition to helping students understand what type of training will connect them to careers, the Colorado Promise will guide participants toward the specific schools and programs that produce the best results for their graduates. All training partners will be required to provide comprehensive data on program completion, graduate employment, future employer satisfaction, and other success metrics. These metrics will be used to publicly rate programs and steer students and state dollars to the programs that best serve all graduates. Employers will be asked to help build and shape the accountability into the Colorado Promise. Many already help by providing training funds for their employees, and we will challenge more to step up in this manner. We will also empower employers through a business council designed to provide feedback to training programs. This council will help inform the state s efforts to determine which programs best prepare participants for jobs of the future. Participating companies will report employee performance and compensation data linked to the training and education pathways. This will provide additional useful data in addition to the self-reporting from training and education institution. Through this process, participants will benefit from better training and employers will benefit from more prepared employees. In addition, programs will be aggressively policed to ensure that state dollars do not support waste, fraud, or abuse. As part of this effort, we will update the state s Eligible Training Provider list to be inclusive of new, innovative programs, so that federal and state dollars can flow to all who are serving individuals well. Programs that refuse to provide such comprehensive data will not be allowed to host Colorado Promise participants. Step 4: Make a commitment to service and receive tuition support As Governor, Mike will establish the Colorado Promise Corps, which will offer students a chance to earn funding for their education or skills training by providing service to the state. These parttime public servants will form a civilian version of the National Guard so they can serve their state without having to leave their day job or their family. In the Colorado Promise Corps, students will receive training in any setting -- community college, online program, residency program, etc. -- and commit to complete a term of service commensurate with the tuition costs of that program. The Colorado Promise Corps provides many critical benefits. First, it provides communities people power to address unmet needs in education, health, conservation, and other areas. Second, serving in the Corps helps Coloradans gain valuable experience in leadership, problem-solving, adaptability, and hard work. Third, it enables Coloradans to acquire the skills they need to enter the jobs they want without going deep in debt. And finally, service itself is a powerful community building experience, bringing together people from different races, classes, religions, and geographies. In a moment where America feels more and more divided, service brings people together around our common commitment to Colorado. Throughout our history, service to causes larger than ourselves has defined us as a nation and a people. Serving will allow individuals to earn new skills debt-free, but the act of serving also better prepares people for work. The evidence is clear. AmeriCorps members, for example, have a 27% greater chance of finding a job. AmeriCorps alumni without a college degree have a 51% 5

6 greater chance of finding a job. We know that Military Veterans, on top of serving the country, continue to strengthen their communities after leaving active duty with higher rates of volunteerism and other civic leadership. What s more, the new economy and the rapidly changing needs of employers necessitate a new set of strengths, including leadership, problemsolving, resourcefulness, collaboration, teamwork, and project management -- all skills that are strengthened through service. This service commitment is not a sacrifice; it is a fulfilling opportunity that has also been shown to help advance one s career. Serving the state in exchange for workforce investments sets off a virtuous social cycle -- community needs are met, individuals in the Corps gains skills and experiences employers want while also earning access to education and training, and employers get the talent they need to compete. This Corps will be an opportunity for all in the state, both those who have already served full time in the civilian or military service, and those who have not yet made that commitment or are not able do so. This opportunity to serve will make sure that everyone can join in the Colorado Promise. As Governor, Mike will ask every government department to identify unmet needs in Colorado that could be filled by this Colorado Promise Corps. This will help build the slate of new service opportunities to meet Colorado s needs and help Coloradans who serve develop specific skills that our new economy requires. Through this process we will define several statewide corps, along the lines of a Reading Corps, a Conservation Corps, or a College Prep Corps. This Colorado Promise Corps allows us to address two of the most immediate problems facing the country at the same time: we both ensure that employees of today are prepared for the jobs of tomorrow and we rebuild relationships across a country that finds itself deeply divided by taking the chance to serve together, arm in arm, regardless of ideology or party. We don t just need to come together so that we can solve these problems -- The Colorado Promise can help bring us together, change the trajectories of our lives, and strengthen the economy of our state. Participants will receive $20 of tuition support per hour of service, up to and until their tuition gaps are met. The highest need students, those who already receive Pell funding, will be able to opt into service as well and receive additional Promise Funds to cover books, fees, and other education-related expenses. Full-time Pell eligible students will be eligible for $1000 a year and part-time students $500 per year. Because recipients of Deferred Action for Childhood Arrivals (DACA) are not eligible for Pell Grants, we included an additional $500,000 scholarship fund specifically for our highest need DACA recipients. Mike sponsored the ASSET bill, which provided in-state tuition for this population, and is committed to continuing to help them pursue training and education. For all the anxiety and fear about the changing economy, Mike sees another story. A story where Coloradans can help ourselves get ahead while also helping Colorado. A story where your personal goals and Colorado s collective needs are not separate, but intertwined. A story that will be written by the ingenuity, resourcefulness, and pride of our state s people adapting and thriving in our new economy when provided with support and opportunity. That s Mike s promise to you and to Colorado. 4. How We Pay For It The Colorado Promise will provide any Coloradan access to debt-free tuition for training programs all the way up to and including two years of public community college to develop the skills they need. We do this by combining federal, state, employer contributions, and worker 6

7 sweat equity to provide up to $8,200 of assistance towards skills training over a two-year period, equal to the cost of tuition for two years of public community college. While the sticker price of community college is $4,107 per year, most have a lower tuition burden. Only 25% of Colorado public community college students attend classes full time. The majority attend part time. The remaining students pay, based on a conservative estimate, an average of $1,659. Of course, some students counted in that average have to pay above that number, so we include average tuition assistance of $150 per person for this population. The Colorado Promise provides full tuition support for full time students who do not receive Pell Grants who are still financially needy enough to receive the American Opportunity Tax Credit. It is also the case that not all community college students will opt into The Colorado Promise right away. This is a challenge to students. The ambition is that 50% of eligible community college students opt into the program. If that occurs, the state contribution to Community College tuition would be approximately $21.6M/yr. This assumes a 10% increase in full-time undergraduate community college enrollment, inspired by this new funding opportunity. These are not the only training programs of the future. Employers and employees want training programs that are more affordable, more efficient, and more aligned to job skills than some traditional community college programs. The Colorado Promise also supports alternative pathways such as boot camps, certification programs, and apprenticeships. Many of these pathways are a year-long or shorter. Our budget assumes that 11,887 participants -- a quarter as many as community college students -- will take advantage of this path through the Colorado Promise, at an average of half the cost of non-pell community college students, adding $4.1M to the cost. The estimated tuition gap between the American Opportunity Tax Credit (AOTC), which is described below, and the cost of an alternative pathway is $154, but this number is doubled in the budget to account for costlier outliers. While the Colorado Promise can support a wide range of training, the pathway must involve a degree, certificate, or other recognized educational credential so that the AOTC can be used. Finally, we budget for Promise Funds -- additional support to the highest need students who can already cover all of their tuition expenses through federal and state aid. Students with the greatest barriers to progress need money for expenses beyond tuition, such as books, fees, housing, childcare, and more. Students studying at least half-time can earn $500 a year through service to be applied to other educational expenses. Full-time participants can receive an additional $1,000 toward education expenses. As with all new financial support received through the Colorado Promise, this must be earned through service. We assume 50% of eligible community college students will participate and the cost will be $20.7M. Through this program, the Colorado Promise extends the opportunity of debt free tuition beyond those who currently have access to sufficient aid for tuition, and it further strengthens opportunities for those with the greatest need. We know that for many of our lowest income students the cost of books or fees or transportation can be the difference between completing a program and dropping out, and the Colorado Promise wants to make sure we close those gaps to keep all aspiring workers on track for the jobs they want in the new economy. This budget assumes that 50% of eligible community college students will participate at scale, and that just under 12,000 will participate in alternative career pathways. Some will opt out because of the service requirement, and others may still opt to attend programs that do not meet the Colorado Promise bar, explained above. 7

8 There will be a five-year phase-in period before the budget reaches this level. The Colorado Promise will launch with a first cohort of programs that are willing to share their program completion, graduate employment, future employer satisfaction, and other success metrics first, and show evidence of the best outcomes for students. We predict launching with 25% of eligible individuals and a budget $24.9M, and adding 5% of eligible students each year for five years. All told, The Colorado Promise will cost approximately $47M once at scale. We can make this promise a reality with an amount of funding equal to.1% of the state s budget. Here s how we pay for it at scale: Help Coloradans make the most of existing Federal and state aid for education and training: The Colorado Promise will make training affordable by ensuring that candidates leverage all existing federal dollars through visionary federal tax programs. Federal Pell Grants Every Colorado Promise applicant must complete the FAFSA form to be eligible for funding; this will ensure those who qualify receive Pell Grant funding. The Pell Grant alone can provide up to $5,920 per year per student. Right now, nearly 20% of Pell Grant eligible students -- 2 million Americans -- are not using it. Simply requiring students to fill out the FAFSA in order to be eligible for state scholarships helped Tennessee move from 42% FAFSA completion rate to 70% FAFSA completion rate in three years. Last year s completion rate in Colorado was 48%, and we assume a similar 28% increase in completion, totaling 76%, and an increase in Pell eligibility to Tennessee's level of 53%. Researchers at Columbia found that though two thirds of community college students are eligible for Pell grants, many just don t get them for lack of applying. We have much ground to make up, and requiring FAFSA completion will help. American Opportunity Tax Credit All Colorado Promise applicants must apply for the American Opportunity Tax Credit as well. Most American families are eligible for some or all of this creation of the Obama Administration, which provides up to $2,500 in tax credits per year. For students who do not have a large tax obligation, the good news is that $1,000 of this is refundable and available to all. The Treasury Department reports that the average AOTC is $1,900. Only single filers that make over $80,000 and joint filing families that make over $160,000 begin to see this credit phase out, which means a small minority of Coloradans are asked to use their own personal or family contribution to make the tuition debt free. The highest need students, those with family incomes under $50,000, will be able to fully fund their tuition through existing federal and state programs. These are current resources we can better leverage to help more students. By joining the Colorado Promise, these students will be guided through the process of gaining this full support. These students will also be urged to apply to other state scholarship programs targeted at this highest need population including the Colorado Opportunity Scholarship Initiative (COSI) which is a statewide scholarship program that Mike helped create. High need Colorado Community College System students earned $47M in state aid last year, and Mike is committed to fighting to maintain current levels of state funding for higher education. In addition to education funding, Colorado Promise will support other training programs with workforce development dollars. The Workforce Innovation and Opportunity Act provides approximately $80M to the state of Colorado every year dedicated to help people build the basic skills for new jobs and to help people make the job transition; we will optimize those dollars to 8

9 support the Colorado Promise. Over the first five years we will scale to a model through which we reallocate 5% of these funds, $4M, to the Colorado Promise. Worker Contribution Each participant in the Colorado Promise will join the Colorado Promise Corps and will make a meaningful commitment to service to different organizations that advance Colorado s long-term growth. Corps members will commit to different lengths of service based on the length and cost of their training. This service could be made to state projects or to non-profit and service organizations that join the Build Colorado network, a network that will include nonprofit organizations that are engaged in some public good and have certified needs that a service corps member or a group of service corps members could help provide. Corps members commit one hour of service for every $20 of education financing. If a Corps member has a $1900 AOTC but needs an additional $2200 a year to complete financing tuition, she would serve 110 hours of service each year. A full-time Pell recipient who applies for the $1,000 Promise Funds would serve for 50 hours a year. Our commitment to debt-free tuition means that Colorado families who can afford to pay tuition without having to incur debt will make the expected family contribution that their financial aid form determines is appropriate; individuals who have incomes over $80,000 or dual filing families with incomes over $160,000 would provide their expected family contribution. We conservatively estimate that this will be 10% of those who don t receive Pell Grants, or just under 5% of the student body. However, as part of the Colorado Promise, the state will build public private partnerships to establish Income Sharing Agreements (ISA) for those who would prefer to finance their training this way rather than upfront tuition costs. This will make it possible for students at any income level to get the training they need debt-free. Through these arrangements, students will commit to returning a percent of their future income in exchange for upfront tuition supports. This innovative new practice avoids the structure of interest-driven debt that can haunt students who do not find the income returns from their training to be sufficient to pay off debts. In addition to supporting tuition for higher income students, these ISA arrangements will be available to all students who want additional aid for the other costs such as books, fees, and housing. These ISAs also help align the incentives of the training program to prepare their graduates for high paying jobs in order to recover their costs so that all training programs are better aligned to the demands of the workforce. Service as Savings In addition, many service programs can save the government money, which can then be reinvested into the Colorado Promise. For example, FEMA Corps is projected to save the federal government $60M/year, and the Arkansas Community Connector Program saved the state over $2M in its pilot years. We can generate similar savings for the state by using Colorado Promise Corps Members to prevent and respond to fires and floods. Our model predicts 1.96M hours of service from Colorado Promise participants every single year, and if the hours are lower, the scholarships and state expenses are lower. As we scale a service corps that can solve public problems in Colorado we anticipate at least $2 of direct savings for every hour served, equaling $3.9M total. These savings could come in the form of a conservation corps that does trail repair, fire mitigation or flood prevention; a reading corps that provides direct support to struggling readers receiving state intervention dollars; or a nurse in training providing emergency staffing at a state hospital. These save the state money on future catastrophic fires, future dollars for reading interventions, or understaffed state hospitals that have to contract out-of-state vendors. 9

10 State Contribution Even with the federal tax credits, worker contribution and employer contribution, Colorado will need to provide additional resources to keep the Colorado Promise. The state will provide key financial support without raiding existing programs or raising taxes. Online Sales Tax New technologies are transforming industries in Colorado in the same way that online sales disrupted the tax base of brick and mortar companies. We had to adapt to this new environment, and Mike led the charge as the sponsor of the Main Street Fairness Act, which required vendors to collect and remit online sales tax in Colorado. That change represents a source of new and growing sales tax revenue for the state. The perfect way to serve those businesses of the future is to make sure we have employees trained with the skills they will need to help grow these businesses, which is why this online sales tax is the perfect new revenue source. The Colorado Promise will use 50% of the growth in new online sales tax revenue over the 2016 total. The Department of Revenue estimates that $170M is lost every year due to non-enforcement. Now that Colorado has won the lawsuit establishing the legality of these fees and the major vendors including Amazon have begun collecting them, revenues from this tax should increase dramatically to match actual online sales. Even a modest assumption of 35% capture by year five would lead to $59.5M of revenue for the state and $29.75M in funding for Colorado Promise by year five. Future Income Tax Earnings made possible by Mike s Pay for Success Legislation The Pay for Success legislation Mike sponsored in 2014 will also provide a source for Colorado Promise funds. Pay for Success legislation helps identify where certain state investments prevent much higher long-term state costs and/or generate new state revenue. Pay for Success financing allows nonprofit and outside investors to pay for the upfront cost of certain training services with the commitment that money will be repaid if the outcomes achieved either save the state money or bring in additional revenue. More and more foundations are investing in solving this important problem, and they could be engaged as investors in this Pay for Success funding stream. As just one recent example, Google announced a $1 billion, five-year investment in nonprofits helping train individuals for tech jobs. For the state and employers this is not a charitable donation, but a wise investment in our future talent pipeline. Increased enrollment in training will significantly increase state revenue by moving people out of low paying and disappearing jobs into higher-paying, high-demand jobs. Once a Colorado Promise participant has completed the training program and earned a new job with a higher salary, a percentage of the income tax increase that comes from this improved earning power will be used to support the ongoing financing of the program. Several states have experimented with such a model: in Texas, for example, 45% of this year s funds for technical college are generated in this value-added accountability funding formula. The technical colleges were calculated to have created $340M in direct tax benefits to the state, so the state appropriated $94M of those funds. We will launch a similar effort here in Colorado. As an example, students entering Arapahoe Community College make just under $10,000 on average, and those who graduate earn just above $35,000. While the student benefits from this gain, the state also generates another $1,158 in CO state income tax revenues. If we assume a $25,000 increase for the new community college enrollees, and an equal number of alternative pathway participants, this will generate $9.6M per year. This is a modest estimate, as we are accounting for one year of increased wages. This means that if the online sales revenues or state service savings or increased earnings don t meet budget expectations. the program could easily meet all program costs by increasing the income tax contributions for additional years of work. If we pursued a five-year capture of the new income tax generated by participants, this would cover 10

11 all Colorado Promise costs without needing any other source of revenue. This proves that the Colorado Promise is not only good for workers but good for the state. Moreover, this figure will increase year over year as we better tie curricula to business needs in high demand industries and we see salaries increase more and more. We will use the Pay for Success Program to fund the upfront costs of training, and the increased income tax revenue that will come from new career opportunities will support ongoing program costs. Many employers are currently piloting income sharing agreements to pay for the cost of college and training. The Colorado Pay for Success legislation empowered Colorado to build a state partnership to transform this income sharing agreement into easily captured income tax returns. Taken together, these innovative mechanisms, partially made possible thanks to Mike s prior successes, fund the Colorado Promise in full. 5. Conclusion The Colorado Promise ensures that every Coloradan who is willing to work for it can develop the skills they need to find opportunity in the new economy. The old social contract has been broken by the fastest changing economy in our nation s history. This is a new social contract that is rooted in affordable and effective pathways that ensure lifelong work in the 21st century. Land-grant colleges, the building of public high schools, and the GI Bill prepared generations for the workforce and renewed the strength of our economy. We built those programs because we saw an obligation and an opportunity to propel our people and our economy forward. The Colorado Promise is the next big step our great state must take in yet another moment of unprecedented changes. Like previous moments in our history, we are required to think differently and boldly about preparing generations for their future. We must think anew and marshal the leadership, resources, ideas, and most importantly, the will, from all industries, sectors, and political parties across our state. We can and will all share in the promise of our changing economy and build prosperous and purposeful lives. 11

12 6. Appendix. Budget at Scale in Year Six Costs Tuition Gap to Fill for Full Time Students Without Pell Grants $18,280,300 Tuition Gap for Alternative Pathways $4,163,552 Promise Funds for Part Time Pell Recipients $12,324,696 Promise Funds for Full Time Pell Recipients $8,405,000 Budget for Tuition Burden for Part-Time Students Without Pell Grants $3,323,250 DACA Fund $500,000 Total Costs $46,996,797 Revenue Online Sales Tax $29,750,000 State Returns from New Income Taxes $9,612,558 Service Savings $3,919,547 Workforce Innovation and Opportunity Act Reallocation $4,000,000 Total Revenue $47,282,105 12