School Finance

Revenue forecasts offer hints on negative factor, higher ed construction

State revenue forecasts issued Friday morning provided a first look at the possible direction of 2015 school finance debates and a better sense of winners and losers among college construction projects.

Economists from the Legislative Council staff and the Office of State Planning and Budgeting each presented their quarterly revenue forecasts and economic reviews to the Joint Budget Committee.

The legislative economists were the more conservative, lowering their forecasts for state revenue growth from what they had estimated in March. The OSPB inched its March forecast upward about 1 percent for both 2013-14 collections and for the 2014-15 fiscal year, which starts July 1. Both found the Colorado economy generally strong and growing faster than the national economy.

Four pieces of the forecasts are of particular interest to education, including overall projected revenues, the health of the State Education Fund (SEF), projected inflation and expected marijuana tax revenues.

Here’s a quick look at what the forecasts say about those issues:

Overall revenues: The OSPB projects $10.8 billion in general fund revenues for 2015-16, compared to $10 billion for 2014-15. Legislative Council projects $10.5 billion in 2015-16.

“This is all positive, but they have built in some pretty conservative projections,” said Jane Urschel, deputy executive director of the Colorado Association of School Boards. Urschel said the forecasts make it possible for the education lobby to push for further reductions in the negative factor next year but that it’s too early to say how much.

State Education Fund: The SEF is used to supplement basic school funding and to pay for special programs. Flush with one-time revenues, many lawmakers sought to tap it for pet projects during the 2014 session. The OSPB estimates $693 million will be left in the SED at the end of 2014-15, money that lawmakers could try to spend.

Inflation: The state constitution requires basic K-12 spending to increase annually by the rate of inflation. OSPB projects 2.6 percent inflation; Legislative Council estimates 2.8 percent. A federally calculated inflation rate reported early in 2015 will be used to calculate school funding for 2015-16.

Marijuana tax revenues: State economists are projecting that marijuana tax revenues will be lower than previously predicted, something that has implications both for school construction, which gets a slice of that money, and for funding of marijuana education programs in schools.

Of special interest to higher education this year is the projected amount of the state surplus at the end of the 2013-14 budget year. A law passed during the 2014 session allocated surplus funds first to water projects and the SEF, along with other smaller distributions. Any revenue above those uses was earmarked for a prioritized list of college and university construction projects.

Legislative Council staff now estimate there will be only enough money for a library project at the Auraria Higher Education Center. But OSPB is projecting there will be enough excess cash for the Auraria work plus projects at Fort Lewis College, Colorado State University, the University of Colorado, Metropolitan State University and Adams State University.

The question will be answered in September after updated revenue forecasts are made.

The June forecasts provide lawmakers, bureaucrats and lobbyists with some broad groundwork for the following year’s budget debates. New forecasts in September will provide the base for the governor’s 2015-16 budget plan, which has to be filed by Nov. 1. And updated forecasts in late December set the stage for lawmakers when they return in January.

Lawmakers generally use the more conservative of the two forecasts when making budget decisions.

Read the Legislative Council forecast here and the OSPB projections here.

after parkland

Tennessee governor proposes $30 million for student safety plan

PHOTO: Marta W. Aldrich
Gov. Bill Haslam speaks with reporters Tuesday about his budget amendment, which includes $30 million for a school safety plan.

Gov. Bill Haslam on Tuesday proposed spending an extra $30 million to improve student safety in Tennessee, joining the growing list of governors pushing similar actions after last month’s shooting rampage at a Florida high school.

But unlike other states focusing exclusively on safety inside of schools, Haslam wants some money to keep students safe on school buses too — a nod to several fatal accidents in recent years, including a 2016 crash that killed six elementary school students in Chattanooga.

“Our children deserve to learn in a safe and secure environment,” Haslam said in presenting his safety proposal in an amendment to his proposed budget.

The Republican governor only had about $84 million in mostly one-time funding to work with for extra needs this spring, and school safety received top priority. Haslam proposed $27 million for safety in schools and $3 million to help districts purchase new buses equipped with seat belts.

But exactly how the school safety money will be spent depends on recommendations from Haslam’s task force on the issue, which is expected to wind up its work on Thursday after three weeks of meetings. Possibilities include more law enforcement officers and mental health services in schools, as well as extra technology to secure school campuses better.

“We don’t have an exact description of how those dollars are going to be used. We just know it’s going to be a priority,” Haslam told reporters.

The governor acknowledged that $30 million is a modest investment given the scope of the need, and said he is open to a special legislative session on school safety. “I think it’s a critical enough issue,” he said, adding that he did not expect that to happen. (State lawmakers cannot begin campaigning for re-election this fall until completing their legislative work.)

Education spending already is increased in Haslam’s $37.5 billion spending plan unveiled in January, allocating an extra $212 million for K-12 schools and including $55 million for teacher pay raises. But Haslam promised to revisit the numbers — and specifically the issue of school safety — after a shooter killed 14 students and three faculty members on Feb. 14 in Parkland, Florida, triggering protests from students across America and calls for heightened security and stricter gun laws.

Haslam had been expected to roll out a school safety plan this spring, but his inclusion of bus safety was a surprise to many. Following fatal crashes in Hamilton and Knox counties in recent years, proposals to retrofit school buses with seat belts have repeatedly collapsed in the legislature under the weight the financial cost.

The new $3 million investment would help districts begin buying new buses with seat belts but would not address existing fleets.

“Is it the final solution on school bus seat belts? No, but it does [make a start],” Haslam said.

The governor presented his school spending plan to lawmakers on the same day that one House committee was scheduled to consider whether to give districts the option of arming some trained teachers with handguns. That bill, sponsored by Rep. David Byrd of Waynesboro, easily cleared its first legislative hurdle on Feb. 28 and has since amassed close to 50 co-sponsors in the House.

Editor’s note: This story will be updated.

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.”