Fully fund K-12 schools? Colorado lawmakers say maybe next year.

The Colorado Capitol with its golden dome is seen behind bare tree branches and against a blue sky. An American flag flies from the rooftop.
School funding is a near constant subject of debate in the Colorado General Assembly. (Dan Lyon / Chalkbeat)

Colorado lawmakers this year came closer to fully funding the state’s schools than at any time since the Great Recession. But rattled by rising inflation and the threat of a ballot measure that would slash anticipated growth in property tax revenue legislators stopped short of constitutionally mandated K-12 spending. 

Democrats say they’re proud of the $36.4 billion budget signed by Gov. Jared Polis last week. The budget dedicates more than $5 billion in state money to base K-12 spending, a 7.5% increase over this year. Average per-student funding will go up 6% to $9,560. Lawmakers are also putting $80 million more into special education, getting closer to funding a formula established back in 2006. 

But despite a reserve in the state education fund that tops $800 million, lawmakers still held back $321 million through a recurring mechanism known as the budget stabilization factor. 

Democrats, who control both chambers, said there’s too much uncertainty on the horizon. Higher state spending is only sustainable, they said, if local property taxes rise enough to take over some of the burden in future years. 

A few months ago that seemed almost guaranteed, thanks to rising property values and recent tax policy changes. But a combination of dramatic inflation and potential property tax limits would sharply increase the state’s school funding obligations, which lawmakers could struggle to meet in 2023.

The only thing worse than not giving schools enough money, Democratic lawmakers believe, would be giving them more money one year only to roll it back the following year. 

“That is not predictable,” said state Sen. Rachel Zenzinger, an Arvada Democrat and Joint Budget Committee member. “That does not help our districts.”

Hoping to head off the ballot measure, Polis and a bipartisan group of lawmakers on Monday rolled out their own version of property tax relief, one they say would still allow the state to fully fund K-12 schools in the next two years while providing $700 million in property tax breaks. Lawmakers have until May 11 to pass a bill. Until then, proponents of the ballot measure, who include Republican lawmakers and business interests, are keeping it alive to influence the legislative process.

Meanwhile, in Colorado classrooms, those calculations can feel like an abstraction.

Salaries start at $36,000 a year in the Lake County School District, and the cost of living is high in mountain communities. Staffing shortages have left student teachers and aides covering classrooms on their own, said Cody Jump, a high school social studies teacher and parent. He’s not sure who will teach his own children when they enter kindergarten and fifth grade next year because half the teachers in those grades have quit. 

When Jump got a piece of metal in his eye during a recent home repair, his wife drove him to the hospital, where they got in a fight in the parking lot about whether they could afford an emergency room visit. 

“We stay because we care about our children and the families in the community where we teach,” he said. “I want to be part of a community that supports its children. But I don’t know how much longer I’m going to be able to afford to stay here.”

Colorado school funding challenges built up over time

Colorado funds its schools with a combination of state and local tax revenue. The state uses a formula to determine how much money each school district gets per student. The state makes up for whatever local taxes don’t generate. 

Amendment 23, passed in 2000, requires total school funding to go up every year by the rate of inflation plus population growth. But two earlier constitutional amendments, Gallagher and the Taxpayer’s Bill of Rights, or TABOR, combined to push down local property tax revenue, forcing the state to take on more and more responsibility. Starting with the Great Recession, lawmakers decided they simply couldn’t afford it and started spending less than Amendment 23 requires. (See timeline below.)

This unpaid obligation adds up to nearly $10 billion since 2010 and serves as a potent symbol of Colorado underfunding its schools. When lawmakers talk about “buying down” or “paying down” the budget stabilization factor, they mean reducing the withholding for current and future years, not paying off past years’ debts.  

The $503 million state withholding this school year meant Denver Public Schools lost out on almost $60 million, Aurora Public Schools lost $27 million, Mesa Valley 51 lost $13.4 million, and Lake County Schools lost $675,000.

“When I look at our salaries, we could hire another 10 to 15 certified teachers with that money,” Jump said. “We have a lot of positions staffed with long-term subs, we have paraeducators doing the work that a certified teacher might do. We could provide those folks with a pathway to being a certified educator without going into debt.”

In Aurora, middle school math teacher Lalita Coatsee wishes her school had more counselors. Students need more help than ever due to pandemic stresses, more than can be provided by the additional counselors hired through a local tax increase. Aurora schools are also facing budget cuts due to declining enrollment. 

“In the beginning of the year, I could go to the office for dry erase markers, pens, but after we heard about the budget cuts, I don’t want to ask,” Coatsee said. 

Lawmakers laid groundwork for more funding amid twin crises.

In 2020, lawmakers wrote the budget as most of the population was under stay-at-home orders and businesses were shuttered. Fearing economic devastation and counting on federal relief money to soften the blow, they cut more than $1 billion from education. The recession failed to materialize, and in 2021, they were able to put $480 million in excess revenue in reserve just for schools. This year, the state has even more one-time money. 

Also in 2020, the Gallagher Amendment and TABOR pushed property tax collections so low the survival of rural fire and hospital districts was threatened, along with school funding. Voters agreed to repeal Gallagher to preserve hundreds of millions in local property tax revenue. At same time, lawmakers used a novel legal argument to start slowly increasing local school taxes without getting new voter approval

Two years later, those changes have paid off. The state’s share of school spending accounted for 67% of the total in 2014-15, but just 56% in next year’s budget, even though the state share will be 7.5% higher than this year and represents the highest total amount the state has ever put into K-12. 

Total program for 2022-23, the amount that describes combined state and local funding for base education needs, is set at $8.7 billion.

Meanwhile, in the 2022-23 school year, Denver Public Schools will miss out on just $33.6 million in state withholding, Aurora will lose out on $15 million, and Lake County will lose out on $380,000.

Getting local taxpayers to cover more of the cost makes it easier for the state to meet its own obligations. With properties set to be reassessed next year, home values skyrocketing, and local tax rates rising under the previous policy changes, state analysts predicted even better local tax collections going forward. 

Joint Budget Committee members this spring talked about eliminating the annual withholding in either a year or over the next two years. Flush with one-time money, the state could spend down its savings for a few years until local tax collections caught up and then maintain higher spending going forward. 

Inflation and property tax uncertainty prompt new plans

But the March economic forecast and the proposed ballot measure threw cold water on those plans. 

With inflation at 7.5%, the state would be on the hook for more education spending. And the proposed ballot measure backed by GOP lawmakers and others would cap growth in assessed values to 3%. A fiscal analysis estimated the measure  would cut statewide local property tax collections by $1.3 billion in 2023-24 and leave the state on the hook for $360 million more in school funding than previously anticipated. Another conservative-backed ballot measure with a 2% cap would cost local governments even more money.

“Reductions in local revenues would threaten the sustainability of any given option, as every decrease in the local share has to be offset with state funds,” a budget analyst wrote in a March memo.

But Joint Budget Committee member state Sen. Bob Rankin, a Carbondale Republican, believes the state could have spent more this year. 

“This is a question of risk versus reward, and I argued that the risk is worth taking in order to help our teachers,” Rankin said. 

State Rep. Colin Larson, a Littleton Republican and backer of the property tax ballot measure, said dramatic increases in property taxes would wreak economic havoc and hurt revenue more than tax limits. He also challenged the idea that more funding will fix schools on its own.

“I look back at the reading levels when I was in school and they weren’t better,” he said. 

Rankin has signed onto the compromise bill along with Democratic JBC member state Sen. Chris Hansen. Both said the proposal will give taxpayers a break in the short-term while still creating the conditions for better school funding down the road. Local taxes would still go up, but more gradually than if lawmakers do nothing. 

When it comes to funding schools, “we don’t think this sets us back at all,” Hansen said. 

Other ballot measures, meanwhile, could also affect next year’s school funding picture. One proposal would cut income tax rates, while another would increase school funding by dedicating more of existing income tax revenue.

New funding sources are necessary, said Tracie Rainey of the Colorado School Finance Project, because even meeting existing obligations would still leave Colorado well behind the national average for school funding.

“That’s still a long way to go,” she said.

​​Bureau Chief Erica Meltzer covers education policy and politics and oversees Chalkbeat Colorado’s education coverage. Contact Erica at emeltzer@chalkbeat.org.

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