The big issues facing K-12 funding were fully framed Wednesday for the legislative Joint Budget Committee, and staff analyst Craig Harper urged members to focus quickly on how to handle those questions.
Colorado Department of Education
In the wake of Amendment 66’s defeat, school finance is emerging as the top education issue for the 2014 legislature. School districts and some lawmakers are pushing for increases that would help restore some of the cuts of recent years.
But Gov. John Hickenlooper’s proposed 2014-15 K-12 budget suggests a relatively modest hike that basically covers just enrollment growth and inflation. The governor’s budget proposes more significant increases for higher education.
Harper met with the committee for four hours Wednesday during the members’ annual pre-session briefing on the governor’s proposed Department of Education budget for 2014-15. Harper’s presentation was based on a 139-page briefing paper prepared for the committee.
Harper made recommendations on some issues but didn’t make specific suggestions on others, noting they are weighty enough to require discussions between the committee and the department and decisions by the JBC and legislative leadership.
That sets up an interesting session on Dec. 19, when Colorado Department of Education officials will meet with the JBC to answer questions.
Here are the key points of the major issues raised during the briefing:
Harper suggested that the legislature needs to make key decisions on how much to spend on schools in 2014-15, how to balance that spending between the main general fund and the supplementary State Education Fund (SEF), how to maintain the health of the SEF over several years and how to reduce what’s called the “negative factor.”
During the recession, the legislature reinterpreted constitutional provisions that govern annual increases in school funding, deciding that those provisions applied only to base funding but not to the additional money used to adjust support to districts based on special needs. That mechanism, called the negative factor, allowed the legislature to spend less on schools than it otherwise would have. That gap now is estimated at about $1 billion.
Hickenlooper is proposing a $222 million increase in school funding for 2014-15 but no significant reduction in the negative factor.
The governor wants to take most of the increase from the SEF, something Harper disagrees with because he fears doing so will just put more pressure on the general fund in later years.
Many districts and education interest groups are pushing hard to reduce the negative factor. Harper’s briefing paper agreed that doing so would be a good thing to do – if lawmakers can find the money.
“Staff recommends that the committee and the General Assembly focus early discussions on the broader questions of how much to pay, how to finance any increases in appropriations, and whether to increase the minimum balance in the SEF. Staff recommends that the committee initiate discussions with legislative leadership, the education committees, and the governor’s ofice concerning those broader questions,” Harper wrote.
Harper also analyzed and made recommendations on several other education budget requests.
The Department of Education has requested $3.8 million (most of it from the SEF) for development and administration of new tests. (See this EdNews story for an update on those plans.
Harper’s briefing paper noted that many school districts are worried about being ready for online tests, particularly in 2015, and that there also are concerns about expected drops in achievement levels because of the transition and about the pressure of implementing multiple reforms. But he didn’t make specific recommendations about funding the request, suggesting committee members discuss the issue further with the department.
The state’s Building Excellent Schools Today construction grant program is at a crossroads, given that it’s almost out of money for making large grants and because a recent state audit found problems with program administration (see this EdNews story).
Harper recommended that the legislature pass a law to make BEST’s smaller cash grants subject to legislative approval. Another panel, the Legislature Audit Committee, is expected to introduce a bill that would tighten up on BEST requirements for local school district matches.
Other budget issues
The department is requesting a $3.1 million increase and additional staff to beef up its computers and information technology unit to meet the demands of managing the avalanche of new data that will be generated by various reform efforts such as the new teacher evaluation system.
Harper agreed that additional money is necessary but suggested the committee discuss the issue further with the department.
Several lawmakers at Wednesday’s hearings also raised questions about CDE’s current independence from the Governor’s Office of Information Technology, which coordinates IT services for a number of other state agencies.
On another issue, Harper suggested that the state’s English language learners law needs a broad overhaul beyond the $430,000 the department is asking for to provide additional assistance to districts. (Such a bill is in the works.)
JBC vice chair Pat Steadman, a Democratic senator from Denver, agreed, saying, “the issue is far bigger than technical assistance.”
Another department request proposes spending $2.8 million from the SEF to cover continued funding of the early literacy assessment tool required by the state’s early literacy law. Harper again recommended the committee discuss this issue with the department and with leaders of the legislature’s two education committees.
Colorado Votes 2018
Amendment 73: Understanding the tax increase for education on your Colorado ballot
Colorado voters face an important education decision this November: whether to approve a major statewide tax increase for schools. This request represents the third time in recent years that Colorado voters have been asked to put more money into schools.
Proponents of the measure say Colorado schools can’t keep doing more with less and need new revenue to do right by students. Opponents say that raising taxes will hurt the state’s economic prosperity without necessarily improving student outcomes.
Here’s what you need to know to make a decision:
What does Amendment 73 do?
This measure would create a graduated income tax for people earning more than $150,000 a year and would raise the state corporate tax rate. It also would change the assessment rate — the portion of your property value that is taxed — for commercial and residential property.
Altogether, these changes are projected to raise an additional $1.6 billion a year for preschool through 12th-grade education. That’s in addition to the roughly $9.7 billion in federal, state, and local money that Colorado will spend this year on schools.
The amendment raises the base amount Colorado is required to spend on each student, and it also dedicates money to preschool spots, full-day kindergarten, students with disabilities, those learning English, and those identified as gifted and talented.
Why is this on the ballot?
Colorado’s Taxpayer’s Bill of Rights requires that all tax increases be approved by voters. As for this particular tax increase, Colorado funds its schools below the national average, and since the Great Recession, state lawmakers have diverted to other areas billions of dollars constitutionally due to education.
Proponents of the measure believe the only way to adequately fund Colorado schools is to tap into an additional revenue source, like these tax increases.
Opponents counter that administrative spending has grown faster than student population and teacher salaries, and that the state and school districts could free up money for classrooms by setting new priorities.
I see amendments and propositions on my ballot. What’s the difference?
Propositions become laws and can be changed by the legislature. Amendments become part of the state constitution and can only be changed by another vote of the people. Amendments need the approval of 55 percent of voters to pass, a higher bar than propositions that only require a simple majority.
How will the money be spent? What guarantees do we have that it will reach the classroom?
Amendment 73 requires that new money “supplement and not supplant” existing funding. That means the legislature cannot redirect current spending on education and replace it with this new funding source. The amendment says the legislature should adopt a new formula for distributing money to districts that takes into account student and district characteristics, but it doesn’t lay out exactly what that should look like.
In the meantime, Amendment 73 describes specific uses for $866 million in new revenue:
Base spending per student will go up from $6,769 to $7,300, a 7.8 percent increase
Funding for full-day kindergarten. Right now, districts get a little more than half a student’s worth of funding for each kindergarten student.
An 8.3 percent increase for preschoool, bringing the total to $131 million
A 6.8 percent increase for special education, bringing the total to $296.1 million
An 80 percent increase for gifted and talented programs, bringing the total to $22.5 million
A 93 percent increase for English language learners, bringing the total to $41.6 million
The extra money that districts currently receive for students with disabilities, those learning English and those identified as gifted accounts for a fraction of the additional cost of educating them, particularly in the case of students with more significant disabilities. Districts have to use tracking codes to account for this money and ensure it goes to its intended purpose. In some districts, additional money might translate into better services for these students, while others might use the additional dedicated funding to free up other money.
That leaves $738.6 million that can be spent on public education as determined by the legislature. Once that money lands in school district coffers, they have broad discretion over how to spend it. This is by design and part of an effort to get buy-in from around the state. Many school boards have passed non-binding resolutions promising to spend the money on teacher pay, more mental health supports for students, and lower class sizes.
In turn, opponents have criticized the lack of specificity as a blank check that won’t necessarily increase teacher salaries or improve student outcomes.
A recent analysis from EdChoice found that since 1992, teacher salaries in Colorado had fallen even as per-student funding and the number of administrators had increased. Colorado Department of Education records show that instructional staff — teachers, counselors, speech language pathologists, school nurses — increased by 14 percent between 2006 and 2016 while administrative staff increased by 34 percent. School administrators argue these positions are necessary to support the work that teachers do and keep districts in compliance with a host of new state and federal regulations. In smaller districts, administrators often wear multiple hats. When we ask teachers about this issue, some of them share the concern that too much money gets spent on central administration, even as they also believe schools need more money overall.
You can look up how much your district spends here.
What does it mean when people say Colorado schools are ‘underfunded’? Compared to what? How underfunded?
Back in 2000, after previous years of budget cuts, Colorado voters passed a constitutional amendment that requires school funding to increase by population plus inflation. But starting with the Great Recession, Colorado lawmakers have not allocated all the money required by that amendment. Over the past 10 years, Colorado schools have missed out on $7.5 billion the law requires them to receive. The courts have upheld this budget maneuver. Money from Amendment 73 could not be reallocated during the next downturn, protecting schools but potentially creating other budget problems for the state.
Colorado also gets low marks on equity. Colorado spends much less money on education than most states with similar levels of wealth and economic activity. Per-student spending varies widely around the state, with rich districts often getting more state money than poor ones. Some districts have convinced voters to approve local property tax increases, while other have not — or have such low tax bases that voters would need to take on large increases to generate much benefit. The additional funding from these local tax increases varies from $32 to $5,024 per student.
Amendment 73 wouldn’t change these structural problems with school funding. It would give state lawmakers more money with which to level the playing field. Right now, sending more money to some districts would require reducing funding to others, creating a political minefield.
Will I pay more in income taxes if Amendment 73 passes?
People who earn up to $150,000 a year will keep paying the same 4.63 percent state income tax rate they do now. Those earning more will pay a sliding increase starting at 5 percent for income from $150,001 to $200,000 up to 8.25 percent for income over $500,000. Someone with taxable income of $200,000 would pay an extra $185 a year, while someone with $1 million in taxable income would pay an extra $24,395, according to a fiscal analysis by the state.
The increases will affect about 8 percent of individual and joint income tax filers. Amendment 73 does not include a provision to adjust the income threshold for inflation, so it’s possible that more taxpayers will pay these higher rates in the future.
This change would generate most of the new revenue under Amendment 73.
What’s the effect on corporate taxes?
Amendment 73 would raise the corporate income tax rate from 4.63 percent to 6 percent. You can see how that compares to other states’ corporate income tax rates here. The average corporate income taxpayer would owe an additional $14,139, according to state fiscal analysts.
Would Amendment 73 raise my property taxes?
This is a complicated question. Amendment 73 does not raise property tax rates anywhere in the state. But if it passes, residential property owners will pay more in 2019 than they otherwise would have, while owners of non-residential property will pay less.
Amendment 73 fixes the assessment rate at 7 percent for residential and 24 percent for non-residential property. That’s lower than it is now, but other constitutional provisions would have pushed the residential rate even lower in 2019.
Exactly how much more or less you pay will depend on your property value, real estate trends in your community, and local tax rates.
This represents a partial fix to a complicated fiscal problem that has bedeviled Colorado lawmakers and the administrators of rural taxing entities — school districts, fire protection districts, and others — for years.
In Colorado, your property is assessed at close to market value, but your local tax rate only applies to a portion of that value. That’s the assessment rate. Another constitutional provision known as the Gallagher Amendment ensures that non-residential property owners always pay a larger share of property taxes than homeowners. Since 1982, when the Gallagher Amendment was approved by voters, property values along Colorado’s developed Front Range have skyrocketed, putting the assessment ratios between residential and other property seriously out of whack. Those ratios apply statewide, and many rural communities have seen their already sparse tax base hollowed out.
In the case of schools, that’s meant the state government has had to backfill more and more money that used to be generated by local taxes. Amendment 73 includes a provision to hold the assessment rates steady just for schools for two reasons. One is that it provides property tax relief to ranchers and farmers, which the measure’s backers hope bolsters support in parts of the state that are traditionally more hostile to tax increases. The other is that it ensures the new tax revenue generated by the amendment doesn’t just backfill an ever-deepening hole in rural districts.
Starting this year, 12.59 percent of marijuana tax revenue is also set aside for the regular education budget. That’s about $20 million a year at current rates. Marijuana money is also set aside for various grant programs including one that schools can use to help pay for health professionals such as counselors or nurses. As the state collects more marijuana revenue, the amounts set aside for the grant programs has increased.
However, the marijuana money available to schools represents a tiny fraction of total education spending, and most of it can’t be spent on basic needs like teacher salaries or classroom materials.
Teacher Christina Hafler and her two-year-old daughter Emma join hundreds of other educators at a rally outside the State Capitol to call for increased eduction funding on April 16, 2018 in Denver, Colorado. (Photo by RJ Sangosti/The Denver Post)
Most school districts asking voters to approve local tax increases for schools this November have one thing in common: They are promising that money will go to raise teacher pay.
Polls show voters are inclined to support increasing teacher pay this year, following several high-profile walkouts across the country where teachers shared their struggles with working multiple jobs, and paying out of their own pocket to outfit their classrooms or help feed hungry students.
“Right now you got a pretty clear majority of people saying, teachers deserve more,” said Keith Frederick, who conducts polls for school districts and other government bodies to determine if they should put requests on the ballot. “Voters are very interested, these days anyway, they’re interested in their community schools, higher teacher pay.”
Many officials from those districts say the pay they offer simply isn’t keeping up with nearby districts, meaning a harder time recruiting and retaining teachers. Salaries and employee benefits take up the largest chunk of school district budgets.
School districts in Aurora, Jeffco, Westminster, Douglas County and Sheridan are among the districts making a local request this November. Ballots have been mailed out this week, and voters will start to decide if the request is worth a local tax increase.
But measuring how competitive teacher compensation actually is among districts can be complicated. Surveys and studies show that salaries alone do not account for what keeps teachers in their job or what makes them leave. And how teachers get paid in some districts is complicated, based sometimes on their evaluations, or performance of their students, or school, or the difficulty in filling the job they’re in.
Then there are other work conditions that can be considered benefits. The school district based in Brighton moved this year to a four-day school week after failing to pass several tax measures. Although the change will only result in small savings, the district claims it’s a new way to attract teachers without having to raise pay.
But looking at state data for last year, most districts that have the highest starting salaries or average pay for teachers, including Cherry Creek, Boulder, and Poudre, also have the lowest teacher turnover.
None of those three districts are requesting local tax increases this year, but their neighboring districts, including in Douglas County, Elizabeth, Jeffco and Thompson, are.
The contrasts between districts can be large. In the neighboring Poudre and Thompson districts, the difference in the average pay is about $5,000, and the difference in starting salaries is even larger. Higher-paying Poudre has a teacher turnover rate of less than 10 percent. In lower-paying Thompson, the turnover rate is about 17 percent.
The Thompson district is requesting a $13.8 million mill levy override to raise teacher pay, and to purchase new books and technology. The district is also requesting a $149 million bond for building maintenance, security improvements and a new school.
Some of the districts requesting tax increases this year have failed to win voter approval before, including Thompson, Westminster and Jeffco. Although several factors including the political culture of the districts influence the vote, highlighting what voters value — like boosting teacher salaries — might improve the chances of voter approval.
Although most of the local tax measures don’t face organized opposition, criticism of a statewide tax measure for schools might impact other questions down the ballot. Critics of the statewide school measure have said that districts are not under obligation to use the money to pay teachers more, and worry that new money could go into administrative costs instead.
Some districts are trying to create assurances for voters.
Aurora Public Schools agreed to language in its contract with the teachers union that requires the district to set aside at least $10 million from new mill levy revenue, if approved, to give teachers a 3 percent raise starting in January. Remaining money would go into creating a new teacher salary schedule.
Even if districts do use the money for increasing salaries, most districts likely have to negotiate with their employee unions to decide just how to do it — whether it’s raising base salary, giving across-the-board raises, or creating new systems that reward certain teachers.
Denver’s school leaders said they would use the largest portion of the proposed new state revenue for teacher salaries. Negotiations there have been heated, as district leaders insist the state measure needs to pass in order for the district to come closer to meeting the union’s demands.