School Finance

Study: Colorado budget woes offset by recession, but fiscal quagmire still remains

Funding for Colorado’s public schools should be safe — for now.

But the state — which is counterintuitively benefiting from the “Great Recession” — still has the Herculean longterm task of closing an estimated $3 billion gap between a 2030 projected budget and the revenue it is expected to collect, according to a fiscal study released today by the Colorado Futures Center.

The Colorado Senate debates the 2011 budget. Photo via Flickr user ColoradoGOP
The Colorado Senate debates the 2011 budget. Photo via Flickr user ColoradoGOP

The study, released this morning, is a follow-up to a 2010 legislative commissioned report that originally found recovery from the recession wouldn’t help Colorado’s budget woes.

While that general longterm prediction remains the same, the update shows a sluggish economy has actually postponed what the report calls an inevitable billion dollar gap between revenue and spending.

Low inflation coupled with fewer than expected students enrolling in Colorado schools — both byproducts of the recession — has allowed the state to exercise more control over how much it spends on public education, the single largest item in its budget.

Colorado is also benefitting from recession measures exercised by the Federal Reserve including unprecedented levels of monetary stimulus and a commitment to keeping interest rates low, the study found.

The state, and by extension education funding, should continue to benefit from the ripples of recession until about 2017, said the center’s lead economist, Phyllis Resnick.

But that’s when everything is expected to change.

By 2017, Resnick said, enough Coloradans will have aged into Medicare and be on fixed incomes, and the state will have collected enough revenue from a hospital tax to trigger refunds to residents because of the constitutional Tax Payer Bill of Rights. The center predicts that will set off a fiscal flood that will rise exponentially to create a sinkhole of $1.52 billion by 2024 and nearly $3 billion by 2030.

Moreover, the forecast calls for the state, after 2017, to begin spending five percent of the general fund  on three items: transportation, capital construction and the state’s reserves, because of a law passed in 2009.

Resnick and the center’s director, Charlie Brown, believe the refunds will be the single greatest cause of the gap.

If the state could find a way to de-TABOR the hospital tax, which has been covering the cost of an expanded Medicaid program since 2009, and extend sales taxes to services like haircuts and dog grooming, they believe the fiscal forecast will vastly improve.

Other longterm solutions recommended at the press conference included increasing the amount of local tax dollars that finance K-12 programs, restructure Colorado’s property tax laws and finding more federal dollars to match state spending.

Cutting funds to programs is also an option, and will most likely be necessary anyway, the authors conceded.

But, “at some point in time, you cut so deeply, so far across the board, you make programs ineffective,” Brown said in an earlier interview with EdNews.

Brown went so far as to say if the state legislature were to cut its way through the decades to balance the budget — which is constitutionally mandated — it might as well shut programs down outright.

If the legislature chooses to go that route, he hopes the phasing out of programs will be done strategically.

Education funding is constitutionally protected in Colorado. However, the legislature has created itself some maneuvering room by creating what is known as the “negative factor.”

Since 2009, the state had re-interpreted what factors, such as the size of a school district and number of “at-risk” students enrolled there, to determine how much schools and districts receive. According to one estimate, per pupil funding is nearly $1,000 below where it should be based on 2000’s Amendment 23.

Resnick and Brown believe the state can cut up to 20 percent of the state’s share of school funding without violating the Constitution. But that amount will be a drop in the bucket by 2030.

Gov. John Hickenlooper, a Democrat, threw the first pitch on negotiations for the 2013-2014 budget with the state’s General Assembly Nov. 1. His budget calls for a $258.4 million increase for K-12 education. If the legislature agrees, the state wide average for per pupil funding would rise to $6,875. The average funding per pupil at the time of the 2008 recession was $6,874.

The forecast produced by the center does not account for any possible future recessions and assumes the economy essentially maintains the status quo.

Paying for school

Sweeping study proposes major changes to the way schools are funded in Michigan

Michigan needs to change the way it funds education so that schools get more money for students who need extra attention — such as those who live in poverty and those who don’t yet have a strong command of the English language.

That’s the top recommendation from a prominent group of educators, policymakers, and business leaders who have been studying Michigan’s school funding system for much of the past two years.

While many states use a complex formula that gives schools more money if they serve children facing extra challenges, Michigan has long used a system that distributes the same amount of money for virtually all students, regardless of their needs.

The state provides some extra funding for students with disabilities — but not nearly enough, according to a state study last year that found schools across Michigan are getting $700 million less a year than they need to serve those students.

The study released Wednesday recommends a major restructuring so that schools would be fully funded for special education programs and would get extra funds to provide resources to students who need extra help. With that money, schools could offer lower class sizes, add counselors and social workers, and give teachers more support, the report says.

The study was conducted by Augenblick, Palaich and Associates on behalf of the Michigan School Finance Research Collaborative.

The collaborative — including top business and education leaders across the state — came together in 2016 after an earlier “school adequacy study” was largely ignored by political leaders.

The earlier study, which was funded by the state legislature, recommended that the state significantly increase the amount of money it sends to schools per student.

The collaborative hopes this new more robust study, which clocks in at more than 300 data-packed pages, will have a greater impact.

Since this study used multiple methods to determine the right funding level for schools, it will be more difficult to ignore, the group hopes.

The study — paid for with $843,000 from major foundations and 18 county school districts — included interviews with hundreds of educators, including district and charters school teachers. Those interviews helped researchers determine how much money schools need to more effectively do their jobs.

The study examined geographic cost differences in different parts of the state, labor cost differences, and other factors and determined that schools need approximately $9,590 each for students who don’t have special needs, including funds that would come from the state and federal governments.

The study recommends that schools get 35 percent more for students living in poverty, between 50 and 70 percent more for students who are learning English, 70 percent more for students with mild disabilities and 115 percent more for students with moderate disabilities.

Among other recommendations in the  report is that charter schools receive the same per-student funding as districts. Currently, the state’s funding system pays some districts more per student than others based largely on historic funding levels as opposed to current needs. Some districts — including most charter schools — are currently getting around $7,600 per child from the state while others get thousands of dollars more

It’s difficult to compare how much funding schools are getting now with the proposed $9,590 per student because schools get a mix state and federal dollars and the $9,590 doesn’t include things like transportation dollars.

The report suggests that the state use a new approach to student transportation in which transportation dollars are distributed differently, taking into account differences between urban and rural school districts.

The report did not put a price tag on the cost of implementing the recommendations and did not spell out how Michigan could come up with the extra money. But members of the collaborative said they hope lawmakers will consider the report as they make policy changes. 

“The issue here is not about whether you live in Farmington or whether you live in Ingham County, it’s about every child ought to have the opportunity to be successful and that ought to be our goal in Michigan,” said Randy Liepa, the Superintendent of Wayne County’s intermediate school district. “I don’t think there will be significant pushback on that.”

The findings were released Wednesday morning, with press conferences planned in Lansing, Grand Rapids, and in the Detroit area.

Read the full report here:

spending squeeze

Facing a state budget crunch, Gov. Cuomo proposes modest 3 percent education boost

Governor Andrew Cuomo delivers his executive budget address.

Facing budget pressure at home and from Washington, Gov. Andrew Cuomo proposed increasing school aid by 3 percent this year —  far less than what advocates and the state’s education policymakers had sought.

Cuomo put forward a $769 million increase in school aid during his executive budget address on Tuesday, less than half of the $1.6 billion sought by the state’s Board of Regents. In response, the state’s top education officials said they were “concerned,” and suggested that they would press lawmakers to negotiate for more education spending.

The governor’s modest increase in school funding comes amid a projected $4.4 billion state budget deficit, a federal tax overhaul expected to squeeze New York’s tax revenue, and the threat of further federal cuts.

Still, Cuomo, a Democrat who plans to run for reelection this fall and is considering a 2020 presidential bid, defended his spending plan as a boost for schools at a time of fiscal uncertainty.

“We have increased education more than any area in state government,” he said during his speech in Albany. “Period.”

He also floated a plan to have the state approve local districts’ budgets to ensure they are spending enough on high-poverty schools. And he set aside more money for prekindergarten, after-school programs, and “community schools” that provide social services to students and their families.

Now that Cuomo’s proposal is out he must negotiate a final budget for the 2019 fiscal year with lawmakers by April 1. While the Democratic-controlled assembly is likely to push for more school spending, the senate’s Republican leaders are calling for fiscal restraint and tax cuts.

What was the response?

Advocates and policymakers were alarmed by Cuomo’s proposed $769 million education bump — a 3 percent spending increase compared to last year’s 4.4 percent boost.

Last month, a coalition of statewide education organizations estimated that the state would need to increase spending by $1.5 billion just to maintain current education services. The group, which includes state teachers union and groups representing school boards and superintendents, called for a $2 billion increase.

In a statement Tuesday, Board of Regents Chancellor Betty Rosa and State Education Commissioner MaryEllen Elia noted that Cuomo’s proposal was less than half the amount they sought. They promised to work with lawmakers to ensure the final budget amount “will meet the needs of every student throughout our State.”

Anticipating such criticism, Cuomo noted in his speech that he has expanded education spending by nearly 35 percent since taking office. His proposal would bring total school aid to $26.4 billion — the largest portion of the state budget.

Still, that didn’t prevent pushback. A state assemblyman heckled Cuomo as the unveiled his education spending plan, suggesting it was not enough money.

“It’s never enough,” Cuomo shot back.

Will poorer schools get more funding?

Cuomo said he wants to fight “trickle-down education funding” and ensure that poor schools receive their fair share of cash.

To that end, Cuomo wants the state education department and his budget office to review local school district budget plans. The plan is aimed at larger school districts, including New York City, which Cuomo singled out in his speech.

“Right now we have no idea where the money is going,” Cuomo said on Tuesday. “We have a formula. We direct it to the poorer districts. But what did Buffalo do with it? What does New York City do with it?”

It’s unclear how the proposal would impact New York City, which already uses a funding formula designed to send more money to schools with needier students. But some education advocates were intrigued by Cuomo’s idea, which they said could be a way to expose and fight inequities in school funding across the state.

“Right now, school-level expenditure with consistent definitions is really a mystery,” said Ian Rosenblum, executive director of The Education Trust – New York. “It means that a lot of inequity can be swept under the rug.”

Cuomo officials also said that 73.1 percent of funding will be directed to high-needs districts in this year’s budget, which the state said was the highest share ever. Last year, they received 72 percent.

But advocates are more concerned with the state’s “foundation aid” formula, which funnels a greater share of funds to high-needs districts. The formula was created in response to a school funding lawsuit settled more than a decade ago; advocates say schools are still owed billions from the settlement.

Cuomo proposed boosting foundation aid this year by $338 million, a far cry from the $1.25 billion requested by the Board of Regents. Without more foundation aid, some advocates say Cuomo’s promise of greater funding equity rings hollow.

“Equity is you’re actually helping to lift up poor districts so that they can provide an equitable education,” said Billy Easton, executive director of the union-backed Alliance for Quality Education. “Not just that they’re receiving a larger share of a too-small pot.”

What does all of this mean for New York City schools?

New York City is not immune from Albany’s budget crunch.

The total increase proposed for the city — $247 million — falls about $150 million short of the mayor’s projections in November, according to the city’s Independent Budget Office.

It may also be difficult for the city to wrangle funding for big-ticket items. Mayor Bill de Blasio wants to expand his prekindergarten program to 3-year-old students, but he estimates that he will need $700 million from state and federal sources by 2021. (The governor proposed $15 million to expand pre-K seats across the state.)

How about charter schools?

Cuomo would boost spending for charter schools by 3 percent the same rate as for district schools. He also wants to provide more support for schools that rent private space, which is a major financial burden for some schools.

“Once again, Gov. Cuomo demonstrated his unwavering commitment to ensuring every student in our state has access to a great public education,” said James Merriman, CEO of the New York City Charter School Center.