Colorado’s $38.5 billion budget proposal increases education funding but must contend with inflation

Enormous American and Colorado flags hang from the railing in the rotunda of the Colorado State Capitol. Portraits of past American presidents line the walls.
Colorado lawmakers introduced the 2023-24 budget in the Senate on Monday. (Helen H. Richardson / The Denver Post)

Colorado’s $38.5 billion proposed budget would increase per student K-12 spending by 8.4% — an increase that barely keeps pace with inflation — and gives a boost to higher education while also allowing public colleges and universities to increase tuition by as much as 5%, the highest increase in the last five years.

The $38.5 billion proposal for the 2023-24 fiscal year represents an 8.9% increase over the current budget. Despite the increase, Colorado lawmakers have less wiggle room this year compared with last year when the state was flush with federal relief funding. 

High inflation over the last year has reduced overall state spending power, and state fiscal experts expect tighter budgets in the next few years. State law will require Colorado to return an estimated $2.7 billion in tax revenue to taxpayers at the end of the fiscal year rather than roll that money into future public investments. 

The bill introduced Monday in the Senate officially kicks off two weeks of amendments and lengthy debates in both chambers. The six-member Joint Budget Committee then usually rejects most of those amendments before sending it back to the legislature for final approval. Passing a balanced budget and the school finance act are the only actions lawmakers must take before May adjournment.

The budget calls for a 5.7% increase in base education spending to $8.9 billion and an 8.4% increase in average per-pupil spending to $10,404.

Most of the new money, though, will come from higher-than-expected local property tax collections due to rising home values. The budget calls for state spending to go down $158 million next year and funding from local taxes to increase $644 million. 

Colorado’s constitution requires education spending to go up each year by the rate of population growth plus inflation. State law determines how much money each school district will get per student as well as total spending, then the state makes up whatever isn’t generated by local taxes.

Student enrollment is going down, so most of the increase in school spending is driven by inflation. In real terms, funding is basically flat. 

Colorado’s budget also fails to increase education funding as much as the constitution mandates. Instead, as usual, lawmakers propose to divert money to other priorities in a budget maneuver known as the budget stabilization factor. This withholding has totaled more than $10 billion since the Great Recession.

Next year’s budget calls for withholding $321 million, the same amount as this year. Some of that money could be restored through the school finance act before the budget process is finalized. 

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Gov. Jared Polis in January proposed withholding of $201 million, more than one-third less than the legislative proposal, which would nudge total K-12 funding above $9 billion. 

In recent years, Republicans have pushed unsuccessfully for amendments to add more funding to K-12 while casting other Democratic priorities as less important.

The budget also calls for $14.8 million to create a new Office of School Safety. That money includes grants for school-level safety improvements, as well as additional resources for threat assessment, emergency response, data analysis, and an ongoing working group.

School improvement efforts would get $1 million more for a total of $7.5 million. The extra money would go to eight to 10 schools that have just a few years of low performance on standardized tests in the hopes that early support can avoid state-mandated interventions later.

Charter schools authorized by the state Charter School Institute would share $24.5 million in extra funding, a 44% increase from this year. Districts are required to share money from local tax increases with the charter schools they authorize but not with state-authorized charters within their borders. The state allocation makes up about 58% of the difference for those schools.

The budget also sets aside $115 million for free meals for most Colorado students. Voters approved the creation of the program, paid for by raising taxes on higher earners, last fall.

Colorado college students could pay more tuition

The budget would boost higher education spending to about $5.8 billion next year, or a 5.1% increase. That total includes other programs such as the state’s historic preservation fund. 

For college and university budgets and student financial aid, the proposal calls for $147.6 million more next year.

The budget increase includes $120 million more than current spending for college and university operating expenses and about $27.5 million more for student financial aid to offset rising tuition for in-state students.  

The increase is more than the $86 million Polis set aside in his November budget, but less than the $144 million that college leaders sought. In response to Polis, college and university leaders in January said they needed more state funds to cover inflationary increases, increased student support services, and the need to increase wages. 

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To cover possible gaps in higher education funding, the budget leaves open a larger-than-expected tuition increase.

The state would allow public institutions to raise tuition by 5% — a percentage point more than expected. The University of Northern Colorado would be allowed to raise tuition by 6%. 

This is the second year that higher education institutions have successfully lobbied for more funding than what Polis proposed. Last year, however,  the state limited tuition increases.

Colorado prepares for free universal preschool

Colorado’s budget also includes $322 million toward the rollout of the state universal preschool program, which will offer 15 hours of tuition-free preschool a week for every Colorado 4-year-old child. Children with additional needs, such as those from lower-income households and those learning English, are supposed to get 30 hours a week of free care. 

The application for the program opened in January and the state is marching toward a summer start. The state has seen higher-than-expected interest in the program and may not have money to provide all the extra hours.

Budget documents say the money will cover 25 hours a week for those students, but legislators and legislative staff told Chalkbeat that was an error. The intention is still to offer 30 hours a week for children who would benefit from more time in preschool, they said.

The state budget includes support for the program, such as an additional $5 million for programs that provide therapy to children ages birth to 3 with developmental delays. In addition, the state would spend $311,000 to create a hotline to connect families, caregivers, child care providers, and educators to clinically trained consultants with expertise in early childhood emotional and mental health. 

About $4 million would be used to better the department’s licensing application and review process as the program gets underway. Another $3 million would go toward grants for employer-based child care programs.

The budget also would provide about $2.8 million for a statewide equity officer, a liaison to work with governments and tribes, and interpretation services. 

Editor’s Note: This story has been updated to explain why budget documents say the state will cover 25 hours a week of preschool for some students, while program rules call for 30 hours a week of free preschool.

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

Jason Gonzales is a reporter covering higher education and the Colorado legislature. Chalkbeat Colorado partners with Open Campus on higher education coverage. Contact Jason at jgonzales@chalkbeat.org.

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