Ruling is in

Supreme Court rejects challenge to school funding formula

Ralph Carr Judicial Center

The Colorado Supreme Court in a 4-3 decision issued Monday rejected a constitutional challenge to part of the state’s school funding formula.

At issue in the case of Dwyer v. State of Colorado was the negative factor, a calculation the legislature has used to reduce school funding to balance the state budget.

“At the end of the day, the State has not reduced statewide base per pupil funding below its constitutional minimum. That fact torpedoes Plaintiffs’ lawsuit,” the opinion said. (See full opinion at bottom of article.)

The decision was not unexpected, but it deals a hard blow to advocates of increased school funding by closing the last big court option available to them.

“This disappointing decision has slammed the courthouse doors on the children of Colorado, cementing in place our uncompetitive levels of education investment,” said Kathleen Gebhardt, a lead lawyer for the plaintiffs.

“We just have to keep trying” to strengthen school funding, she added. “The new normal, it’s just not acceptable. … The next step has to be the voters,” perhaps with a ballot proposal to tweak constitutional requirements for school funding.

The suit was filed just over a year ago by a group of parents and school districts organized by Children’s Voices, the Boulder nonprofit law firm that also put together the Lobato v. State of Colorado lawsuit. That case challenged the state funding system on broader grounds and was rejected by the high court in 2013.

The target in the Dwyer case was much narrower — the negative factor and the proper interpretation of Amendment 23, the constitutional provision that requires K-12 funding to increase annually by population growth and the rate of inflation.

The plaintiffs asked that the negative factor section be stricken from the state’s school funding law and that the legislature be barred from reinstating the factor in another form. The suit didn’t ask that lost funding be restored.

The case boiled down to a fundamental disagreement between the plaintiffs and the state on two key issues — the definitions of base school funding and per-student funding.

“Plaintiffs’ challenge to the negative factor presents a surprisingly straightforward question of constitutional interpretation. Quite simply, this case is about one thing: the meaning of the term ‘base,'” the ruling said.

The court’s majority came down on the state’s side.

“By its plain language, Amendment 23 only requires increases to statewide base per pupil funding, not to total per pupil funding,” the majority wrote. “The Supreme Court therefore holds that the negative factor does not violate Amendment 23.”

The ruling said that principles of ballot measure interpretation “compel the conclusion that Amendment 23 only requires increases to statewide base per pupil funding, not total per pupil funding. We know that this is what Amendment 23 means, because this is exactly what Amendment 23 says.”

The ruling also said those legal principles required that “We presume that the negative factor is constitutional, and we will only void it if we deem it to be unconstitutional beyond a reasonable doubt.”

The negative factor has been an issue of increasing concern — and even bitterness — among school board members, administrators and teachers since the legislature first used it in 2010, when state revenues still were reeling from the recession.

State and local funding for basic school operations totals about $6.23 billion this school year, an average of $7,295 per pupil. Without the negative factor, total funding would be $885 million higher. (See this spreadsheet of how negative factor affects individual districts.)

Legislators from both parties have been sympathetic about the negative factor’s impact on schools, if not to the argument that it was unconstitutional. They have concerns about reducing the legislature’s budgeting flexibility and about impacts on other state programs.

But for the last two legislative sessions, lawmakers have worked to reduce the negative factor, which had produced a funding shortfall as high as $1 billion in past years.

Budget experts fear it will be increasingly difficult to shrink the negative factor more in the future. Despite rising state revenues, constitutional requirements for annual state spending caps and taxpayer refunds make it unlikely significantly larger amounts of money will be available for K-12 in 2016-17 and beyond. (See the 2016-17 projection from the Colorado School Finance Project and these models of future negative factor impacts.)

How Amendment 23 works

Passed by voters in 2000, Amendment 23’s backers intended for it to provide a predictable and growing source of funding for schools. The amendment’s goal was to restore per-pupil funding to 1988 levels over time.

State funding for schools comes in two major chunks. The larger amount, base funding, provides an identical per-student amount to every district. The second chunk, called factor funding, gives districts varying additional per-student amounts based on individual district characteristics such as numbers of at-risk students, low enrollment and cost of living for staff.  Local property and vehicle tax revenues also contribute to what’s called total program funding for schools.

A third, smaller pot of state support known as categorical funding provides money to districts for programs such as special education, gifted and talented and transportation. That money is not distributed by the same formula that governs total program funding.

A key fact is that up until the 2010-11 school year, the legislature applied the inflation-and-enrollment increase to both base and factor funding.

Behind the negative factor

In 2010, the legislature created the negative factor (originally called the stabilization factor) to control school spending as lawmakers continued to struggle with the overall state budget. It applied to the 2010-11 K-12 budget and has been in effect ever since.

The legal reasoning behind the negative factor is that Amendment 23 applies only to base funding, not to factor funding. The original legal rationale for the negative factor is based on a 34-page 2003 memo issued by the Office of Legislative Legal Services.

With state revenues improving, reduction of the negative factor was the top priority for education interest groups during the 2014 legislative session. Their proposals ranged as high as $275 million. In the end, lawmakers agreed to a $110 million reduction.

The Hickenlooper administration and legislative budget experts resisted a larger buy down, arguing that a bigger amount would put too much pressure on the state budget in future years. That can happen because reducing the negative factor puts more money into K-12 base funding, which is subject to Amendment 23’s multiplier in the future.

Behind the Dwyer lawsuit

The suit was filed about a month after the 2014 legislative session, during which supporters of increased school funding were unable to persuade lawmakers to make a big cut in the negative factor.

Lawsuit backers met with key lawmakers near the end of the session, but legislators reportedly refused to be swayed by any possibility of a lawsuit.

But discussions about a challenge to the formula had been in the works long before that.

The lead plaintiffs were Lindi and Paul Dwyer, who have four daughters in the Kit Carson district.

Other plaintiffs  included the Colorado Springs 11, Boulder Valley, Mancos, Holyoke and Plateau Valley school districts, along with the East Central Board of Cooperative Educational Services. Other plaintiffs were the Colorado Rural Schools Caucus (now known as the Rural Alliance) and the Colorado PTA. Four sets of parents with children in the Kit Carson, Lewis-Palmer and Hanover districts also signed on to the suit.

The case also drew several friend of the court briefs supporting either the plaintiffs or the state.

Briefs supporting the plaintiffs were filed by the Colorado Association of School Boards and the Colorado Education Association, among others. A brief supporting the state’s position was filed by several business groups, including the Denver Metro Chamber of Commerce.

Monday’s ruling was written Chief Justice Nancy Rice and supported by justices Brian Boatright, Nathan Coats and Allison Eid. Justices Monica Marquez, William Hood and Richard Gabriel dissented.

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:

 

Teacher Pay

Every Tennessee teacher will make at least $33,745 under new salary schedule

PHOTO: Patrick Wall

Some teachers in 46 Tennessee districts will see a pay boost next year after the State Board of Education voted Wednesday to raise the minimum salary for educators across the state.

The unanimous vote raises the minimum pay from $32,445 to $33,745, or an increase of 4 percent. The minimum salary is the lowest that a district can pay its teachers, and usually applies to new educators.

The boost under the new schedule won’t affect most Tennessee districts, including the largest ones in Memphis, Nashville, Knoxville and Chattanooga — where teacher salaries already exceed the state minimum. (You can see the list of districts impacted here.)

The state’s largest teachers union lauded the increase, which will be funded under the state’s 2017-18 budget under Gov. Bill Haslam.

“Teachers statewide are increasingly struggling to support their own families on the stagnant wages of a public school teacher,” said Barbara Gray, president of the Tennessee Education Association. “It is unacceptable for teachers to have to choose between the profession they love and their ability to keep the lights on at home or send their own children to college.”

Tennessee is one of 17 states that use salary schedules to dictate minimum teacher pay, according to a 2016 analysis by the Education Commission of the States. In that analysis, Tennessee ranked 10th out of 17 on starting pay.

The 4 percent raise is a step toward addressing a nationwide issue: the widening gap in teacher wages. On average, teachers earn just 77 percent of what other college graduates earn, according to a 2016 study from the Economic Policy Institute. Tennessee ranks 40th in that study, with its teachers earning 70 percent in comparison to other graduates.

View the Economic Policy Institute’s data in full: