Funding fight

Student Success funding bill praised and panned

House Speaker Mark Ferrandino (at podium) touts the proposed Student Success Act.

Legislative backers of the proposed Student Success Act formally unveiled their spending-and-reform plan at an upbeat Capitol news conference Thursday, even as skeptics ratcheted up criticism of the proposal.

While legislators at the news conference promoted the bill as a balance between more funding and reform, people attending a school boards conference a few blocks away applauded a protest song that called on lawmakers to do more to reduce the state’s school funding shortfall.

The yet-to-be-introduced bill proposes spending more than $300 million — part to reduce the $1 billion funding shortfall, some to help districts pay for implementation of reforms already on the books, and part for a list of earmarked programs. (Chalkbeat Colorado first reported the details of the bill in this story.)

Around the Capitol, the bill commonly is called the “Son of 213,” a reference to Senate Bill 13-213, the comprehensive, $1 billion overhaul of the state’s school funding system that remains on the shelf because voters last year rejected the tax increase necessary to pay for it. (Sponsors of the new bill hate that nickname.)

More than a dozen House members from both parties flanked Democratic Speaker Mark Ferrandino of Denver as he called the proposal a first step toward improved school funding and a continuation of education reform efforts.

“While not everyone is in full agreement, people have been heard,” Ferrandino said. “We are absolutely committed to working with all stakeholders.”

The bill’s three prime sponsors amplified the do-what-we-can and all-are-being-consulted themes.

Reps. Millie Hamner, D-Dillon, and Carole Murray, R-Castle Rock, touted the bill as a “balanced approach.” Hamner added, “We will continue to reach out to all groups.” Hamner is chair of the House Education Committee and Murray is the senior Republican member.

“We’ve heard the districts, but we also have an interest in moving Colorado forward,” Hamner said.

Senate prime sponsor Sen. Mike Johnston, D-Denver, picked up the same themes, saying, “We’re not going to get all of the way” toward restoring K-12 funding, but added, “Let us begin the process of trying to make this reinvestment.” (While Johnston is widely regarded by lobbyists and many educators as the animating force behind the bill, its sponsors are promoting Hamner and Murray as the key drivers and stress the bipartisan support for the bill, at least in the House. Johnston was the only senator at the news conference.)

Others raise concerns about bill

While supporters were touting the bill, others were significantly less enthusiastic.

As it happens, the Colorado Association of Schools board opened its annual legislative conference on the same day as the supporters’ news conference.

Those who attended a luncheon at the Brown Palace Hotel cheered a “protest” song written by Mark DeVoti, a superintendent who now works for CASB, that urged the legislature to devote more money to buying down the negative factor.

The negative factor is a formula used by the legislature to reduce school funding from what it otherwise would have been in order the balance the annual state budget. It’s estimated the negative factor has set school funding $1 billion below what it would have been otherwise.

The proposed Student Success bill would make only an $80 million dent in that $1 billion. School districts and superintendents are pushing to “buy down” the negative factor in 2014-15 by anywhere from $200 million to $275 million.

The chorus to DeVoti’s two-verse song goes:

Take that Negative Factor, make it go away!
Come on put that billion back
Do it with no string attached
Take that Negative Factor, make it go away

Lt. Gov. Joe Garcia, the Hickenlooper administration’s point person on education issues, was the featured speaker at the CASB luncheon. According to several people who attended the event, Garcia was peppered with lots of hard questions – and no softballs – about the negative factor and the Student Success bill. Attendees said Garcia held his own but that the session was tense.

Later in the day, CASB chief lobbyist Jane Urschel made an impassioned plea to members to lobby their legislators for reduction of the negative factor. “I cannot do this for you,” she said. “You have to talk to them. … I think they can do [reduce] $200 million in the negative factor and still do some other expenditures they want to do.”

In a reference to that fact that most CASB members come from small rural districts, Urschel said, “Get off your tractors” and come to Denver to lobby.

Two other influential mainline interest groups, the Colorado Education Association and the Colorado Association of School Executives, issued statements Thursday raising concerns about the Student Success Act.

“We appreciate that lawmakers allocated some money to help revive struggling districts, but the proposed $80 million is inadequate to schools and classrooms that lost more than $1 billion in just five years,” said CEA President Kerrie Dallman in a prepared statement. “We also have great concern that the majority of the funding in the proposal comes with mandates on how to use, or is one-time money.”

CASE Executive Director Bruce Caughey also called for a larger cut in the negative factor.

Negative factor reduction carries future implications

A key – but complicated – issue in the negative factor debate is the impact on future state budgets if a significant amount of money is devoted to buying down the negative factor. Because the state constitution requires annual increases in base school funding based on inflation and enrollment growth, increasing base funding through reduction of the negative factor would mean even larger mandatory school funding in future years. People like Ferrandino and Hickenlooper budget advisors resist too big a cut in the negative factor for that reason.

A safety valve for school support is a dedicated account called the State Education Fund, which can be used to supplement school support from the state’s main General Fund. Gov. John Hickenlooper has proposed keeping a $700 million balance in the SEF at the end of 2014-15, thereby saving some money to spend on schools in future years. The spending proposed in the Student Success Act could leave as little as $200 million or as much as $400 million in the SEF.

Asked about that, Hickenlooper budget chief Henry Sobanet told Chalkbeat Colorado, “There are ideas in the legislature that total several hundred million dollars above our [budget] request. After the March forecast, we will work with the JBC and leadership on a budget package that predicted revenue can support.”

For now, the proposed spending in the Student Success bill is an educated guess and is expected to change after those state revenue forecasts are released at the end of Marcy.

“The March forecast will determine how much we can spend,” Ferrandino said.

Notably absent from the Student Success bill is any increased funding for full-day kindergarten and the Colorado Preschool Program, both favorites of education reformers. Depending on the March forecasts, Murray said additional funding for those programs could be included in the annual school finance bill, a separate piece of legislation. That would be “the icing on the cake,” she said.

New bill proposes other uses for BEST revenue

The Student Success bill proposes spending all $40 million generated by new marijuana taxes for kindergarten facilities, charter school facilities and school technology upgrades.

A bill introduced Wednesday proposes different uses.

House Bill 14-1287 proposes that the money go to the state capital construction fund without earmarking, according to prime sponsor Rep. Dave Young, D-Greeley. But the main thrust of the bill is to help school districts affected by disasters such as last year’s wildfires and floods.

In the event of an officially declared disaster, the bill would require the Department of Education to contact affected school districts to inventory damage. Affected districts could apply to the Capital Construction Assistance Board for emergency aid, and the normal local matching requirements of the Building Excellent Schools Today program would be waived. The board could use up to 10 percent of the fund for emergency grants.

Asked about potential conflict with student success bill, Young smiled and said, “I think we’re going to have an interesting debate.” (Young was part of the supporting cast of lawmakers at the Student Success news conference.)

HB 14-1287 originated with a special legislature committee convened after last year’s disaster and has bipartisan sponsorship.

More money

What Colorado’s booming economy might mean for the state education budget

More money is forecast to appear below the gold dome (Denver Post photo).

Gov. John Hickenlooper wants to put an extra $200 million into education next year and another $100 million in the 2019-20 fiscal year, but a lot of that money could go to offset hits to districts from anticipated reforms to the state’s pension program and reductions in local tax revenue.

The proposal comes in response to new economic forecasts released Monday that show Colorado having more money than previously expected.

Legislative economists predict that lawmakers will have a whopping $1.3 billion or 11.5 percent more to spend or save in 2018-19 than is budgeted in 2017-18. The forecast from the governor’s Office of State Planning and Budget predicts similar increases in revenue. After meeting the reserve requirement of 6.5 percent, Colorado will have an additional $492 million in reserve for this fiscal year, and even with a higher reserve of 8 percent proposed for next fiscal year, the state would have an additional $548.1 million in 2018-19. 

It’s normal for the forecasts to be slightly different because the economic analysts often use slightly different assumptions. In this case, the governor’s office predicts that the additional revenue will be more spread out over this fiscal year and the next one, while legislative economists think more of the money will be coming in next year. That difference means the legislative forecast shows the state potentially hitting the revenue limits imposed by the Taxpayer’s Bill of Rights, despite lawmakers making more room under the cap just last year, while the governor’s forecast does not.

These are the numbers that the Joint Budget Committee has been waiting for to finalize its recommendations for the 2018-19 budget year. Republicans and advocates for more transportation spending have already seized on the numbers to support a plan to ask voters to approve new debt to pay for road construction and dedicate up to $300 million a year to pay off that debt.

Of course, these forecasts are also inherently speculative – and legislative economists warned these forecasts contain even more uncertainty than usual.

State Rep. Millie Hamner, the Dillon Democrat who chairs the Joint Budget Committee, summed up the message as one of caution about dedicating too much of the new revenue to ongoing expenses. The more that gets committed, the harder it will be for the state to meet all of those commitments in future years.

Those who want to see Colorado spend more on K-12 education have pushed back on the Republican roads bill out of fear that the commitment could make it harder to send more money to schools in the future.

The governor’s budget director Henry Sobanet recommended treating much of this new money as “one-time” funds that should go to “one-time” uses. In a letter to the Joint Budget Committee, he laid out a plan.

In the case of roads spending, he’s recommending an extra $500 million for road construction in 2018-19, but only $150 million in 2019-20. And in the case of education, he’s recommending an additional $200 million in 2018-19 and an additional $100 million the following year.

However, this extra money might not show up in classrooms – or rather, it might show up in a lack of cuts rather than new money.

The governor’s budget request already called for a reduction in the budget stabilization factor of $100 million. That’s the amount by which Colorado underfunds K-12 education compared to the requirements of Amendment 23. In this budget year, it’s $822 million, after a mid-year adjustment. Some of the extra money could go toward reducing it even further.

However, Sobanet said he envisions most of it going to offset reductions in local property tax revenue that will be caused by a provision of the Colorado constitution that governs the ratio between residential and commercial property tax revenue.

It’s also possible that school districts could end up having to pay more toward some sort of agreement on changes to the Public Employees’ Retirement Association, or PERA. The final form of reforms to PERA is far from certain.

“Another downgrade in the residential assessment rate means more state share to keep total per pupil spending up,” Sobanet said. “We know that since the December announcement of property taxes and since we know PERA might be on the table for something, let’s set aside some resources and make sure we can handle this.”

Indiana's 2018 legislative session

State takeover plans for Gary and Muncie could be revived as Indiana lawmakers return in May

PHOTO: Shaina Cavazos
Gov. Eric Holcomb addressed reporters Monday. He's asking lawmakers to return for a special session in May.

Lawmakers will return to the Statehouse this May after an unusual summons Monday from Gov. Eric Holcomb, and it’s possible they could revisit a controversial plan to expand state takeover of the Gary and Muncie school districts.

But Holcomb said the takeover plan should not be pushed through during a special session and should be acted upon next year. It’s been more than a decade since lawmakers held a special session in a non-budget year.

“I would prefer to wait,” Holcomb said. “I don’t believe that it rises to the level of urgency to be dealt with right now.”

The regular legislative session ended in chaos last week, with lawmakers leaving this and several other important bills unresolved when the clock ran out.

Republican lawmakers have been largely supportive of the takeover plan, and so they could revive the issue despite Holcomb’s stance. Holcomb said discussions would happen this week over what issues could be addressed during the special session.

House Bill 1315 sparked heated debate right up until the final minutes of the 2018 legislative session. The bill would have given control of Muncie schools to Ball State University and stripped power from the Gary school board. Another part of the bill would have developed an early warning system to identify districts in financial trouble.

On Thursday, House Speaker Brian Bosma said the bill was one of the important issues left on the table when the legislature had to adjourn.

But Senate President David Long also noted that the bill has been massively unpopular in some circles — Democrats were strongly opposed to it, as were teachers unions and some educators and community members.

Both Republican leaders said in statements Monday that they supported the governor’s special session request. But John Zody, the Indiana Democratic Party chairman, derided the move as wasteful and a reflection of lawmakers’ inability to finish their work on time.

“Republican leadership incompetently steered session into a wall on the last lap,” Zody said in a statement. “Now they’re asking taxpayers to foot the bill for another shot at passing their do-nothing agenda.”

Holcomb said his biggest priorities during the special session would be getting a $12 million loan from the state’s Common School Fund to Muncie schools to deal with financial difficulties stemming from declining enrollment and mismanagement of a bond issue. That loan was originally a provision in the House bill.

State Superintendent Jennifer McCormick said Monday morning that she also would support action to get Muncie schools the money they were promised. McCormick also said the early warning system could be helpful to prevent these situations in the future.

“We want Muncie to be successful,” McCormick said, adding that anything the state can do to be proactive “and get people help so we’re not dealing with more Muncies and Garys” is a good thing.

The special session could come with a steep price tag for Indiana taxpayers. Micah Vincent, director of the Office of Management and Budget, said early estimates for calling lawmakers back into session could be about $30,000 per day. But that cost “is dwarfed by the cost of inaction,” Holcomb said. It’s unclear how long the special session could last.

The governor also said he wanted to prioritize school safety legislation, another measure that didn’t get final votes before time ran out. He is calling for lawmakers to direct $10 million over the next two years to the state’s Secured School Fund. The money would allow districts to request dollars for new and improved school safety equipment and building improvements.

His plan comes in the wake of a shooting in Parkland, Florida, where 17 students and faculty members were killed last month.

The shooting also sparked activism across the country, with thousands of students protesting against gun violence in schools and calling for stricter gun regulations. Last Wednesday, many Hoosier students joined the national movement by walking out of school.