What's the way forward?

Education leaders put on brave face in wake of Supreme Court ruling

Colorado education leaders say they will continue fighting for stronger education funding at the Capitol and perhaps at the ballot box following a Supreme Court ruling upholding the state’s current finance system.

But supporters of more funding face steep hurdles in their quest, based on the state budget situation and past history.

The Colorado Supreme Court on Monday rejected a constitutional challenge to the so-called negative factor, a formula the legislature uses to reduce annual school funding.

The decision in the Dwyer v. State lawsuit pretty much dashes the last hope for a sweeping fix to the tight funding situation that has vexed district leaders since 2010, when the negative factor was first used.

In that same time period, the Supreme Court has rejected two school funding lawsuits and voters defeated a proposed $1 billion tax increase to help support schools.

“K-12 is in for a bumpy ride,” said Tracie Rainey, executive director of the Colorado School Finance Project, a research organization.

Jane Urschel, deputy executive director of the Colorado Association of School Boards, had a slightly different take. Quoting the just-departed Yogi Berra, she said, “When you come to a fork in the road, take it. That’s where we are,” she added, saying education now faces “a short-term route and a long-term path” on funding.

The heart of the issue

School funding is driven by two things — Amendment 23 and a 1994 school finance law. The constitutional amendment, approved by voters in 2000, requires school funding to increase by enrollment growth and inflation every year.

Negative factor history
  • Fiscal year 15-16: $855.1M
  • FY14-15: $880M
  • FY13-14: $1.004B
  • FY12-13: $1.001B
  • FY11-12: $774M
  • FY10-11: $381M
  • FY09-10: $130M

The finance law divvies money up in two ways: Base funding, through which districts receive an equal amount per student, and factor funding, which gives districts varying amounts based on unique characteristics like size, number of at-risk students and staff cost of living.

Before the negative factor was created, the Amendment 23 formula was applied to both base and factor funding. The legal rationale behind the negative factor allows the formula to be applied only to the base, essentially allowing the legislature to reduce factor funding. Some argue the negative factor also has the effect of cutting the base.

It’s estimated use of the negative factor has cut school funding by about $5 billion since 2009-10. Support for basic school operating costs is about $6.2 billion this school year.

“The negative factor has had a devastating impact on school districts across Colorado,” said Lesley Dahlkemper, a member of the Jefferson County school board.

Does education face a “new normal?”

District leaders have been resisting the negative factor for five years, but some observers have concluded that tight funding is “the new normal” for schools. Opinions still differ in the wake of the court ruling.

“I don’t know how it’s not,” said Reilly Pharo Carter, executive director of Climb Higher Colorado, a group that advocates for high academic standards.

Others hope the situation will be temporary.

Milestones
  • 2000 – Amendment 23 passed
  • 2010 – A23’s 1 percent annual “bonus” expires; negative factor imposed
  • 2013 – Supreme Court rejects Lobato funding lawsuit; voters defeat $1 billion tax increase to help fund schools
  • 2014 – Despite intense lobbying, legislators make only modest trim in negative factor
  • 2015 – High court rejects Dwyer lawsuit

“We can’t allow it to be the new normal,” said Lisa Weil, executive director of Great Education Colorado, a funding advocacy group.

“We should not let anyone, legislators or the general public, think that because it’s the new normal it’s OK,” said Democratic state Sen. Andy Kerr of Lakewood, a Jeffco teacher and member of the Senate Education Committee. “We shouldn’t let anyone forget what the old normal was.”

Legislative prospects are dim

With the state courthouse door closed for now, education leaders are turning toward Urschel’s short-term route: the 2016 legislative session.

Advocates made a hard push to trim the negative factor in 2014 and tried again during the 2015 session. But lawmakers were able to make only small reductions.

“If we are serious about providing a high quality education to the students of Colorado, the legislature and the governor need to make increased school funding a high priority,” said Kerrie Dallman, president of the Colorado Education Association, the state’s largest teachers union.

But none of the more than a dozen education leaders interviewed by Chalkbeat Colorado are optimistic.

“I hold absolutely no hope that our funding problems might be solved by the governor or the legislature,” said George Welsh, superintendent of the Canon City schools and a long-time advocate for smaller districts.

“It is not realistic to think that the governor and legislature will be able to ‘buy down the negative factor’ in the next few years,” said Chris Watney, president of the Colorado Children’s Campaign.

The key problem is that refunds required by the Taxpayer’s Bill of Rights, a slowing of state revenue growth, automatic increases in base school funding and required support of transportation will leave lawmakers with little extra cash for the 2016-17 budget.

“There aren’t extra dollars, there is no unused pot of money and the legislature does not have the power to create more dollars by printing them, deficit spending or by raising taxes. Thus, lobbying ‘pressure’ won’t succeed here because it can’t,” said Republican Sen. Chris Holbert of Parker, a member of Senate Education.

“I think we’re going to be lucky to keep the negative factor where it is,” said Kathleen Gebhardt, a lead attorney for the plaintiffs in the Dwyer lawsuit.

Some people are looking to changes in the hospital provider fee for short-term relief. That fee is assessed on hospitals to attract higher federal Medicaid funding, with the money paid back out in Medicaid reimbursements. Even though it’s not a tax and can’t be spent for non-Medicaid purposes, the $800 million a year generated by the fee counts against the state’s TABOR revenue cap and helps trigger tax refunds.

Gov. John Hickenlooper wants lawmakers to reclassify the fee so it doesn’t count as state revenue. Doing so would free up money for state spending.

Many education leaders support the governor.

“It’s a short-term strategy that would give us some breathing room,” said Boulder Valley Superintendent Bruce Messinger, who has been a leading voice on school funding.

Hickenlooper was unsuccessful in selling the idea to the 2015 legislature and likely will face a challenge in 2016, particularly with majority Republicans in the Senate, who don’t want to roll back TABOR refunds.

Going to the ballot

The long-term path for education leaders is developing some sort of education-funding ballot proposal for voters.

“I think it’s very likely we’ll have to go to the ballot,” Weil said.

But no one is predicting yet what a ballot proposal would look like. Options include raising the state revenue ceiling, a dedicated tax increase for K-12 or tinkering with Amendment 23.

Constitutional thicket
A variety of constitutional and legal provisions affect the state budget, including:
  • Balanced budget – The state constitution requires this
  • Taxes – TABOR says tax rates can only be raised by voters
  • Revenue cap – The amount of money the state can spend in a year is limited by TABOR
  • Refunds – If revenue exceeds the cap, the excess must be refunded to taxpayers, or lawmakers can propose a ballot measure allowing the excess to be spent
  • Other spending – State Medicaid spending is driven partly by federal requirements, and state law requires transfers to transportation and construction under some circumstances

Kerr and others note a ballot proposal could be a tough sell.

“There are people who have been talking about it all along, but I don’t see any appetite for going back to the ballot at this point,” he said, alluding to voter rejection of a proposed tax increase for K-12 education in 2013.

Any ballot proposal also would reopen discussions within the education community about changing school finance formulas. Both education reform advocates and poorer districts argue the formulas are outdated and inequitable.

“Equity, accountability and innovation … should be top of mind as we look for answers,” Watney said.

Broader constitutional fixes are being discussed in other quarters.

A group of civic and business leaders named Building a Better Colorado is holding public meetings around the state and studying a possible list of constitutional changes, not just to the state budget.

If that group moves ahead with a proposal, it will have to consider education, Gebhardt believes.

“If you don’t have K-12 support it’s going to be very difficult,” she said, because any campaign will need the “boots on the ground” provided by teacher and parent groups.

One last lifeline

There is one other court case still pending that could affect education funding.

A 2011 federal court lawsuit filed by some legislators, other elected officials and private citizens argues that TABOR violates federal constitutional guarantees that states have “representative” forms of government – including legislatures with the power to tax.

The case hasn’t been tried while procedural issues are being considered by the federal courts.

Learn more about school finance in Chalkbeat’s archives

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.