A massive rewrite of Colorado’s school funding formula is getting closer to hitting legislators’ desks in a few weeks, setting up lengthy debates and possibly leading to a voter decision later this year on a major tax increase for K-12 schools.

Sen. Mike Johnston, D-Denver
Sen. Mike Johnston, D-Denver / File photo

The proposal developed by Sen. Mike Johnston, D-Denver, is intended to make the state’s school funding system more equitable by directing money to schools with the greatest needs and more adequate by increasing the amount of funding. (The voters, of course, will have to decide the adequacy question.)

“This is a once-in-a-generation chance to get this right,” Johnston said in a conference call with reporters Monday afternoon.

The proposed bill is long (144 pages) and complicated (Johnston’s staff wrote a 19-page guide to the measure). See the full details below, but here are the key elements:

It would go into effect for the 2015-16 school year, but it wouldn’t go into effect at all if voters don’t approve a tax increase this coming November.

  • Base per-pupil funding would increase because of the expansion of full-day kindergarten slots.
  • The system for counting enrollment, now based on once-a-year attendance counts, would be changed to the “average daily membership” system that measures enrollment across the whole school year.
  • Funding would be provided for full-day kindergarten in all schools and for half-day preschool for all at-risk four-year-olds. There would be full-time funding for all high school students, regardless of how many classes they’re taking.
  • There would be funding increases for at-risk students, English language learners and special education students. Individual school principals would have more spending authority over some of the additional at-risk funding.
  • Districts that spend less local money than indicated by their property wealth would be given a prod to raise local taxes.
  • Additional state funding would be provided to match some local tax increases, to fund innovative district programs such as longer school days and to pay for the costs of implementing recent state reform requirements.

Potentially controversial elements of the bill likely include proposed elimination of a calculation that awards districts extra funds based on the cost of living for school staff, the new calculation designed to force wealthy but low-spending districts to raise local taxes and the proposed method of counting enrollment.

Other wild cards in the coming debate are whether Johnston yet has the full backing of the business community and Gov. John Hickenlooper.

Johnston released a draft of the proposed bill on his website Monday to gather additional comments on his plan. He said Monday afternoon that he hopes to formally introduce the bill in “a few weeks” after considering comments and tweaking the draft. He called the bill text “a first draft of the proposal.” He said he feels the bill has elements to appeal to all interest groups in education and that it would be good for every district. “There are only winners and bigger winners in this structure.”

Origin of the bill

The state’s current funding formula was created in 1994 and hasn’t been substantially changed since then, despite numerous studies and proposals by both legislative and outside groups.

In 2011 the Colorado Children’s Campaign and several other civic and education organizations formed a group named the School Finance Partnership, which began discussions about how to craft a new funding formula. Johnston was part of those deliberations from an early stage and promised a bill during the 2012 legislative session, but that didn’t happen.

Johnston and other backers of the idea have been crisscrossing the state since last summer trying to gain ideas about and build support for the bill. He says some 200 meetings have been held reaching more than 2,000 people connected with 125 of the state’s 178 school districts.

Because of the time lag built into Johnston’s proposal, the 2013 legislature still will have to pass a school funding bill for 2013-14 based on the old formula.

Key elements of the bill

If voters approve increased K-12 funding this year, the new system would go into effect for the 2015-16 school year

Base funding

  • Base funding would be increased by an undetermined amount, primarily because of the cost of additional full-day kindergarten slots.
  • Enrollment counts would be based on average daily membership counts, collected four times a year from school districts.
  • District funding would be calculated using prior year enrollment figures.
  • Multi-year averaging of enrollment losses would be retained for declining districts to soften funding cuts.
  • Base funding would include availability of full-day kindergarten for all students and full per-pupil funding of all high school students regardless of how many classes they take. Additional half-day preschool slots for at-risk four-year-olds would not be included in the per-pupil base as that program is funded separately.

Weights

The current formula includes “factors” designed to increase funding for individual districts based on their regional cost of living, numbers of at-risk students, size and other characteristics. Johnston would retain some of those – to be called “weights” – but with some changes.

  • The definition of at-risk students would be expanded to also include those eligible for reduced-price lunch, in addition to those eligible for free lunches.
  • The number of English learners in a district would become a weight.
  • Double weights would be assigned for students who are both at-risk and English language learners. State at-risk funding would be more targeted to individual schools than it is now.
  • The small-enrollment weight would be retained only for districts under 2,023 students, taking out some districts that now receive that funding, and the current district cost-of-living weight would be eliminated.

Categorical funding

Districts currently receive additional funding outside of the main formula to help with such costs as special education, gifted and talented programs and transportation. Johnston’s bill would retain most of those funding streams but significantly increase the money available for special education and gifted and talented.

State & local shares

The bill would set the overall state share at 64 percent of K-12 spending and the local share at 36 percent. That would be used as a base to calculate the expected contribution from districts, based on a district’s property value, median resident income and concentration of poverty. Districts that aren’t contributing the amount of local revenue needed to meet their share would not receive additional state funds, creating an “incentive” for them to seek tax increases from their voters.

Other provisions

  • The state would provide matching money for districts with low property values that want to raise local taxes but can’t generate much revenue from those local increases.
  • An innovation fund would be created that districts could use for such things as longer school days and years.
  • There would be an increase in the current limits on local tax increases.
  • Districts that would lose funding under the new formula would be held unharmed until 2020.
  • There would be additional state funding, proposed at $600 per student, to help districts implement state reform requirements. These funds are intended to give districts an infusion of cash to partially offset the budget cuts of recent years but would not be included in the per-pupil base so as not to put future pressure on the state budget.
  • The proposal would not eliminate the “negative factor,” the formula used in recent years to cut what school funding otherwise would have been to the levels the legislature felt it could afford in tight budget years. Johnston, in a conference call with reporters, said he hopes passing the bill and a tax increase “will put us on a trajectory so that additional cuts won’t have to be made.”

Charter schools

  • Districts will be required to share revenue with their charter schools from the state matches for local tax increases.
  • There would be increased special education funding.
  • At-risk funding would be based on actual enrollment of such students at charter schools.

The funding gap

One question about Johnston’s plan is how much money actually will be available for the specific changes he proposes. A recently updated “costing-out” study (read the document) estimates Colorado may be as much as $4.7 billion short of what it needs to adequately fund K-12 schools.

Some of Johnston’s allies, particularly in the business community, believe $1 billion is the largest tax increase voters would tolerate. Johnston said Monday he doesn’t feel that there’s a very big gap, estimating the cost of the bill at $750 million to $1.1 billion, depending how much money is put into various components of the plan.