Report Finds Economic Mobility Remains Unattainable for Many Coloradans
By Robert Davis
Economic mobility remains unattainable for many low-to-moderate income Coloradans, thanks to stagnant public investment in education and the state’s high cost of living, a report by The Bell Policy Center found.
Authors Dr. Anita Alves Pena, an economist at Colorado State University, and graduate student John Singleton performed a statistical analysis of 20 years of budgetary data in Colorado’s six key funding areas: K-12 education, higher education, healthcare, human services, corrections, and judicial. They intended to identify funding priorities that help raise people out of poverty.
The report concludes generally that public expenditures in education help reduce poverty. Particularly, K-12 education showed the highest correlation to increased homeownership, which is the report’s measurement of economic mobility.
However, significant attainment gaps remain between different demographic groups. To Pena and Singleton, this led them to conclude that strategic public investments are needed to build “better institutions and systems to support all Colorados.”
“Our report is really a call to policymakers based on rigorous statistical analysis of real-world data that is representative of the lives and experiences of real Coloradans who have been facing increased costs of living over time,” Pena told the Denver VOICE
“The reality is that we have taxes and we have spending at the state level, and there are real tradeoffs among the many things that we can spend our state money on,” she continued.
Statistical models with increased K-12 education funding showed lower probabilities of a family experiencing poverty equally for whites and communities of color. Conversely, models with increased higher education funding showed an increased probability of communities of color experiencing poverty.
The authors said the phenomenon can be explained by the way Colorado allocates its General Fund education dollars. K-12 programs are directly funded, meaning their costs are paid out of the General Fund. On the other hand, higher education is primarily paid for through cash funds like fees and tuition.
A report released by the Colorado Department of Education in 2019 identified increased cash funding as a primary reason why the cost of attending a college or university in the state has increased 65 percent in the past decade.
Similarly, the authors found the share of Colorado’s lowest-income individuals who attended a four-year program grew from 13.5 percent to 23.1 percent.
For low-income Coloradans who view education as a means of improvement, “this suggests an increasingly reduced return on investment in higher education when compared with wage stagnation over the same period,” according to the report.
Using census data, the duo was able to paint a picture of how funding shortfalls have changed middle class and low-income families in Colorado over time.
Overall, families living below the federal poverty line have experienced lower total family incomes over the past two decades. For example, a family of two adults and one child receives a combined income of only $21,720 per year.
Meanwhile, the number of families in Colorado that meet these criteria is growing, even though the percentage of families living in poverty has remained relatively flat for 18 years. These families are also reporting fewer welfare benefits as a percentage of their income than during the Great Recession, according to the report.
Denver’s human services funding pales in comparison to what it was a decade ago. In 2011, total funding for the department was $349.2 million, representing 39 percent of the City’s overall budget. Mayor Michael Hancock’s proposed budget for 2021 would appropriate over $187 million, or only nine percent of the $2.1 billion pie.
“This is especially worrisome given, at the time of this writing, we are experiencing the early economic effects associated with the COVID-19 pandemic and resulting budgetary restrictions. It is an intuitive conclusion the reduction in total income, the reduction in public supports, and the current economic budget shortfalls will further reduce vulnerable Coloradans’ economic mobility,” the report concludes.
The stagnation of wages and decreases in funding for public benefits has created a gorge between Colorado’s self-sufficiency standard—the income a family must earn to meet basic needs without public or private assistance—and the federal poverty line.
Colorado’s self-sufficiency standard for a family of two with one infant was $68,483 in 2020, according to the University of Washington’s School of Social Work. That’s over three times as much as a family living in poverty earns.
The report says much of what Colorado is experiencing is common in a rapidly growing economy. Since housing is a traditional wealth builder, the report argues that providing affordable housing could mitigate those growing pains by providing low-income earners to build wealth during years of growth.
“This report really cemented my belief in the wealth creation potential of affordable housing in Colorado,” Singleton told the VOICE.