Updated: Ed Fund worries jangle Capitol nerves as session wanes

Updated May 3, Noon – Concerns about the amount of money in the State Education Fund sparked anxiety at the Capitol Friday about possible changes in the 2014-15 school finance deal that seemed settled earlier this week (see this story for background).

The development made it a frantic day for K-12 lobbyists, who convened in countless huddles to consult and drained their smartphone batteries with non-stop texting.

The issue also prompted a late-afternoon, voices-raised scrum in the House lobby between House Speaker Mark Ferrandino and several district lobbyists.

Key legislators said to expect movement on the issue Monday. And state budget director Henry Sobanet said, “We’ll figure this out early next week.”

The education fund is a dedicated account used to supplement various K-12 programs. Swollen to more than $1 billion this year because of infusions of state surplus funds, the SEF has been a tempting target for lawmakers anxious to increase education spending.

But Hickenlooper administration officials and some legislative budget experts want to be careful about a SEF spending spree so that there’s money available for use in future budget years.

Sobanet told Chalkbeat Colorado late Friday afternoon that he’d like to have a balance of about $660 million in the fund at the end of the 2014-15 budget year. (When the legislative session started, Sobanet was urging $700 million.) Talk around the Capitol Friday was that even achieving that lower number will require cutting about $50 million in SEF spending from education bills just passed or still pending in the legislature.

Sobanet said $50 million “is a moving target” and that a more exact figure has to be determined. “We’ll do that process before we start making recommendations or reductions.”

The biggest targets for cuts could seem to be the $110 million negative factor reduction and the $20 million of additional early literacy funding in House Bill 14-1292, the Student Success Act. The School Finance Act, House Bill 14-1298, includes $17 million for at-risk preschool and kindergarten funding, $30 million for English language learners and also additional funding for full-day kindergarten in general. Some of that money presumably could be vulnerable.

One influential lawmaker close to the discussions told Chalkbeat that the $110 million is safe, and that what unfolds next week might ease a lot of worries.

“There is a way forward,” he said, declining to elaborate. “There are lots of options.”

Several other pending bills also propose use of SEF money, but those total only about $8 million.

One of those, a proposal intended to improve performance of alternative education campuses (Senate Bill 14-167) was killed in a House committee Friday. And the Senate Appropriations Committee slashed the price tag of the gifted and talented bill (House Bill 14-1102).

Even Senate Bill 14-150, which proposes doubling the current $5 million budget of the Colorado Counselor Corps, “will get a haircut,” one lawmaker said. (The bill already has been sent to the governor, but there are procedural ways around that.)

The dilemma spotlighted splits in the education lobby, with mainline groups anxious to protect the $110 million for the negative factor while more reform-minded groups want to avoid cuts to early childhood, ELL and literacy programs. They often huddled in separate groups Friday.

House Speaker Mark Ferrandino was amused and a bit sarcastic about the sudden flurry of lobbyist anxiety over the supposed $50 million gap.

He reminded Chalkbeat that he’s been stressing for months that the levels of 2014-15 spending advocated by K-12 interests were “unsustainable.” The Denver Democrat originally was skeptical about making any reduction in the negative factor.

He repeated such arguments to K-12 lobbyists later during a spirited exchange in the noisy, stuffy House lobby as a water bill debate dragged on in the chamber.

A short time later, Ferrandino, Sobanet and Sen. Pat Steadman, D-Denver, huddled briefly in a second-floor alcove. Steadman is vice chair of the Joint Budget Committee and a prime sponsor of the School Finance Act. They broke up smiling.

The parliamentary ball was in the House’s court, as it had to decide what to do with Senate amendments to the success and finance acts.

The House voted Friday night to request that the School Finance Act be taken to conference committee, and it voted to accept Senate amendments to the Success Act. The scope of finance bill is broad enough that any changes to next year’s spending plan could be done there.

The question of the SEF’s balance isn’t an esoteric argument among budget writers

Although the fund has plenty of money at the moment, using it to increase basic school support – known as Total Program Funding – imposes costs in subsequent years on the state’s main General Fund, which provides the bulk of school funding every year. Total program has to increase by inflation and enrollment every year, hikes that have to be borne mostly by the General Fund.

Sobanet wants to keep a certain balance in the education find to help cushion the General Fund in later years and reduce the odds of K-12 budget cuts in the next economic downturn.

School district lobbyists have been working hard this session to get as much money as possible now, and they say districts will worry about future budget cuts if and when they happen.

Lawmakers need to make up their minds fast – they have to adjourn next Wednesday.