Funding fight truce

“It’s haircut day” for school finance bills

A House-Senate conference committee on Monday nipped and tucked various elements of the 2014-15 School Finance Act and snapped up about $30 million in federal mineral revenues for school spending, reaching a compromise in the dispute over how to pay for a stack of this year’s education bills.

The compromise version of House Bill 14-1298 passed 5-1 and must now be approved by both the House and Senate.

Although some lobbyists were working as late as Monday morning trying to avoid some program cuts, the compromise plan is expected to gain final approval without much more contention. The controversy surfaced late last week (see this story for details). Lawmakers have to adjourn Wednesday.

The goal of the compromise is to reduce the amount of money to be taken from the State Education Fund, a dedicated account that’s used for both general K-12 support and for special programs.

The compromise plan would leave about $660 million in the fund at the end of 2014-15, the target that the Hickenlooper administration wants. Without the cuts and shifts in the compromise plan, the balance would be $612 million, said Sen. Pat Steadman, D-Denver and the architect of the compromise plan.

He said the plan is designed “to make sure we leave the State Education Fund with a sufficient balance to fulfill the commitments we’ve made in the future. … There’s a lot of pressure on the fund; one of our objectives is to trim back a little bit.”

“There are several programs getting a haircut,” said Steadman, who came to the conference committee with the plan in hand. The meeting lasted less than 15 minutes. Steadman, a prime sponsor of the finance act, also is vice chair of the Joint Budget Committee and one of the legislature’s fiscal experts.

Here’s how various elements of the bill (and some related measures) fared in the barber’s chair.

Negative factor: The proposed buy-down of the state’s $1 billion K-12 funding shortfall remains at $110 million. School districts have fought ferociously this session to whittle down the negative factor, and any attempt to tinker with this number would have ignited a political and lobbying firestorm.

Kindergarten support: The Senate added $10 million to the bill to slightly increase the amount the state pays for kindergarten students, which is .58 of per-pupil funding for other students. Steadman’s plan cuts the $10 million. Sen. Andy Kerr, D-Lakewood, suggested $5 million, but the conference committee didn’t agree. Eliminating the increase was “a bit more than a haircut,” Kerr complained. He was the only no vote on the compromise plan.

English language learners: The conference committee approved a $27 million increase in funding for ELL programs, trimming the $30 million originally in the bill.

Early literacy funding: The conference committee approved an $18 million increase to the $16 million currently spent on the READ Act, cutting by $2 million the original plan for a $20 million boost. (This spending actually is in House Bill 14-1292, the Student Success Act, but it’s possible to change that with language by amending HB 14-1298.)

Counselor Corps: This program will get only $3 million in additional funding, not the $5 million contained in Senate Bill 14-150. (The program’s current funding is $5 million.) This also is being changed through HB 14-1298, like the literacy funding.

What makes the whole plan work is use of $30.4 million from yet another account, the State Public School Fund, replacing money that would have come from the education fund. Steadman said budget analysts discovered last week that the $30.4 million, generated by federal mineral lease revenues, was available.

Several other separate bills that proposed taking money from education fund already have had their own haircuts, but the amounts of money involved are relatively small.

Two other significant pieces of HB 14-1292 were removed earlier in the intense and prolonged negotiations around school funding. They were a $40 million fund to help districts implement new programs like standards, testing and evaluations and $10 million for implementation of the average daily membership method of counting school enrollment.

There was significant controversy late in the session over a part of HB 14-1292 that proposed creation of a state website containing searchable information about school and district spending. School districts had opposed the plan, but a compromise approved by both houses last week budgets $3 million for the website and removes some requirements that districts didn’t like. (Get more details in this story.)

Several smaller spending elements of the Success Act and the Finance Act weren’t caught in the “haircuts” and remain in the bills. Major items include:

  • A $17 million increase for at-risk preschool and full-day kindergarten students, enough to fund 5,000 more students.
  • Up to $11.5 million in charter facilities funding, plus a $6.5 million infusion for a charter school bond program.
  • $2 million in additional funding for boards of cooperative educational services to help small districts implement reforms.

money matters

Why Gov. Hickenlooper wants to give some Colorado charter schools $5.5 million

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

If Mike Epke, principal of the New America School in Thornton, had a larger budget, he would like to spend it on technical training and intervention programs for his students.

He would buy more grade-level and age appropriate books for the empty shelves in his school’s library, and provide his teachers with a modest raise. If he could really make the dollars stretch, he’d hire additional teacher aides to help students learning with disabilities.

“These are students who have not had all the opportunities other students have had,” the charter school principal said, describing his 400 high school students who are mostly Hispanic and come from low-income homes.

A $5.5 million budget request from Gov. John Hickenlooper, a Democrat, could help Epke make some of those dreams a reality.

The seven-figure ask is part of Hickenlooper’s proposed budget that he sent to lawmakers earlier this month. The money would go to state-approved charter schools in an effort to close a funding gap lawmakers tried to eliminate in a landmark funding bill passed in the waning days of the 2017 state legislative session.

Funding charter schools, which receive tax dollars but operate independently of the traditional school district system, is a contentious issue in many states. Charter schools in Colorado have enjoyed bipartisan support, but the 2017 debate over how to fund them hit on thorny issues, especially the state’s constitutional guarantee of local control of schools.

The legislation that ultimately passed, which had broad bipartisan support but faced fierce opposition from some Democrats, requires school districts by 2020 to equitably share voter-approved local tax increases — known as mill levy overrides — with the charter schools they approved.

The bill also created a system for lawmakers to send more money to charter schools, like New America in Thornton, that are governed by the state, rather than a local school district.

Unlike district-approved charter schools, which were always eligible to receive a portion of local tax increases, state-approved charter schools haven’t had access to that revenue.

Terry Croy Lewis, executive director of the Charter School Institute, or CSI, the state organization that approves charter schools, said it is critical lawmakers complete the work they started in 2017 by boosting funding to her schools.

“It’s a significant amount of money,” she said. “To not have that equity for our schools, it’s extremely concerning.”

CSI authorizes 41 different charters schools that enrolled nearly 17,000 students last school year. That’s comparable to both the Brighton and Thompson school districts, according to state data.

Hickenlooper’s request would be a small step toward closing the $18 million gap between state-approved charter schools and what district-run charter schools are projected to receive starting in 2020, CSI officials said.

“Gov. Hickenlooper believes that working to make school funding as fair as possible is important,” Jacque Montgomery, Hickenlooper’s spokeswoman, said in a statement. “This is the next step in making sure that is true for more children.”

If lawmakers approve Hickenlooper’s request, the New Legacy charter school in Aurora would receive about $580 more per student in the 2018-19 school year.

Jennifer Douglas, the school’s principal, said she would put that money toward teacher salaries and training — especially in the school’s early education center.

“As a small school, serving students with complex needs, it is challenging and we need to tap into every dollar we can,” she said.

The three-year old school in Aurora serves both teen mothers and their toddlers. Before the school opened, Douglas sent in her charter application to both the Aurora school board and CSI. Both approved her charter application, but because at the time her school would receive greater access to federal dollars through CSI, Douglas asked to be governed by the state.

Douglas said that her preferred solution to close the funding gap would be to see local tax increases follow students, regardless of school type or governance model. Until that day, she said, lawmakers must “ensure that schools have the resources they need to take care of the students in our state and give them the education they deserve.”

For Hickenlooper’s request to become a reality, it must first be approved by the legislature’s budget committee and then by both chambers. In a hyper-partisan election year, nothing is a guarantee, but it appears Hickenlooper’s proposal won’t face the same fight that the 2017 charter school funding bill encountered.

State Rep. Jovan Melton, an Aurora Democrat who helped lead the charge against the charter school funding bill, said he was likely going to support Hickenlooper’s proposal.

“You almost have to do it to be in alignment with the law,” Melton said. “I don’t think with a good conscious I could vote against it. I’m probably going to hold my nose and vote yes.”

Payment dispute

Fired testing company seeks $25.3 million for work on TNReady’s bumpy rollout


Tennessee officials won’t talk about the state’s ongoing dispute with the testing company it fired last year, but the company’s president is.

Henry Scherich

Henry Scherich says Tennessee owes Measurement Inc. $25.3 million for services associated with TNReady, the state’s new standardized test for its public schools. That’s nearly a quarter of the company’s five-year, $108 million contract with the state, which Tennessee officials canceled after technical problems roiled the test’s 2016 rollout.

So far, the state has paid the Durham, North Carolina-based company about $545,000 for its services, representing about 2 percent of the total bill, according to a claim recently obtained by Chalkbeat.

Measurement Inc. filed the claim with the state in February in an effort to get the rest of the money that it says it’s owed. Since then, lawyers for both sides have been in discussions, and the company filed a lawsuit in June with the Tennessee Claims Commission. The commission has directed the State Department of Education to respond to the complaint by Nov. 30.

“We’re moving forward,” Scherich told Chalkbeat when asked about the status of the talks. “… We’re simply asking to be paid for the services we provided.”

Education Commissioner Candice McQueen declined last week to discuss the dispute, which she called “an ongoing pending lawsuit.” A spokesman for the attorney general’s office also declined to comment on Monday.

Scherich said he and other company officials have not been called to Nashville for hearings or depositions.

“Our lawyers and the state’s lawyers are still skirmishing each other,” he said. “…They argue about lots of things. It’s kind of like we’re establishing the ground rules for how this process is going to proceed.”

PHOTO: Grace Tatter
Education Commissioner Candice McQueen announced the firing of Measurement Inc. and the suspensions of most testing in April 2016.

Tennessee’s dramatic testing failure started on Feb. 8, 2016, when students logged on during the first morning of testing and were unable to load TNReady off the new online platform developed by Measurement Inc. The fallout culminated several months later when McQueen fired the company and canceled testing altogether for grades 3-8. In between were months of delays after McQueen instructed districts to revert to paper-and-pencil materials that would be provided by Measurement Inc. under the terms of their contract. Many of those materials never arrived.

The company’s claim suggests that the state was hasty in its decision to cancel online testing and therefore shares blame for a year of incomplete testing.

The Tennessee Department of Education “unilaterally and unjustifiably ordered the cancellation of all statewide electronic testing that occurred on February 8, 2016, following a transitory slowdown of network services that morning,” the claim says.

(In an exclusive interview with Chalkbeat the day before his company was fired, Scherich said Measurement Inc.’s online platform did not have enough servers for the 48,000 students who logged on that first day — a problem that he said could have been fixed eventually.)

The claim also charges that McQueen’s subsequent order to substitute paper test materials was “unnecessary and irresponsible” and impossible to meet because of the logistical challenge of printing and distributing them statewide in a matter of weeks.

In her letter terminating the state’s contracts with Measurement Inc., McQueen describes daily problems with the company’s online platform in the months leading up to the botched launch. “This was not just a testing day hiccup; the online platform failed to function on day one of testing,” she wrote.

McQueen said those experiences contributed to her department’s conclusion that Measurement Inc. was unable to provide a reliable, consistent online platform and left her with no option but to order paper and pencil tests. She also cited the company’s failure to meet its own paper test delivery deadlines for her ultimate decision to terminate the contracts and suspend testing.

The last sentence of the four-page termination letter says the state would “work with (Measurement Inc.) to determine reconciliation for appropriate compensation due, if any, for services and deliverables that have been completed as of the termination date after liquidated damages have been assessed.”

In addition to its invoices for work under the contract, Scherich said his company is owed another $400,000 for delivering test-related materials to the state after its contract was ended.

“We didn’t want to be a company that stood in the way of the programs of the state of Tennessee, so we provided all the information they requested,” Scherich said. “We were told we would be paid, we provided the information, and then we’ve not been paid.”

Founded in 1980, Measurement Inc. had been doing testing-related work for Tennessee for more than a decade before being awarded the 2014 TNReady contract, its biggest job ever. The company had a fast deadline — only a year — to create the state’s test for grades 3-11 math and English language arts after a vote months earlier by the legislature prompted Tennessee to pull out of PARCC, a consortium of other states with a shared Common Core-aligned assessment.

Scherich said the loss of the TNReady contract was “a major hit” for his company, but that Measurement Inc. has paid every employee and subcontractor who worked on the project. “We have had to go into debt to keep ourselves viable while we wait for this situation with Tennessee to be resolved,” he said, adding that the company continues to do work in about 20 other states.

To pursue its claim, Measurement Inc. has hired the Tennessee law firm of Lewis, Thomason, King, Krieg & Waldrop, which has offices in Nashville and Knoxville.

“I’m sure we’ll work out something amicable with the state over time,” he said. “I’m an optimistic person. But I think our lawyers and their lawyers will have to have a lot of negotiations.”

Below are Measurement Inc.’s claim against the state, and the state’s letter terminating its contracts with the company.

Editor’s note: This story has been updated with details about the claim’s status.