Funding & Finance

EdNews guide to Amendment 66

When Coloradans cast their votes on Amendment 66 this fall, they will be making a historic decision on both how much money to devote to schools and on how that money is spent.

LogoThe proposed constitutional change would increase state income rates, with the additional revenue earmarked for P-12 education.

But the amendment is joined at the hip to Senate Bill 13-213, a law passed earlier this year that significantly changes how funds are allocated to school districts. If the amendment is defeated, the law doesn’t go into effect.

EdNews has been following the issue since before SB 13-213 was introduced in the legislature last winter. What follows is a guide to what the law and the amendment would do.

Dollars and cents

Current spending: The state and school districts currently spend about $5.5 billion a year on school operating costs, called total program funding. Overall school spending is higher, more than $10 billion a year, including payments on bonds and spending of federal and other local funds that aren’t included in total program funding.

New revenue: Passage of A66 would raise about $950 million in new state revenue in its first year, rising to about $1.01 billion in 2015-16, the first year the new funding formula would go into effect.

Proposed spending: The P-12 budget in the first year would rise to about $6.4 billion because of extra spending required by SB 13-213. Average statewide per-pupil spending would rise from the current $6,652 to an estimated $7,426.

“Optional” spending: Parts of SB 13-213, such as grants for innovative programs, additional funding for special education and gifted and talented students and charter school facilities funding, might or not be fully funded in the first year, depending on how much revenue A66 actually brings in. Legislative staff analysts estimate A66 revenues could be $300 million short of funding all the bells and whistles in SB 13-213.

Back to square one: On a per-pupil basis, A66 would bring average statewide per-pupil funding to $7,426, about $200 higher than the $7,242 per student spent in 2009-10, the high point of school funding before the recession forced the legislature to cut more than $1 billion from what funding would have been otherwise.

What the new system would do

The state’s current school finance system attempts to achieve “equity” in school funding by giving different districts varying amounts of per-pupil funding to account for the higher costs of educating students in small districts, for the greater expense of teaching at-risk students and for staff cost of living in more expensive regions of the state.

The SB 13-213 system makes a similar attempt to achieve equity, but it uses different “weights” to do that. Fewer districts would receive compensation for size, and the cost-of-living factor would be eliminated. Instead, districts with the highest concentrations of at-risk students would gain the most from the new plan.

Here are the key features of the SB 13-213 system:

Base funding: The starting point would be per-student funding in 2013-14, the last year of the old finance system is A66 passes. Spending would increase annually by inflation.

Early education: A key feature of SB 13-213 would be full funding of half-day preschool for the estimated 20,180 at-risk students eligible for the Colorado Preschool Program. There’s not enough funding now to serve all eligible students. (The preschool program uses a different definition of at-risk that the K-12 system does.) The new system also would provide funding of full-day kindergarten for families that want it. (Many districts provide full-day kindergarten now. Some pay for out of their own funds; others charge parents tuition. Half-day kindergarten is free, but kindergarten is optional for families; mandatory school attendance laws don’t apply until first grade.)

At-risk students: The new system proposes a major shift of funding to at-risk students, currently defined as children eligible for free school meals. (There’s endless debate over whether that is the appropriate “proxy” for identifying whether students are in fact at risk of falling behind academically.) SB 13-213 proposes no change in that definition and would expand it to include students eligible for reduced-price meals.

Under the current system districts can receive no more than 130 percent of base funding for at-risk students. The new plan would give some districts 140 percent of base funding for at-risk students and English-language learners. In addition to expanding the definition of at-risk, students who are both at-risk and ELL would be counted twice. (Students could be classified as ELL for five years, as compared to the current two years.)

Money for reform: Recent education reform laws, such as the educator evaluation law (Senate Bill 10-191) have been criticized because they were passed without state funding for implementation. The new system would include a $411 per-student payment to all districts (called the Teaching and Leadership Investment) intended to help districts pay for rollout of new content standards, new tests and the new teacher evaluation system.

“Backpack” funding: An article of faith for many education reformers is giving schools and principals greater autonomy in spending. SB 13-213 gives a nod to that ideal, saying principals should have more flexibility in spending the additional state funding for at-risk students. But, in one of the many political compromises made to get the bill passed, superintendents and school boards retain review power over principals’ plans.

Innovation grants: The new system proposes a $100 million fund, overseen by a governor-appointed board, that would make grants to school districts for programs such as longer school days and years. The exact amount of money available would depend on how much revenue A66 actually raises.

Capitol signing ceremony
Gov. John Hickenlooper shakes hands with Sen. Mike Johnston after signing SB 13-213.

Counting students: Under the current finance system, attendance is counted in a narrow time period around Oct. 1 every year. The new system would use a method called average daily membership, under which student attendance is tallied throughout the year. The idea is that a more accurate counting system means that districts will get funding for students actually in classrooms. The new counting system would take effect in 2017-18 because of the time needed to set it up.

Charters: The new system’s funding mechanisms for at-risk and ELL students will apply to both district-chartered schools and to schools overseen by the state Charter School Institute. The state also would supply additional funding for institute schools, and both types of charters would receive increased support for facilities costs. The bill did not give district charters a mandated share of local tax override revenues, which was a major goal for charter interests and a disappointment when it didn’t happen. So SB 13-213 advantages institute schools more than it does those overseen by districts.

State and local shares: SB 13-213 creates a formula for determining how much each district should contribute to total costs through its property taxes and how much the state should be responsible for. The formula uses property values, income of district residents and percentages of at-risk students.

Under that calculation, many districts are currently raising less local revenue than they could – about $81.8 million statewide. SB 13-213 does not reduce the amount of state money to such districts, but they theoretically could spend more money on their students – if voters approve local tax-rate increases. With full district support the average statewide per-pupil funding is estimated at $7,522 instead of $7,426.

Everything else: In an effort to attract support from wide segments of educators and interest groups, Democratic Sen. Mike Johnston of Denver loaded SB 13-213 with a variety of other provisions, including more money for special education students, greater flexibility for districts in raising local tax override revenues, state matching funds for poor districts to increase local taxes and additional funding for students being educated in juvenile treatment and detention facilities.

Stacks of cashExtra cash: Even though the new system wouldn’t kick in until 2015-16, the new tax revenue would start flowing next Jan. 1 if voters pass A66. That “early” revenue, about $1.45 billion, currently is set to flow into two reserve funds for use later and into an educational technology fund. Up to 40 percent of the money would go to the Building Excellent Schools Today construction program.

A23 vs. A66: There’s a key policy question embedded in the A66/SB 13-213 proposal. The current finance system is driven by Amendment 23, a 2000 constitutional change that requires base school funding increase every year by enrollment and the rate of inflation.

That requirement would be stripped from the constitution by A66, although the inflation requirement remains in SB 13-213. But because that’s just a law, it could be changed by future legislatures.

A66 creates a new requirement that 43 percent of state general fund revenues be earmarked for basic school funding. That could mean dollar amounts go down when state revenues decline during a recession. The new revenue produced by the higher tax rate would be deposited in a separate education fund and dedicated to school innovations.

Some education leaders are nervous about the changes, fearing they provide a less reliable guarantee of school funding than A23 does.

Other backers of A66 argue that making the change is vital to remove the pressure on other state spending that is forced by a constitutional guarantee of increased school spending. Other observers note that the A23 guarantee was weakened during the recession when lawmakers reinterpreted the amendment and found a way to cut K-12 spending by about $1 billion from what it otherwise would have been.

How it’s paid for

Tax rates: A66 increases individual tax rate on adjusted income from 4.63 percent to 5 percent on incomes up to $75,000. Income above $75,000 would be taxed at 5.9 percent. Small business owners who file taxes as individuals would be affected. (The rate was 5 percent until 2000.)

Your tax bill: Legislative analysts who prepared the state voter guide estimate that A66 would increase taxes by $97, or 8 percent, for taxpayers with gross income of $50,000 and taxable income of $26,300. At the higher end, taxes would increase 18 percent, or $1,281 for a taxpayer with gross income of $200,000 but taxable income of $154,000 after deductions and credits.

How will we know if it works?

SB 13-213 requires a series of reports on the new system’s costs and on its return on investment, plus creation of a state website that would include data on individual schools’ spending, including information on staff salaries and benefits. The first cost study wouldn’t be done until 2016, and the first return on investment study in 2020.

What the sides are saying

Colorado Commits to Kids logoThe campaign over a new system as complex as A66/SB 213 inevitably is reduced to sound bites, slogans and oversimplification.

Supporters, organized by a committee named Colorado Commits to Kids, argue that A66 would lead to smaller class sizes, more individual attention to students, restoration of programs that have been cut, improved student achievement, more accountability and a better educated workforce to fill the jobs of the future – all while keeping Colorado taxes low compared to neighboring states.

The amendment is widely supported by school administrators, teachers, education advocacy groups and liberal-leaning think tanks; the business community is split.

Opponents argue that the new system doesn’t provide real education reform, doesn’t have effective accountability measures, that more spending doesn’t necessarily yield better student achievement and the Colorado’s economic recovery is too fragile to bear higher taxes. Critics also point out that part of the higher taxes paid by residents of larger and wealthier counties won’t go back to their schools but to districts elsewhere in the state.

Opponents include conservative advocacy groups, pretty much every Republican elected official and some business groups. There’s a range of opinions among school boards and school board candidates, often reflecting local community views about higher taxes.

The prospects

Campaign logoMany observers believe the A66 election boils down simply to whether a majority of citizens who stir themselves to vote are willing to raise the income taxes they pay. Coloradans have been skeptical about statewide tax increases in recent decades (see this EdNews story for the history), although voters have a history of supporting local increases.

The vote is expected to be close, regardless of whether A66 passes or fails.

Proponents, having raised about $5 million through the end of September, are much better funded and organized than opponents, but the campaign has been relatively low-key. Colorado Commits has been running a steady TV ad campaign throughout the state but also is focusing heavily on social media, door-to-door canvassing, phone banks and get-out-the vote efforts.

Turnout generally is lower in odd-numbered years, when there are no high-profile governor, Senate or other races to draw voters. Turnout this year also is expected to vary locally, depending on the intensity of school board and local government races in different towns and counties. The election is being conducted with mail ballots, so all registered voters receive ballots at home, but it’s up to them to return them by mail or at voting centers.

Don’t forget the marijuana tax

The only other issue facing all voters statewide this year is Proposition AA, and it also has an education component.

The measure would impose a 15 percent state excise tax on the average wholesale price of retail marijuana, with the first $40 million of that revenue going to the BEST program. (Revenue is expected to be less than $40 million in the first two years of the tax.)

Proposition AA also would impose a 10 percent sales tax on retail marijuana sales, with that revenue going to state regulation and enforcement efforts. (Medical marijuana would not be taxed.) The state voter guide (link in the grey box above) has more information on the proposition.

Voter information

Image of voter putting ballot in ballot box.Election matters generally are handled by county clerks. So if you have questions about your registration, receiving a ballot, how to return your ballot or other questions, contact your local clerk’s office. This page on the Department of State’s website has links to clerk’s offices.

If you’re registered, your ballot should arrive in the mail shortly, as clerks can mailing them out starting Tuesday, Oct. 15.

If you’re not registered, a recent change in election law makes it possible to register online through Oct. 28 or in person at a county clerk’s office through Election Day, Nov. 5. You can check your registration or register online here.

budget debate

Under the House budget plan, suburban districts would get more money while some urban districts would get less

PHOTO: Alan Petersime
Kindergarteners using the computer at IPS School 90.

Suburban schools, English-learners and virtual schools would fare well under the Indiana House’s 2017 budget plan, while Indianapolis Public Schools and other urban districts would see drops in state support.

In the Republican-crafted two-year budget draft, presented to the House Ways and Means Committee today, Indiana schools are projected to get an extra $273 million to support student learning, a 2.8 percent increase overall. Basic per-student funding that all districts get would also increase to $5,323 in 2019, up 4.6 percent from the $5,088 they received in 2017.

Much like in 2015, almost every district in Marion County would see a slight increase in state funding, with the largest bumps going to Beech Grove and Perry Townships. Each would get nearly 8 percent more in tuition support — the state’s contribution that funds each student’s education. Both districts’ boosts can be attributed in part to growing student populations.

Only one district in the county is expected to lose funding. IPS would see a big decline in state aid under the proposed budget, down by nearly 5 percent. That’s partially because enrollment is projected to decline over the next two years. But the largest drop would come from a reduction in the “complexity index” — extra dollars districts receive to educate poor students. That amount would fall by $9.4 million by 2019.

During her campaign, state Superintendent Jennifer McCormick called for adjustments to the complexity index, but House lawmakers kept the calculation as it was. It will continue to rely on how many families qualify for food stamps, foster care and welfare programs.

Although IPS and other urban districts — such as those in Gary, East Chicago and Hammond — lose either tuition support, per-student funding or both, many township and suburban districts saw increases.

In order to cover those increases in a year when state revenues are less than expected, Rep. Tim Brown, R-Crawfordsville, chairman of the budget-making House Ways and Means Committee, said the state did have to make cuts.

The House plan axes money for teacher performance bonuses. Last year, Indiana paid $40 million for the bonuses, which varied widely from district to district. High-performing teachers from wealthier districts got as much as a few thousand dollars, while those in poorer urban districts, such as Wayne Township, received less than $50.

Brown said the priority was finding a way to increase funding for all students.

“We made the decision, especially in this tight first year, to see what we could do to boost the foundation for every child in Indiana,” Brown said.

That move is likely to see pushback from the Senate. Sen. Luke Kenley, R-Noblesville, said he’d like to see the bonuses continue, albeit in a fairer way.

The House plan would also increase the budget for English-learners by 50 percent, going to $300 per student in 2018 and $350 per student in 2019, up from $200 per student in 2017.

Virtual charter schools, previously funded at just 90 percent of what other schools receive from the state, are bumped up to 100 percent under this plan. The proposal comes as Indiana’s online schools have struggled to find success — each one received an F from the state in 2016.

However, Brown argued they should be treated the same as other schools because “every child is equal.”

The overall $273 million boost to schools would also include an 11.3 percent increase in funding to Indiana’s taxpayer-funded voucher program, where families can use state dollars for private school tuition. Contributions are expected to move to $163 million in 2019, up from $146 million in 2017 due to higher anticipated participation.

The House plan sets aside less than what Gov. Eric Holcomb and McCormick have endorsed, but Brown said that the House’s plan — unlike Holcomb’s — is based on what was actually spent in 2017, not what lawmakers originally appropriated. State school districts enrolled fewer students than anticipated, so less money was spent.

The plan still has to pass out of Ways and Means before it heads to the full House, likely sometime next week.

The budget also includes:

  • $20 million per year for the state’s preschool program
  • $1.5 million per year for developing teacher “career pathways.”
  • $1 million per year to improve school internet access.
  • $2 million over two years for schools to use toward counseling and student support services, such as ones provided through groups like Communities In Schools.
  • $5 million over two years in incentive grants for schools and districts that consolidate services
  • $500,000 per year for dual language immersion programs
  • Kids with the most severe special needs would get a 4 percent increase in per-student funding over the next two years.
  • $12.5 million per year (up from $9.5 million) for the state’s Tax Credit Scholarship program
  • $12.5 million per year for the Charter and Innovation Network School Grant Program

Chalkbeat reporter Dylan Peers McCoy contributed to this story.

one hurdle down

Charter school funding bill clears Senate Education Committee

A student does classwork at James Irwin Charter Elementary School in Colorado Springs. (Denver Post file)

A bill that would require school districts to equally share money from local tax increases with charter schools cleared its first legislative hurdle Wednesday.

Senate Bill 61 advanced out of the Republican-controlled Senate Education Committee on a 4-3 party-line vote.

Supporters testified during a hearing last week that charter school students deserve equal access to taxes their parents pay each year.

Charter schools receive public money but operate independently, with greater autonomy over budgets, curriculum, and hiring and firing. Currently, it’s up to districts whether to share revenues from local tax increases with charter schools, and practices vary.

Opponents said the state would set a dangerous precedent, essentially breaking a compact between school boards and voters who approved tax increases known as mill levy overrides. Under the bill, charters would get a share from such tax measures approved by voters in the past and any that win approval in the future.

The bill was sponsored by state Sen. Owen Hill, a Colorado Springs Republican, and Sen. Angela Williams, a Denver Democrat. It is expected to win Senate approval but its future is cloudier in the Democratic-controlled House. Similar legislative efforts have failed in the past.

“What this bill is really about is the funding disparities that exist,” Williams told the Senate committee Wednesday. “Charters are public schools. They are schools that all our children attend … I don’t think any kid should be systematically underfunded because of the type of school they attend.”

Democrats on the education committee raised a number of concerns. Sen. Nancy Todd, an Aurora Democrat, said that while she fully supports school choice, the state has not been adequately funding the public school system.

“We are in a financial bind as a state,” Todd said. “I don’t believe that it is our role to step in and tell the local school districts what they have to do and how they are going to spend their money. Where does that stop?”

Democratic Sen. Rachel Zenzinger, who represents portions of Jefferson County, said she struggled with the bill. She too cited the financial pressures on districts, which continue to face shortfalls under Colorado’s complicated school funding system.

“I really feel at this time I can’t tie the hands of my local district people with another mandate from the state,” she said.

Sen. Tim Neville echoed other Republicans in saying he supports the bill to bring equality to school funding. He also pointed out that mill levy overrides approved by voters this fall included no language excluding charter schools.

The committee vote was 4-3, with Republicans Hill, Neville, Bob Gardner and Kevin Priola voting yes, and Democrats Todd, Zenzinger and Mike Merrifield voting no.