Colorado’s superintendents want (a lot) more money for schools and a new way to divvy it up

Colorado’s superintendents want to change how the state distributes money to school districts — but only if voters are willing to approve a $1.7 billion tax increase for education.
10 min. read
State Board of Education chairman Steve Durham, center, and vice chair Angelika Schroeder meet with Aurora Public Schools Superintendent Rico Munn in May 2015. ( Photo by Nicholas Garcia )

District 50 Rep. Dave Young. The first day of the Colorado state legislative session. Jan 11, 2017. (Kevin J. Beaty/Denverite)

By Erica MeltzerChalkbeat

Colorado’s superintendents want to change how the state distributes money to school districts — but only if voters are willing to approve a $1.7 billion tax increase for education.

The new formula would give more money to school districts whose students have more needs, but without more money in the pot, many districts would actually lose funding. Hence, the need for a lot more money.

Voters have twice rejected statewide tax increases to fund education, most recently in 2013, but supporters of this new funding model say this time is different. This November, voters approved local tax increases in districts that had previously struggled to raise money, raising hopes that the political climate is shifting. And unlike previous attempts, people who want more money for schools have the backing of local school leaders who will be able to say exactly how a statewide tax increase would benefit students in their districts.

“We have a unique opportunity in that people who have deep knowledge of our schools, this diverse group of superintendents, have reached a consensus that we haven’t seen before,” said state Rep. Dave Young, a Greeley Democrat who has sponsored a bill to enact the formula change pending voter approval of a tax increase.

Young added: “It would be a real mistake at a time when our economy is doing well and we have this sort of collaboration to miss this opportunity to respond to the needs of our students.”

Lawmakers who oppose tax increases look at the large dollar amount attached to this proposal and don’t see much to talk about.

“We probably have more interest in drinking month-old milk than we do to revisit an issue that voters already said, by a margin of 2 to 1, ‘We don’t want to go down this path,’” said state Sen. Owen Hill, the Colorado Springs Republican who chairs the Senate Education Committee.

This proposal lands in a complicated political environment. A bipartisan committee has been meeting to talk about school finance issues, but they’re months away from proposing legislation. Some state officials, including the governor, are more focused on a looming crisis provoked by a constitutional provision that reduces local tax revenue in rural districts. Republicans, meanwhile, have their eye on a transportation bond proposal.

“equity” and “adequacy”

The superintendents who brought this proposal forward have two goals in mind: “equity” and “adequacy.” Equity is how the school funding pie gets divided fairly among districts, and adequacy is the size of the pie.

The proposal calls for a “student-centered” distribution model to replace the state’s school finance formula created in 1994. At its most basic, this approach gives districts and schools more money for students who have more needs, whether that’s learning English or being gifted and talented or both.

This is a national trend in school funding that’s more common at the district level. Denver Public Schools already distributes money within the district using this approach, as does Indianapolis and New York City. The U.S. Department of Education recently invited districts to apply for a “weighted student funding” pilot program that would attach more money to students with more needs and have that money follow students wherever they go. 

Colorado’s current funding model already gives schools more money if they have more students who qualify for free lunch, a proxy for poverty. The state formula also includes factors like cost of living and personnel costs. Money for students with disabilities, students who are gifted and talented, and students who are learning English is in a separate pot and isn’t distributed as part of per-pupil funding.

Accounting for those additional student needs

In examining funding for specific populations, analysts with the Education Commission of the States wrote that so-called “formula funding” – what the superintendents are proposing – provides more equity and predictability for school districts, while keeping money for students with particular needs in a separate fund gives the state more control over how that money is spent but is less stable. In Colorado, that second pot of money for students with additional needs gets larger with inflation, but it doesn’t get larger to account for more students with those needs.

That’s a key difference, superintendents say, between their proposal and the status quo. Their proposal would account for those additional student needs within the per-pupil funding formula. In addition, districts that provide full-day kindergarten would get an entire student’s worth of money for each kindergartner, instead of a little more than half a student’s worth, as they do now. School leaders say this approach is fairer and better reflects the real costs to educate students.

Colorado schools are serving more students and a more diverse student population than they were in 1994, said Walt Cooper, superintendent of the Cheyenne Mountain School District in Colorado Springs, and they’re more accountable for educating those students to the same level as their classmates.

“If you could go back in time and take a snapshot of what students looked like in Colorado in 1994 and what schools looked like and what accountability systems looked like and compare them to now, the world of K-12 is so exponentially different from the world of K-12 in 1994, it’s even hard to draw these direct comparisons,” Cooper said. The School Finance Act has “outlived its usefulness. And it’s not even fully funded.”

In 2000, Colorado voters decreed that per-pupil funding should increase by inflation each year. But the amendment they passed didn’t provide any new money for education. During the Great Recession, lawmakers started applying a “negative factor” or “budget stabilization factor” to reduce the amount by which they funded schools. This year, Colorado schools are getting $6.6 billion in state and local funds – $828 million less than they would if voters’ demands were fully realized. Colorado consistently ranks as one of the lowest states in per-pupil funding.

No district should lose money

Cooper said the group working on this proposal started from an assumption that no district should lose money, and if you divide $6.6 billion using the new formula, a lot of districts lose money. To get to a point where no districts are losing money and many are getting more money – in some cases as much as 50 percent more – total annual spending on K-12 education needs be closer to $8.4 billion.

Colorado’s Taxpayer’s Bill of Rights requires that voters approve any tax increases. Either the legislature or private citizens’ groups can place these requests on the ballot, but a tax increase for schools is very unlikely to come from the General Assembly. Republicans have said that transportation, not education, is their top spending priority, and even a roads bill sponsored by the Republican senate president couldn’t get out of a Republican-controlled committee last session because it involved a tax increase. This year, Republicans want to ask voters to approve new debt for road construction without a tax increase.

That leaves private citizens to get something on the ballot. State elections officials have signed off on language for eight potential tax measures that would raise between $1.4 billion and $1.7 billion, each with a slightly different funding mechanism. Supporters of those measures still need to decide which version they’ll pursue.

“The $64,000 question is what is the tax policy and the mechanism that actually generates the revenue,” Cooper said.

Great Education Colorado, which is consulting with the supporters of the ballot measure, sent out an email praising the superintendents’ proposal and Young’s bill as “step one of what we’re calling ‘the Colorado Two Step.’”

“First we establish how new dollars would be fairly distributed,” Great Education Executive Director Lisa Weil wrote. “Then we give voters a chance to do right by kids.”

Figuring out an acceptable change for voters

Young said Colorado’s school funding situation is dire, and change can’t wait. He’s found a Republican co-sponsor, state Sen. Don Coram of Montrose. Within his caucus, Coram is a moderate on fiscal issues, and his name alone won’t get this bill through Senate committees hostile to the idea of raising taxes. Young said he hopes to find support among rural Republicans, similar to the support they gave to last year’s compromise on a hospital fee with major implications for their districts. And the bill itself does not ask for a tax increase to be placed on the ballot, only that the funding formula be changed if voters approve more money.

Even sympathetic Democrats aren’t sure this is the right approach, though.

Gov. John Hickenlooper said that when it comes to schools, his top priority is getting closer to full funding under the existing formula and dealing with an impending crisis caused by the Gallagher Amendment. That provision in the state constitution caps the share of property taxes paid by residential property owners. As property values have skyrocketed along the Front Range, residential tax rates have ratcheted down, and that’s led to drastic cuts in rural communities with smaller tax bases.

Some state officials would like to change the Gallagher Amendment, but figuring out which change will be acceptable to voters and then selling it is no easy task. That task doesn’t get any easier if it’s sharing the ballot with a transportation bond measure and a tax increase for schools.

“That’s my first priority: What would the voters be willing to consider in terms of changing the Gallagher Amendment so that it stops squeezing rural communities?” Hickenlooper said. “A billion and a half in revenue, I’m not sure what it would take to generate that.”

A bipartisan group of lawmakers have been meeting to look at changing how the state funds its schools. The interim school finance committee spent the off-season gathering information, and its members hope to propose legislation for the 2019 Colorado General Assembly.

Hill, the Republican senator, is vice-chair of that committee, and he said the superintendents’ proposal – “just to fly in with a magic bullet” – undermines the effort to come up with bipartisan solutions.

State Rep. Alec Garnett, a Denver Democrat and the committee chair, said that if Young’s proposal made it into law and if voters approved a major tax increase, he’d have to ask the members of the committee if it makes sense to keep meeting.

Cooper said the superintendents started meeting on their own, informally at first, before the interim committee was even conceived, and they confined their efforts to a narrow focus: how money is distributed to districts. There are still plenty of questions for the committee to work on, including how costs are shared between the state and local districts, another major inequity in Colorado.

Cooper said major policy changes take time, and this one is important.

“If we fall short this year, regardless of how far we make it, we’re further ahead than if we had not gone forward, and we’ll be back next time,” he said. “We will not be easily dissuaded.”

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