School Finance

K-12 funding issues start to come into focus

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
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:

School finance

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.

Testing

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.

BEST program

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.

Take back

Higher property values mean Colorado is getting back millions from schools

PHOTO: J. Zubrzycki
Colorado State Capitol

With student enrollment lower than anticipated and property tax revenues up in many districts, the state could get back as much as $77 million originally allocated for schools this year.

That’s a small portion of Colorado’s $7 billion K-12 education budget, and that money could be used to help fund Gov. Jared Polis’ universal full-day kindergarten plan. But some lawmakers want school districts, not the state, to control at least a portion of that money.

Citing the recent Denver teacher strike and concerns over school funding, the Colorado House voted Friday to let schools keep $12.9 million of that money. As early as Wednesday, the state Senate must either approve the amended Senate Bill 128 or send it back to a conference committee made up of the budget committee members.

It’s the first salvo in what could become a contentious debate over how the state funds schools.

Under Colorado law, the legislature determines how much money school districts should get for each student, with the state and school districts picking up a portion of the costs. If local districts raise more money, the state pays a correspondingly smaller amount. This year, school districts raised a collective $56.1 million more than predicted from local sources, mostly property tax revenue.

At the same time, schools are educating fewer students than predicted. Per pupil funding is based on estimates made months in advance. Enrollment for the current school year is 1,056 fewer than forecast, with at-risk student enrollment 9,893 fewer than the estimate.

The $77 million — or $64.1 million if the House amendment stands — could help fund full-day kindergarten, which is estimated to cost $227 million next year.

Or it could go into next year’s school finance act, which lays out how much money schools will get for 2019-20. Or it could go into the general fund, where it could be used for other needs.

But asking school districts to return money midway through the year can be difficult “because districts hire teachers for the start of the school year and then it’s really hard halfway through to say, ‘Oh, we can’t pay for you anymore,’” said Matt Cook, director of advocacy and public policy for the Colorado Association of School Boards.

Last year, the state took back $104 million. With an increase in local revenues of $97 million, the total cut was only about $7 million, compared to a $21 million impact this year if the state keeps the full amount. Some of last year’s money was later put toward school safety measures.

The House amendment keeps average per-pupil funding at $8,137, instead of reducing it by about $15 on average as the Joint Budget Committee proposed.

The impact of these proposed changes varies among school districts, said Tracie Rainey, executive director of the Colorado School Finance Project. Some districts have seen larger changes in enrollment than others, and some districts raise a large portion of their revenue from local sources, while others are more dependent on state funding.

“[Y]ou’re all of a sudden again going to have a whole different group of kind of winners and losers in this process,” she said.

There’s also a political consideration for Democrats and Republicans alike.

“Everybody who ran for election this last year ran on funding education better, and that they were looking to try to solve the problem,” Rainey said.

In fact, attack ads in the 2018 election often cited votes on school finance amendments or promises to increase school funding.

The House amendment passed on a voice voice with apparent broad support. It replaced an earlier amendment that would have left all $77 million with the school districts.

“I think our next step for us would be what’s the financial, fiscal implication of the amendment and then wait to see what we hear from our staff,” said state Sen. Rachel Zenzinger, an Arvada Democrat and budget committee member.

How this relatively tiny slice of the pie is carved up could be instructive, going forward, education observers say.

“That’s always the big question every year, right?” Cook said. “How do we pay for everything? This year you’ve got the pressure for full-day kindergarten, so I think it’s going to be a very tough budget negotiation.”

new money

House budget draft sends more money to schools, but not specifically to teacher raises

PHOTO: Laura Faith Kebede/Chalkbeat

Despite months of heated debate, Indiana House Republicans are not setting aside extra dollars for meaningful teacher raises in their version of the state’s $14.5 billion education budget plan released Monday night.

Even though lawmakers are proposing preserving a controversial merit-based bonus pool and adding small amounts for teacher training programs, their budget draft would largely leave it up to school districts to dole out raises through increased overall funding.

The budget draft proposes increasing what Indiana spends on schools overall by $461 million — or 4.3 percent — through 2021, a little more than increases in years past. The basic per-student funding that all districts get would jump from $5,352 per student this year to $5,442 per student in 2020 and $5,549 per student in 2021. House lawmakers are also adding in a one-time payment of $150 million from state reserves that would pay down a pension liability for schools. But while lawmakers and Gov. Eric Holcomb have said that pension payment would free up about $70 million in schools’ budgets each year, the state likely wouldn’t require the cost-savings be passed along to teachers.

Although increasing teacher pay is a top goal for House Republicans, lawmakers have crafted bills that hinge on districts spending less money in areas such as administration or transportation rather than adding more money to school budgets and earmarking it for teacher salaries.

Their criticism of school spending has raised the ire of superintendents and educators who say they have little left to cut after years of increasing costs and state revenue that has barely kept pace with inflation.

But budget draft, which is expected to be presented to and voted on by the House Ways and Means Committee on Tuesday, doesn’t completely omit efforts to incentivize teachers to stick around. Unlike Holcomb’s budget proposal, House lawmakers are keeping in the current appropriation of $30 million per year for teacher bonuses.

The House budget draft would also set aside $1 million over two years for a teacher residency pilot program and $5 million over two years for schools that put in place career ladder programs that allow teachers to gain skills and opportunities without leaving the classroom.

Teacher advocacy groups, such as the Indiana State Teachers Association and Teach Plus, have been supportive of residency and career ladder programs, but the organizations have also called for more action this year to get dollars to teachers. Additionally, the ideas aren’t new — similar programs have been proposed in years past.

Calls for the hundreds of millions of dollars it would take to raise teacher salaries to be more in line with surrounding states will likely go unheeded for now as the state instead prioritizes other high-profile and expensive agencies, such as the Department of Child Services and Medicaid.

But while plans for major teacher pay raises appear to be on hold, House lawmakers are looking to boost funding in other areas of education to support some of the state’s most vulnerable students.

The budget draft would increase what the state must spend on preschool programs for students with disabilities from the current $2,750 per-student to $2,875 in 2020 and $3,000 in 2021 — the first such increase in more than 25 years.

House lawmakers are also proposing the state spend more money on students learning English as a new language, at $325 per student up from $300 per student now. While all schools with English learners would receive more money per student under this plan, the new budget draft removes a provision that had previously allocated extra dollars to schools with higher concentrations of English learners.

A 2017 calculation error and an uptick in interested schools meant state lawmakers did not budget enough money for schools with larger shares of English-learners in the last budget cycle, so they ended up getting far less than what the state had promised. But even the small increases were valuable, educators told Chalkbeat.

House lawmakers also suggested slashing funding for virtual programs run by traditional public school districts. Going forward, funding for both virtual charter schools and virtual schools within school districts would come in at 90 percent of what traditional schools receive from the state — now, only virtual charter schools are at the 90 percent level. It’s a marked change for House lawmakers, who in years past have asked that virtual charter school funding be increased to 100 percent.

The virtual funding proposal comes as lawmakers are considering bills that would add regulations for the troubled schools, where few students pass state exams or graduate.

The budget draft also includes:

  • $5 million per year added to school safety grants, totaling $19 million in 2020 and $24 million in 2021
  • Doubling grants for high-performing charter schools from $500 per student to $1,000 per student, at a cost of about $32 million over two years. The money is a way for charter schools to make up for not receiving local property tax dollars like district schools, lawmakers say.
  • $4 million per year more to expand the state’s private school voucher program to increase funding for certain families above the poverty line. Under the plan, a family of four making between $46,000 and $58,000 annually could receive a voucher for 70 percent of what public schools would have received in state funding for the student. Currently, those families receive a 50 percent voucher.
  • About $33 million over two years (up from about $25 million) for the state’s Tax Credit Scholarship program.