From the Statehouse

Lots of ways to raise your taxes

The 24 proposed ballot measures that would raise state income taxes to boost funding for K-12 education suggest a wide and bewildering variety of ways to do that.

Image of school desk atop a dollar bill.Four of the proposals would keep the state’s current flat tax system but raise the rate to 5.35 percent from the current 4.63 percent. The other 20 plans would create progressive income taxes with either two tiers or five. Those suggest larger percentage increases in higher income brackets.

Some of the measures would tinker with existing constitutional structures, including Amendment 23, which mandates annual increases in base K-12 funding.

Despite the variations, most of the proposed constitutional amendments would arrive at about the same destination – an increase of around $1 billion in new revenue. All new revenue would be earmarked for education and couldn’t be spent on other programs. The state currently collects about $5.2 billion a year from individual income taxes.

Proposal texts
  • Find links to proposal texts on this page. Colorado Forum proposals are numbers 13-28; Great Education Colorado measures are 30-37.

The proposals are driven by a coalition of education, civic and business groups as part of a campaign to both modernize the state’s school funding formula and also increase revenue for K-12 schools. The measure that would change the formula, Senate Bill 13-213, is working its way through the Senate. (See this EdNews story for the bill’s current status.)

But because the state constitution forbids the legislature from raising taxes itself, the additional revenues required by SB 13-213 would have to be approved by voters. (If the bill passes but voters reject additional taxes the new formula wouldn’t go into effect.)

Sixteen of the tax increases are proposed by Colorado Forum, a group of business and civic leaders that works on constitutional and fiscal reform. The other eight are proposed by Great Education Colorado, a group that advocates for increased school funding. Both are part of a larger coalition called the School Finance Partnership, which has been working on school reform and funding since the spring of 2011.

“We are very hopeful we can get something done” to improve school support, said Gail Klapper, director of Colorado Forum.

Why were so many plans filed?

Trying to amend the state constitution is a tricky legal process dictated by complicated rules governing the scope and wording of proposed ballot measures. So groups sometimes file multiple versions so they have backups in case one version is successfully challenged. (Disputes over ballot measures periodically end up before the Colorado Supreme Court.)

Drafting ballot measures also is a political process, and different versions often are filed to acknowledge the priorities of individual interest groups within a coalition and to create alternatives whose potential popularity can be tested in public opinion surveys and focus groups. A key reason why all the measures would generate about $1 billion in revenue is because previous polling and focus groups indicated that’s about the most the public would support.

Lisa Weil
Lisa Weil

“We wanted to make sure there are as many options as possible,” said Lisa Weil, policy director for Great Education.

Proposals had to be filed by March 22 to be considered for the November 2013 ballot, so Colorado Forum and Great Education covered their bets by filing multiple versions. (The two groups are cooperating, not competing in the effort.)

“We are very appreciative of everything that Colorado Forum is doing,” Weil said. “We are looking forward to working with them.”

After the measures undergo multiple reviews that begin Thursday and run through late April, a single measure is expected to be chosen for submission to voters. Proponents will have to gather at least 86,105 required signatures by Aug. 5.

“People are chomping at the bit to work on an increase for education,” said Liane Morrison, executive director of Great Education.

What the proposals would do

How it all works

  • See the box below for a more detailed explanation of how the proposals would change current parts of the constitution

In addition to various tax rates, the 24 plans offer different mechanisms for using the additional revenue.

The 16 Colorado Forum plans sort into four groups. Every proposal would raise taxes and also create what’s called the Education Achievement Fund, which would receive the new revenues and be used to fund various elements of the SB 13-213 formula. Here are the other features of the four groups:

  • In addition to raising taxes, a first group also would earmark 43 percent of the state general fund every year for K-12 education and also change another section of the constitution that currently acts to drive down school district property tax collections.
  • A second group would raise taxes and stabilize district property tax collections.
  • A third group would raise taxes and include the 43 percent earmarking of the general fund for schools.
  • The fourth group would just raise taxes and put the additional revenue in the achievement fund.

Revenue raised by the four plans would range from about $811 million to just over $1 billion, Klapper said, although she cautioned those estimates might be low. (Legislative staff will calculate estimated revenues for each proposal during the review process.)

In addition to different tax rates, the main variation among the eight Great Education plans is that some would give education an added boost. The Taxpayer’s Bill of Rights section of the constitution requires that certain surplus revenues be refunded to taxpayers. (State revenues haven’t grown enough in recent years to trigger that.) Some versions of the proposals would instead transfer such surpluses to K-12 spending.

The Great Education proposals would use the existing State Education Fund as the holding account for new education revenue.

And there are more proposals

Three other proposals related to SB 13-213 and school funding also have been filed.

One proposes putting the original text of SB 13-213 to the voters as a change to state law. It was filed by Kelly Brough, CEO of the Denver Metro Chamber of Commerce, and Tamara Ward, CEO of Colorado Concern, a group of business executives.

Brough said last week, “Our rationale for filing the title was to protect our ability to ensure SB 213 is preserved … if the bill doesn’t pass or changes significantly” in the legislature. “Our title was filed to address … the reality that the fate of SB 213 at the Capitol is very uncertain. If SB 213 passes and is signed by the governor our title is not needed. If none of the tax increases go forward in 2013, our ballot title is not needed.”

And two measures were filed by tea party activist Steve Dorman. One would increase income taxes by only .0001 percent to fund SB 13-213, and one would raise state sales taxes by 10 percent to fund teacher pensions.

Education & the constitution

The state constitution currently includes three elements that affect education funding.

Amendment 23 – This provision requires that base K-12 funding increase by enrollment growth and inflation every year. Additional school funding isn’t covered by that requirement, and the legislature actually has cut school funding in recent years because of tight state revenues. It’s estimated that school support is about $1 billion below what it would have been without those cuts.

Some of the Colorado Forum proposals would repeal the A23 multiplier and replace it with a requirement that 43 percent of the state general fund be devoted to K-12 every year.

Taxpayer’s Bill of Rights (TABOR) – This part of the constitution sets limits on state revenue and spending increases and requires voter approval of new taxes. Several of the proposals would create significant exemptions from TABOR for education spending.

Gallagher Amendment – This section was intended to set ratios between business and residential property taxes. In combination with TABOR, which was passed later, it’s had the effect of driving down residential assessment rates and shifting a higher percentage of school costs to the state. Some of the Colorado Forum proposals include a provision that would create a floor below which residential assessment rates couldn’t drop.

And … the single subject rule – An unavoidable hurdle for ballot measure proponents is what’s called the “single subject rule,” which limits the content of a measure and requires the full content be listed in a measure’s title. More than one past measure has fallen afoul of this rule.

Proponents of the school tax measure believe their single subject is “school finance” and that they can pass the test. “We’re hopeful it will fall under that single subject,” said Trey Rogers, a lawyer who is working with proponents.

Sticking with a single subject is the reason why proponents want to tinker with the Gallagher Amendment only as it applies to school taxes. The fluctuation of property taxes for counties, cities and special districts wouldn’t be changed.

rules and regs

New York adds some flexibility to its free college scholarship rules. Will it be enough for more students to benefit?

PHOTO: Office of Governor Andrew M. Cuomo
Governor Andrew Cuomo delivered his 2017 regional State of the State address at the University at Albany.

New York is offering more wiggle room in a controversial “Excelsior” scholarship requirement that students stay in-state after graduating, according to new regulations released Thursday afternoon.

Members of the military, for example, will be excused from the rule, as will those who can prove an “extreme hardship.”

Overall, however, the plan’s rules remain strict. Students are required to enroll full-time and to finish their degrees on time to be eligible for the scholarship — significantly limiting the number who will ultimately qualify.

“It’s a high bar for a low-income student,” said Sara Goldrick-Rab, a leading expert on college affordability and a professor at Temple University. “It’s going to be the main reason why students lose the scholarship.”

The scholarship covers free college tuition at any state college or university for students whose families earn less than $125,000 per year. But it comes with a major catch: Students who receive Excelsior funding must live and work in New York state for the same number of years after graduation as they receive the scholarship. If they fail to do so, their scholarships will be converted to loans, which the new regulations specify have 10-year terms and are interest-free.

The new regulations allow for some flexibility:

  • The loan can now be prorated. So if a student benefits from Excelsior for four years but moves out of state two years after graduation, the student would only owe two years of payments.
  • Those who lose the scholarship but remain in a state school, or complete a residency in-state, will have that time count toward paying off their award.
  • Members of the military get a reprieve: They will be counted as living and working in-state, regardless of where the person is stationed or deployed.
  • In cases of “extreme hardship,” students can apply for a waiver of the residency and work requirements. The regulations cite “disability” and “labor market conditions” as some examples of a hardship. A state spokeswoman said other situations that “may require that a student work to help meet the financial needs of their family” would qualify as a hardship, such as a death or the loss of a job by a parent.
  • Students who leave the state for graduate school or a residency can defer repaying their award. They would have to return to New York afterwards to avoid having the scholarship convert to a loan.

Some of law’s other requirements were also softened. The law requires students to enroll full-time and take average of 30 credits a year — even though many SUNY and CUNY students do not graduate on time. The new regulations would allow students to apply credits earned in high school toward the 30-credit completion requirement, and stipulates that students who are disabled do not have to enroll full-time to qualify.

Looming threat

Report: Looming financial threats could undermine ‘fresh’ start for new Detroit district

The creation of a new school district last year gave Detroit schools a break from years of crippling debt, allowing the new district to report a healthy budget surplus going into its second year.

It’s the first time since 2007 that the city’s main school district has ended the year with a surplus.

But a report released this morning — just days after Superintendent Nikolai Vitti took over the district — warns of looming financial challenges that “could derail the ‘fresh’ financial start that state policymakers crafted for the school district.”

The report, from the Citizens Research Council of Michigan, notes that almost a third of the district’s $64 million surplus is the cost savings from more than 200 vacant teaching positions.

Those vacancies have caused serious problems in schools including classrooms crammed with 40 or 50 kids. The district says it’s been trying to fill those positions. But as it struggles to recruit teachers, it is also saving money by not having to pay them.

Other problems highlighted in the report include the district’s need to use its buildings more efficiently at a time when many schools are more than half empty. “While a business case might be made to close an under-utilized building in one part of the city, such a closure can create challenges and new costs for the districts and the families involved,” the report states. It notes that past school closings have driven students out of the district and forced kids to travel long distances to school.

The report also warns that if academics don’t improve soon, student enrollment — and state dollars tied to enrollment — could continue to fall.

Read the full report here: