Colorado school finance bill would spare districts from impact of enrollment declines

Children wearing winter coats and backpacks walk to school on a snowy day.
Fewer students enrolled in Colorado schools this year, raising the prospect of budget cuts. (Hyoung Chang/The Denver Post)

Colorado school districts would avoid the worst budget hits from losing 30,000 students this school year under a bill that received initial support from the Joint Budget Committee Thursday.

The bill sends an extra $60 million to school districts — $41 million to make up for lost local tax revenue and another $19 million to districts that saw particularly large enrollment declines or that experienced a notable decrease in the number of students living in poverty. 

Rural districts will share another $25 million from a new nicotine tax approved by voters in November.

Colorado funds districts based on how many students they have, as well as other factors like district size and student poverty, with the state and school districts sharing the costs. With the state budget set in the spring, lawmakers always adjust school funding midway through the year to account for changes in enrollment and local tax collections from the previous year’s estimates.

Many school districts were bracing for significant cuts this year — on top of cuts the legislature already made last year in response to a pandemic-related economic slump — because 3% fewer students have showed up to school.  

According to the school finance formula, the full hit to school districts should have been almost $121 million. But Colorado lawmakers already hold back hundreds of millions every year that the state constitution says should go to K-12 schools to pay for other priorities. The withholding reached $1.2 billion this school year, as lawmakers struggled to balance the budget during the height of business restrictions and job losses. Colorado’s K-12 budget is about $7.2 billion.

Rather than claw back $121 million for the state, the school funding adjustment bill essentially treats it as part of the amount that was already withheld. 

The additional $19 million in the bill will benefit districts that saw more than a 2% decrease in enrollment or that saw a big decrease in students deemed “at-risk.” These are students who qualify for free lunch or food stamps under federal guidelines or who are learning English, and districts get more money to serve these students. That means that decreases in this student population have a bigger financial impact. 

Officials believe the drop in low-income students comes from families not filling out paperwork, rather than fewer families struggling amid historic job losses. 

“I think the at-risk students are there, and we didn’t effectively count them,” legislative budget analyst Craig Harper told the Joint Budget Committee.

Districts like Aurora, Westminster, Adams 14, and Sheridan, all working-class Denver suburbs with large immigrant populations, faced particularly large cuts related to students in poverty not showing up in the count.

With Democratic majorities in both chambers of the Colorado legislature, the bill is likely to pass easily, but Republicans still could raise objections. 

State Sen. Bob Rankin, a Carbondale Republican, said he supported the financial adjustment bill in committee so that it can move forward, but he has concerns about effectively paying for students that districts are not educating.

“We have 30,000 fewer students and we’re going to increase funding?” he said. “I’ll vote for this [today] but I’m going to have a lot to say about it going forward.”

State Rep. Julie McCluskie, a Dillon Democrat, said the bill maintains funding that districts were counting on and need now more than ever.

“I really do think this solution is the right solution for our school districts and our students,” she said.

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