School Finance

School finance overhaul introduced

Updated March 9 – The proposed school finance reform bill has been introduced in the Senate at the 2013 legislature’s halfway point, along with details of what it could mean for every Colorado school district.

Pile of cashTotal cost of the plan would be about $6.4 billion, roughly $1 billion more than the state and local districts currently spend on basic school operating costs.

Statewide average per-pupil funding would rise from $6,302 to $7,459, according to the Department of Education.

The measure, named Senate Bill 13-213, was introduced at about 11 p.m. Friday as the Senate ended a long day of debate on gun bills. Prime sponsor Sen. Mike Johnston told EdNews Friday that he expects Senate committee review during the week of March 18 and floor debate at the end of that week. The following week will be dominated by consideration of the proposed 2013-14 state budget, so the House may not turn its attention to school finance until April, if the Senate passes it. The legislature must adjourn by May 8.

Here’s a quick look at the potential changes in per-pupil funding for the state’s largest districts:

  • Adams 12-Five Star – Funding would go from $6,413 currently to $7,127
  • Aurora – $6,881 to $8,268
  • Boulder Valley – $6,498 to $6,885
  • Cherry Creek – $6,526 to $6,973
  • Colorado Springs District 11 – $6,465 to $7,258
  • Denver – $6,994 to $8,298
  • Douglas – $6,339 to $6,710
  • Jefferson County – $6,436 to $7,053
  • Poudre – $6,258 to $6,975
  • St. Vrain – $6,456 to $7,126

Check the full list of districts here.

Bill at a glance
  • $1 billion K-12 funding increase, if voters approve
  • Starts in 2015-16 school year
  • More money for preschool kids, kindergartners, at-risk students, English language learners, gifted and talented students
  • Across-the-board per-student bonus to help districts implement state reforms
  • New enrollment counting method
  • Incentives for low tax/high value districts to increase local taxes
  • Revenue improvements for charters
  • Regular review of the program and spending effectiveness

Johnston and his backers envision a two-part process in which the legislature would approve the complicated new formula but then voters would have to decide whether to raise taxes to pay for it. If voters didn’t approve the revenues the new system wouldn’t go into effect.

A key goal of Johnston’s plan is funneling more money to districts and schools with higher populations of at-risk students and English-language learners, which partly explains the larger increases for districts like Aurora and Denver and the smaller boosts for districts like Boulder Valley and Cherry Creek that have fewer students from poor families.

The per-pupil figures, both under the current system and the Johnston plan, don’t reflect full spending by districts. Many districts, including Cherry Creek and Denver, have received voter approval of local tax increases called mill levy overrides that add to district revenues but aren’t included in the state funding formula. And many districts, especially poor ones, receive federal Title I funds, intended to supplement spending in schools with high percentages of poor students. That money also isn’t reflected in state formulas current or proposed.

The estimates are illustrations in the sense that they show what per-pupil funding would be in 2013-14. The bill actually would go into effect in a later school year. The estimates also assume that district enrollment counts will drop an average of 2.1 percent because Johnston’s bill would move to the average daily membership method of counting students, replacing the current once-a-year attendance counts taken around Oct. 1.

The estimates reflect significant proposed increases in funding for at-risk preschool students and for full-day kindergarten and also include a flat $600 per student “bonus” to help districts cover the costs of implementing state education reforms.

Special circumstances for a few districts

Another element of Johnston’s plan would stabilize the ratio between local and state support of schools. Part of that mechanism would in effect “nudge” a few districts that levy low property taxes relative to property value to increase their taxes.

Those districts would receive the full higher funding for five years without having to raise local taxes. But after that they’d have to increase taxes to maintain the full per-pupil funding envisioned by the new plan.

Those districts are mostly in Eastern Plains or mountain areas of the state and include:

Campo, Arickaree, Bayfield, Branson, Briggsdale, Cheyenne, Durango, Gilpin, Hanover, Ignacio, Kim, Kit Carson, Norwood, Ouray, Parachute, Platte Canyon, Prairie, Primero, Rangely, Ridgway, Rifle, Steamboat Springs and Telluride.

Four other districts, Aguilar, DeBeque, Liberty and Plateau, would receive more total funding but less per pupil funding. That’s an anomaly created by adding more preschool and kindergarten students to very small enrollments.

Release of the district estimates, which has been delayed repeatedly, has been anxiously awaited by district leaders and education lobbyists. The figures are expected to affect district and lawmaker attitudes in the coming debates on the bill after it is introduced.

The Denver Democrat released an initial draft of his bill on Feb. 18 and has been working since then to gather more input on his ideas and to craft changes. The other prime sponsors are Sen. Rollie Heath, D-Boulder, and Rep. Millie Hamner, D-Dillon. Heath was the author of an unsuccessful 2011 ballot measure to increase taxes for schools. Hamner is chair of the House Education Committee.

Voter approval key to the plan

Johnston has been conducting an extraordinarily active campaign to raise support for his ideas. But key interests, including the governor’s office, elements of the business community and some districts, aren’t fully on board with the plan, especially the idea of going to the voters in November 2013.

But Johnston said he remains convinced next November is the best time to put the issue to voters and is confident he has wide support in the education and business communities.

“I certainly can’t speak for the governor, where he’ll be,” Johnston said.

Lt. Gov. Joe Garcia, the administration’s point person on education, told EdNews earlier this week that the governor still hasn’t made up his mind on the question of an education ballot issue.

“I don’t think the governor has a timeline,” Garcia said. “The governor is committed to working as quickly as possible.” While acknowledging that “timing is an issue here,” Garcia said Hickenlooper is interested in “making sure it’s the right question [on the ballot] that gets to the right solution.”

Johnston and allies who are working on the ballot issue face some tight timelines. March 22 is the deadline for submitting proposed language to the state (proponents can submit multiple proposals with different wordings). April 5 is the deadline for review of proposals and submission to the secretary of state.

The state requires 86,105 valid signatures of registered voters to put a proposal on the ballot. The deadline for submitting signatures is Aug. 5.

This story was changed on March 13 to correct statewide per-pupil figures.

Inside Senate Bill 13-213

Notable increases

  • $1 billion more for K-12 schools, if approved by voters
  • $600 per-student grant to districts for implementing reform laws
  • $100 million for an innovation fund districts could use for such things as longer school days and years
  • $80 million increase in special education funding for students with more severe disabilities
  • $6 million to provide “additional career opportunities” for highly effective teachers
  • $5 million to launch the new student count system a create a financial reporting system

Key elements of the bill

Base funding

Overall K-12 funding would be increased by about $1 billion.

Enrollment counts would be based on average daily membership counts, collected four times a year from school districts.

District funding would be calculated using prior year enrollment figures.

Multi-year averaging of enrollment losses would be retained for declining districts to soften funding cuts.

Base funding would include availability of full-day kindergarten for all students and full per-pupil funding of all high school students regardless of how many classes they take.

Additional half-day preschool slots for at-risk four-year-olds would not be included in the per-pupil base because that program is funded separately.

Adjustments to base funding

The current formula includes “factors” designed to increase funding for individual districts based on their regional cost of living, numbers of at-risk students, size and other characteristics. Johnston would retain some of those – to be called “weights” – but with some changes.

The definition of at-risk students would be expanded to also include those eligible for reduced-price lunch, in addition to those eligible for free lunches.

The number of English learners in a district would become a weight.

Double weights would be assigned for students who are both at-risk and English language learners. State at-risk funding would be more targeted to individual schools than it is now.

The small-enrollment weight would be retained only for districts under 4,300 students, taking out some districts that now receive that funding, and the current district cost-of-living weight would be eliminated.

Categorical funding

Districts currently receive additional funding outside of the main formula to help with such costs as special education, gifted and talented programs and transportation.

Johnston’s bill would retain most of those funding streams but increase by $80 million the money available for special education.

State & local shares

The bill would set a 60/40 goal for the ratio of state and local contributions to school funding. That would be used as a base to calculate the expected contribution from districts, based on a district’s property value, median resident income and concentration of poverty. Districts that aren’t contributing the amount of local revenue needed to meet their share would not receive additional state funds after an initial “hold unharmed” period, creating an “incentive” for them to seek tax increases from their voters. (This affects about two-dozen districts, and the provisions have been softened from the original draft of the bill.)

Other provisions

The state would provide matching money for districts with low property values that want to raise local taxes but can’t generate much revenue from those local increases.

An innovation fund would be created that districts could use for such things as longer school days and years.

There would be an increase in the current limits on local tax increases.

There would be additional state funding, proposed to start at $600 per student, to help districts implement state reform requirements. These funds are intended to give districts an infusion of cash to partially offset the budget cuts of recent years but would not be included in the per-pupil base so as not to put future pressure on the state budget. In the most recent version of the bill, the $600 amount would increase as revenues increase.

The proposal would not eliminate the “negative factor,” the formula used in recent years to cut what school funding otherwise would have been to the levels the legislature felt it could afford in tight budget years.

Charter schools

Districts will be required to share revenue with their charter schools from local tax increases.

There would be increased special education funding for charters.

At-risk funding would be based on actual enrollment of such students at charter schools.

The state would give extra money to schools overseen by the Charter School Institute based on a percentage of local tax increases successfully passed by districts.

There would be special enrollment counting provisions to avoid penalizing fast-growing charters.

Measuring impact

The legislature would commission an initial study of the full cost of the K-12 systems, with updates every four years. Those subsequent studies also would review whether spending is producing educational improvements and higher student achievement.


Colorado schools are getting a major bump in the state’s 2018-19 budget

Students waiting to enter their sixth-grade classroom at Kearney Middle School in Commerce City. (Photo by Craig Walker, The Denver Post)

Colorado’s strong economy has opened the door for state lawmakers to send a major cash infusion to the state’s public schools.

As they finalized the recommended budget for 2018-19, the Joint Budget Committee set aside $150 million, an additional $50 million beyond what Democratic Gov. John Hickenlooper had asked for, to increase funding to schools.

“We believe this is the most significant reduction in what used to be called the negative factor since it was born,” said state Rep. Millie Hamner, the Dillon Democrat who chairs the Joint Budget Committee.

Colorado’s constitution calls for per pupil spending to increase at least by inflation every year, but the state hasn’t been able to meet that obligation since the Great Recession. The amount by which schools get shorted, officially called the budget stabilization factor, is $822 million in 2017-18. Under state law, this number isn’t supposed to get bigger from one year to the next, but in recent years, it hasn’t gotten much smaller either. 

But a booming economy coupled with more capacity in the state budget created by a historic compromise on hospital funding last year means Colorado has a lot more money to spend this year. In their March forecast, legislative economists told lawmakers they have an extra $1.3 billion to spend or save in 2018-19.

The recommended shortfall for next year is now just $672.4 million. That would bring average per-pupil spending above $8,100, compared to $7,662 this year.

Total program spending on K-12 education, after the budget stabilization factor is deducted, should be a little more than $7 billion, with the state picking up about $4.5 billion and the rest coming from local property taxes.

The budget debate this year has featured Republicans pressing for more ongoing money for transportation and Democrats resisting in the interest of spreading more money around to other needs. The positive March forecast reduced much of that tension, as a $500 million allocation for transportation allowed a compromise on roads funding in the Republican-controlled Senate. That compromise still needs the approval of the Democratic-controlled House, but suddenly a lot of things are seeming possible.

“We knew we were going to have more revenue than we’ve ever had to work with,” Hamner said of the status at the beginning of the session. But that presented its own challenges, as so many interest groups and constituencies sought to address long-standing needs.

“The fact that we’ve been able to reach such incredible compromises on transportation and K-12 funding, I think most members will be very pleased with this outcome,” Hamner said. “Where we ended up is a pretty good place.”

The big outstanding issue is proposed reforms to the Public Employees Retirement Association or PERA fund to address unfunded liabilities. A bill that is likely to see significant changes in the House is wending its way through the process. The Joint Budget Committee has set aside $225 million to deal with costs associated with that fix, which has major implications for teachers and school districts budgets.

The Joint Budget Committee has also set aside $30 million for rural schools, $10 million for programs to address teacher shortages, and $7 million for school safety grants.

The budget will be introduced in the House on Monday. Many of the school funding elements will appear in a separate school finance bill.

Going forward, there is a question about how sustainable these higher funding levels will be.

“It does put more pressure on the general fund,” Hamner said. “If we see a downturn in the economy, it’s going to be a challenge.”

What's fair

Colorado’s state-authorized charter schools could get more money next year

Students at The New America School in Thornton during an English class. (Photo by Nic Garcia)

Charter schools authorized at the state level by the Charter School Institute are likely to get more money in the 2018-19 budget year. That’s one year before most other charter schools will see benefits from last year’s charter school funding equity bill.

That bill was a major compromise out of the 2017 session, and it requires school districts to share money from voter-approved tax increases with the charter schools they’ve authorized, starting in 2019-20. The bill also created the mill levy equalization fund to distribute state money to the Charter School Institute’s 41 schools. Because no local school board approved these schools, they wouldn’t otherwise be eligible for revenue from these increases, known as mill levy overrides.

Charter School Institute administrators came calling for their money this year, though, with a request for $5.5 million from the general fund. They arrived at this number by identifying institute schools within the geographic boundaries of districts that already share some extra revenue with their local charters and assuming institute schools got a similar share.

Institute Executive Director Terry Croy Lewis called it a “first step” toward parity that would bring institute and district-authorized charter schools to the same level in advance of the new law going fully into effect in 2019. Lewis said it seemed like a fair approach because the parents at institute-authorized schools often live within the geographic boundary and pay taxes at the same rates as parents whose children go to traditional schools or district-authorized charters.

However, the charter equity bill says that extra money for institute schools has to be distributed on an equal per-pupil basis. The original approach, which created more equity among schools in the same geographic boundary, created more disparities among institute schools in different regions – and the law might not have allowed it.

“I don’t think you can define equity in this conversation because equity cuts a lot of different ways,” said state Sen. Dominick Moreno, a Commerce City Democrat and member of the Joint Budget Committee.

Budget analyst Craig Harper suggested to the Joint Budget Committee that separate legislation might be necessary to allow the distribution proposed by the Charter School Institute, something no lawmakers wanted to see after the bruising fight over the charter school equity bill.

Instead, the Charter School Institute revised its proposal to distribute the money among its schools on a per-pupil basis, regardless of geography and whether the local district already shares money.

What sort of difference does this make?

In the first distribution scenario, Early College of Arvada, located in the Westminster district, would have gotten nothing – because Westminster doesn’t currently share money with its own charters. Under the new proposal, the school would get $131,233 based on its pupil count. Meanwhile, Colorado Early College – Fort Collins, which would have gotten $621,357 because the Poudre district already shares money, would instead get just $374,952

Lingering confusion over the distribution question led JBC members to postpone a decision several times before they voted 4-2 this week to include the $5.5 million request in the 2018-19 budget.

It still has to survive the extended battle over the budget that takes place in the full House and Senate each year.