School Finance

Lawsuit claims school funding reduction mechanism unconstitutional

Updated 9 a.m. – A group of school districts and parents filed a lawsuit Friday arguing that the device used by the legislature to control annual K-12 spending, the so-called negative factor, is unconstitutional.

The suit, filed against the state in Denver District Court, argues that the negative factor violates Amendment 23, the constitutional provision that requires school funding to increase by inflation and enrollment growth every year.

The suit has been expected for some time and opens a new front in the policy war over the negative factor, a conflict that intensified during the 2014 legislative session. It’s estimated that use of the negative factor has cut about $1 billion a year from what school districts otherwise would have received for basic operating costs. (See text of suit here.)

The plaintiffs ask that the negative factor section be stricken from the state’s school funding law and that the legislature be barred from reinstating the factor in another form. The suit does not ask that lost funding be restored.

Lead lawyers in the case are Timothy Macdonald of Arnold and Porter and Kathleen Gebhardt of Children’s Voices, a Boulder public interest law firm. She was the lead lawyer in the long-running Lobato v. State school funding suit, which was thrown out by the Colorado Supreme Court in 2013. (Get full background on the Lobato case here.)

Kathleen Gebhardt / File photo
PHOTO: Scott Elliott
Kathleen Gebhardt / File photo

Gebhardt told Chalkbeat Colorado that the final decision to file was made on Tuesday, partly because recent state revenue forecasts (see story) indicate continued improvement in state finances.

“It’s a simple claim, just that the negative factor violates Amendment 23,” Gebhardt said, describing it as a very different case from the complex Lobato suit.

The plaintiffs in the new case include the Colorado Springs 11, Boulder Valley, Mancos, Holyoke and Plateau Valley school districts, along with the East Central Board of Cooperative Educational Services. Other plaintiffs are the Colorado Rural Schools Caucus and the Colorado PTA. Four sets of parents with children in the Kit Carson, Lewis-Palmer and Hanover districts also have signed on to the suit.

The lead plaintiffs are Lindi and Paul Dwyer, who have four daughters in the Kit Carson district, and the case takes their name, Dwyer v. State. Gov. John Hickenlooper and Education Commissioner Robert Hammond are the named defendants in the suit.

Lawyers from four Denver law firms have agreed to assist Gebhardt with the case without charge.

What Amendment 23 does

Passed by voters in 2000, A23’s backers intended for it to provide a predictable and growing source of funding for schools. The amendment’s goal was to restore per-pupil funding to 1988 levels over time. For the first 10 years after passage the amendment required that funding increase an additional 1 percent a year on top of the increases for inflation and enrollment.

State funding for schools comes in two chunks. The larger amount, base funding, provides an identical per-student amount to every district. The second chunk, called factor funding, gives districts varying additional per-student amounts based on district characteristics such as numbers of at-risk students, low enrollment and cost of living for staff.  Local property and vehicle tax revenues also contribute to what’s called total program funding for schools.

(A third, smaller pot of state support known as categorical funding provides money to districts for programs such as special education, gifted and talented and transportation. While A23 requires overall categorical funding to increase by inflation every year, the money is not distributed by the same formula that governs total program funding.)

The key fact is that up until the 2010-11 school year, the legislature applied the inflation-and-enrollment increase to both base and factor funding. (Because of the recession, in 2008-09 and 2009-10 the legislature cut school funding by other means.)

Behind the negative factor

School funding chart
Source: Colorado legislative staff. Click for larger view

With the economy still squeezing state revenues, in 2010 the legislature created the negative factor (originally called the stabilization factor) to control school spending as lawmakers continued to struggle with the overall state budget. It applied to the 2010-11 K-12 budget and has been in effect ever since.

The legal reasoning behind the negative factor is that A23 applies only to base funding, not to factor funding. And while the original A23 factors are intended to increase school funding, the negative factor gives lawmakers a tool for reducing it. This is the key issue under attack in the new lawsuit. The negative factor hasn’t been tested in court before. Its rationale is based on a 34-page 2003 memo issued by the Office of Legislative Legal Services at the request of then-Rep. Keith King, R-Colorado Springs. (Read memo here.)

“Amendment 23 precludes the General Assembly from purporting to grow the base but then slashing overall education funding by fundamentally revamping or jettisoning the [finance] formula as in effect in 2000,” the suit argues.

The policy debate

Negative factor impact
  • $5.9 billion K-12 funding in 2014-15 with
  • $6.8 billion without

A23 isn’t the only constitutional provision that applies to the state budget. Among other things, the constitution requires a balanced state budget every year, limits the amount of new revenue that can be spent even in years of high growth and restricts property taxes in a way that has reduced growth of local district revenues.

Because of those restrictions, policymakers who support the negative factor argue that it’s necessary to prevent K-12 spending from consuming larger and larger shares of the state’s general fund budget and squeezing out other state programs.

With state revenues improving, reduction of the negative factor was the top priority for education interest groups during the 2014 legislative session. Their proposals ranged as high as $275 million. In the end lawmakers agreed to a $110 million reduction.

The Hickenlooper administration and legislative budget experts resisted a larger buy down, arguing that a bigger amount would put too much pressure on the state budget in future years. That can happen because reducing the negative factor puts more money into K-12 base funding, which is subject to A23’s multiplier in the future.

Lawsuit backers met with key lawmakers near the end of the session, but legislators reportedly refused to be swayed by any possibility of a suit.

What happens next

As usually happens in these kinds of constitutional cases, the attorney general is expected to ask the district court to dismiss the suit. If that happens, the plaintiffs would appeal to the Colorado Court of Appeals.

Assuming the case stays alive in district court one way or another, both sides could file their written arguments by the end of the year – creating a pile of legal documents for the 2015 legislature to ponder as lawmakers consider the 2015-16 budget and how big a negative factor to include.

Interest groups already are gearing up to push for additional factor buy downs in 2015, and a live lawsuit will provide additional fuel and tension for the debate.

 

school facilities

Cold temps close Memphis state-run schools, highlighting bigger issue of repairing costly, aging buildings

PHOTO: Caroline Bauman
Georgian Hills Achievement Elementary was one of four school closed Tuesday due to heating issues.

About 1,200 students in Tennessee’s turnaround district stayed home from school on Tuesday because their school heating systems weren’t working properly.

Temperatures dipped below 35 degrees, and four schools in the Achievement School District opted to cancel classes because of boiler issues: Georgian Hills Achievement Elementary School, Frayser Achievement Elementary School, Corning Achievement Elementary School, and Martin Luther King Jr. High School.

Aging school buildings in Memphis have caused headaches and missed school time for Shelby County Schools and the Achievement School District, which occupies buildings rent-free from the local district. Just last week, Hamilton High School in Shelby County Schools closed for two days after a power outage caused by heavy rain, and Kirby High School remains closed because of a rodent infestation. Kirby’s students are being housed in different schools for the rest of the semester while repairs are made to rid the school of pests. And Shelby County Schools had to deal with the dropping temperatures on Tuesday as well, with Westwood High School and Oak Forest Elementary ending classes early due to their own heating issues.

But Tuesday’s closures for state-run schools point to a larger issue of facilities: In a city full of older school buildings needing expensive updates, who pays, and who does the work? There is a formal maintenance agreement between the two districts, but the lines that divide responsibilities for repairs are not always clear.

Shelby County Schools is responsible for bigger fixes in the state district, such as new roofs or heating and air conditioning systems, while the state district’s charter operators are responsible for daily maintenance.

Bobby White, chief of external affairs for the Achievement School District, said they are working with Shelby County Schools to resolve the heating problem at the three elementary schools, two of which share a building. But he said that the issues won’t be fixed by Wednesday, and the schools will remain closed.

“We know it throws off our teachers and students to miss class,” White said. “It’s an unfortunate situation. And it underscores the larger issue of our buildings not being in good shape.”

The charter organization Frayser Community Schools runs MLK Jr. High School as part of the Achievement School District, and a spokeswoman for Frayser said they were handling the broiler repairs on their own.

“We are not working with SCS because they don’t handle HVAC issues that are less than $25,000” maintenance director, Erica Williams told Chalkbeat in an email.

The state district was created in 2012 to turn around the state’s lowest-performing schools by taking over local schools and giving them to outside charter organizations to run. Shelby County Schools has a crippling amount of deferred maintenance for its school buildings, including those occupied by the state district, that would cost more than $500 million. The Shelby County district prioritizes how to chip away at that huge cost based on how many children are affected, the condition of the building, and the type of repair, spokeswoman Natalia Powers told Chalkbeat, adding that the district has made some major repairs at state-run schools.

But Sharon Griffin, chief of the Achievement School District told Chalkbeat previously that one of her goals is to resolve problems more quickly with Shelby County Schools when a major repair is needed to avoid lost class time.

Still counting

Jeffco bond measure that had been failing pulls ahead in narrow race

PHOTO: Andy Cross/The Denver Post
Students work on breathing exercises during a yoga class at the end of the school day at Pennington Elementary School.

Update: Over the weekend, the bond measure pulled ahead and is currently headed toward passage, with 50.3 percent of the vote. We’ll continue to update this post as new results come in.


Vote tallies released Thursday in Jefferson County show that a $567 million bond request is down by just 132 votes, opening up the possibility that it might yet pass.

We previously reported that Jefferson County voters had approved a $33 million local tax increase but turned down the bond request. At midday Wednesday, just 48 percent of voters had said yes. The gap was roughly 7,000 votes, and the trend hadn’t changed since the first returns were posted Tuesday evening. It appeared to mark the second time in two years that Jeffco voters had turned down a request to issue debt to improve school buildings.

But by Thursday evening, with additional ballots counted, the margin by which Jeffco Measure 5B was failing had narrowed significantly. The 132-vote margin is currently within the window that would trigger an automatic recount. A mandatory recount is triggered when the difference is one half of one percent of the number of votes cast for the higher vote count, according to officials from the Secretary of State’s office.

Backers of the tax measures are holding out hope the result could change.

District officials said they plan to use the proceeds of this year’s tax measures to raise teacher pay, increase mental health support for students, beef up school security, expand career and technical education, improve science facilities, add more full-day preschool, and buy classroom materials and technology.

On Wednesday, Katie Winner, a mother of two students in Jeffco schools, told us the two tax measures were closely tied and both equally needed.

“I want to know what voters were thinking,” she said. “I didn’t see one without the other.”

We’ll keep tabs on the counting and update you as soon as we have a final tally.