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.

 

Future of Schools

CPS $1 billion capital budget hearings: Questions, demands, and mixed feelings

PHOTO: Elaine Chen
Community members gave passionate testimonies at a public hearing at Malcolm X College for the proposed capital budget.

Chicago Public Schools surprised many when it dropped its biggest facility spending plan a few weeks ago with a big “B”—that stands for billion—in the headline.

Considering that the district had planned to spend less than $200 million on capital needs for the 2018-2019 school year, this plan represents a five-fold increase. It relies largely on bonds to pay for building improvements and introduces new schools amid steadily shrinking enrollment, mostly in areas around gentrifying neighborhoods.

Divergent opinions surrounding the capital budget emerged at three concurrent community meetings CPS held Thursday night at City Colleges sites around Chicago: Malcolm X, Harry S. Truman, and Kennedy-King. The Chicago Board of Education is scheduled to vote on the district’s $7.58 billion budget, including the capital plan, on July 25.

At the Malcolm X meeting, CPS Senior Policy Advisor Cameron Mock presented a map showing capital budget projects distributed evenly throughout the city, but, as CPS Chief Financial Officer Jennie Bennett acknowledged, “not all projects are equal.”

Bennett explained that “the allocation of these projects were really in large part due to feedback about need.”

Chalkbeat mapped out the costliest capital projects, and found that the West side, particularly the Southwest side, received the smallest concentration of large investments.

The map shows investments in facility needs over $5 million, all programmatic investments, all investments in overcrowding relief, investments in site improvements over $500,000, as well as sites of the two new classical schools. The map does not show the two new schools in Belmont Cragin and the Near West Side, because the district has not yet specified exact locations. The district also has not yet identified schools for many of its capital projects, such as technology and facility upgrades. See the full plan here.

At Thursday’s hearings, parents from schools that did receive significant funding, such as Christopher Elementary School in Gage Park and Hancock High School in West Elsdon, expressed thanks. But others asked for for more investment.

Residents questioned the plan to build a new $70 million high school on the Near West Side. Lori Edwards, a Local School Council member at Crane Medical Prep on the Near West Side, said that Crane desperately needed air conditioning and heating, doors with windows, and security cameras.

“I’m surprised that we can’t just get basic things instead of building a new high school,” she said.

Questions also surrounded the $44 million assigned for a new elementary school in Belmont Cragin on the Northwest Side to address overcrowding. A sophomore at Prosser High School in Belmont Cragin asked for investment in her school instead. At Prosser, she said, “there needs to be reconstruction in the classrooms, the paint on the walls is falling off.”

Leticia Neri, a mother of two students at Camras Elementary School in Belmont Cragin, was wary of adding a school to the neighborhood. Her children used to attend Burbank Elementary, which is also in Belmont Cragin. When Acero Roberto Clemente, a charter school, opened just two blocks down in 2013, she said that Burbank lost pupils.

However, Mock said the proposed new school was a response to demand in Belmont Cragin. And in fact, several miles north in Uptown, where CPS’s Chief Operating Officer Arnie Rivera and other officials led a meeting Thursday, a handful of Belmont Cragin residents argued in favor of the school.

Parent Mariela Estrada said Belmont Cragin Elementary, which her 9-year-old attends,  is overcrowded. While the district’s formula doesn’t label any Belmont Cragin school overcrowded, the numbers paint a different picture. Belmont Cragin Elementary’s 414 students share a building with Northwest Middle School’s 545 pupils.

“I am really, really grateful right now for what we are getting,” she said.

The North Side, as the map above shows, will receive the most capital funding. Several attendees expressed gratitude for investments in area schools, especially a new ADA compliant gym at McCutcheon Elementary in Uptown, and an expanded test-in Decatur Classical School program in West Ridge, that will add seventh and eighth grades. Students have to test into the city’s five highly competitive classical schools, and hundreds are turned away every year.

Even so, not all North Side residents felt their schools would receive what they need, and many questioned CPS’ process for planning improvements.

A mother of a student at Schurz High School, in Old Irving Park, thanked CPS for a plans to install a new athletic field, but mentioned the school’s leaky roof, faulty heating system, green and black mold under carpets, and peeling paint in the auditorium. “It’s gross,” she said.

Parent Dawne Moon, said Kilmer Elementary School in Rogers Park is “not currently a safe environment.” Moon, a Local School Council member,  complained of rusted lockers, “bathrooms that smell like urine, even after they are cleaned,” temporary covers over holes in the roof that keeps water from pouring into classrooms, and of bricks falling from the ceiling in the school’s gym.  

“We can hope that the next brick doesn’t fall on a kid,” she said.

Betsy Vandercook, co-chair of the education committee at Network 49, a progressive neighborhood group based in Rogers Park, said schools in her neighborhood would get less than what adjacent communities like Edgewater and West Rogers Park would receive.

“Rogers Park is not, for whatever reason getting the same resources that many other North Side communities are getting,” she said about the capital budget proposal. “Take this back, look at it again, look at what is and isn’t needed.”

budget season

New budget gives CPS CEO Janice Jackson opportunity to play offense

PHOTO: Elaine Chen
Chicago Public Schools CEO Janice Jackson announced the district's $1 billion capital plan at Lázaro Cardenas Elementary School in Little Village.

Running Chicago’s schools might be the toughest tour of duty in town for a public sector CEO. There have been eight chiefs in a decade – to be fair, two were interims – who have wrangled with mounting debt, aging buildings, and high percentages of students who live in poverty.

Then there’ve been recurring scandals, corruption, and ethics violations. Since she was officially named to the top job in January, CEO Janice Jackson has had to clean up a series of her predecessors’ lapses, from a special education crisis that revealed families were counseled out of services to a sexual abuse investigation that spotlighted a decade of system failures at every level to protect students.

But with budget season underway, the former principal finally gets the chance to go on the offensive. The first operations budget of her tenure is a $5.98 billion plan that contains some good news for a change: 5 percent more money, courtesy of the state revamp of the school funding formula and a bump from local tax revenues. CPS plans to funnel $60 million more to schools than it did last school year, for a total of $3.1 billion. Put another way, it plans to spend $4,397 per student as a base rate — a 2 percent increase from the year prior.

CPS’ total budget comes out to $7.58 billion once you factor in long-term debt and an ambitious $1 billion capital plan that is the focus of a trio of public hearings Thursday night. When it comes to debt, the district owes $8.2 billion as of June 30, or nearly $3,000 per every Chicago resident.

“The district, without a doubt, is on firmer footing than it was 18 months ago, but they’re not out of woods yet,” said Bobby Otter, budget director for the Center for Tax and Budget Accountability. “When you look at the overall picture (the $7.58 budget), they’re still running a deficit. This is now the seventh year in a row they are running a deficit, and the amount of debt the district has, combined with the lack of reserves, leaves them with little flexibility.”

Earlier this week, standing in front of an audience of executives at a City Club of Chicago luncheon, Jackson acknowledged that it had been an “eventful” seven months and said she was ready to focus on strategies for moving the district forward. “I won’t be waiting for next shoe to drop or wasting time and resources waiting for next problem. I want to design a system to educate and protect children.”

“I’m not in crisis mode,” she added.

Here’s what that looks like in her first year when you just consider the numbers. The biggest line items of any operating budget are salaries, benefits and pensions: Taken all together, they consume 66 percent of CPS’ planned spending for the 2018-2019 school year. Rounding out much of the rest are contracts with vendors ($542.6 million, or 9 percent), such as the controversial janitorial deals with Aramark and SodexoMAGIC; charter expenditures ($749 million, or 13 percent); and spending on transportation, textbooks, equipment, and the like (12 percent).

A closer look at how some of those items are allocated offers a window into Jackson’s vision. The Board of Education is scheduled to vote on the plan July 25.

Investing in choice

Earlier this month, the district announced a nearly $1 billion capital plan, funded by bonds, that would support new schools, technology upgrades, and annexes at some of the district’s most popular campuses. The operating budget, meanwhile, accounts for the people and programs driving those projects. It proposes nearly doubling the staff, from 10 to 17, in the office that manages charters, contract programs, and the creation of new schools. It reestablishes a chief portfolio officer who reports directly to the CEO. And it adds expands access to International Baccalaureate programs and Early College STEM offerings. In a letter at the beginning of the 2019 Budget Book, Jackson said such expansions “move the district closer to our goal of having 50 percent of students earn at least one college or career credential before graduating high school.” 

Advocating for students

The budget seeds at least two new departments: a four-person Office of Equity charged with diversifying the teacher pipeline, among other roles, and a 20-person Title IX office that would investigate student abuse cases, including claims of student-on-student harassment.

Leaning into high schools

Fitting for a budget designed by a former high school principal – Jackson was running a high school before age 30 – the plan leans in to high schools, establishing $2 million to fund four new networks to oversee them. (That brings the total number of networks to 17; networks are mini-administrative departments that track school progress, assist with budgeting, and ensure policy and procedures are followed.) And it earmarks $75 million across three years for new science labs at neighborhood high schools. What’s more, it supports 10 additional career counselors to help campuses wrestle with a graduation mandate – set forth by Mayor Rahm Emanuel – that seniors have a post-secondary plan to graduate starting with the Class of 2020.

Throwing a lifeline to small schools

The budget also sets forth a $10 million “Small Schools Fund” to help schools with low enrollment retain teachers and offer after-school programs. It also earmarks an additional $5 million to help schools facing precipitous changes in enrollment, which can in turn lead to dramatic budget drops.   

Supporting modest staff increases

After a round of layoffs were announced in June, the budget plan adds at least 200 teachers. But the district would not provide a clear accounting of whom to Chalkbeat by publication time. Earlier this week, it announced plans to fund additional school social workers (160) and special education case managers (94).

The district plans to add positions for the upcoming 2018-2019 year.

As Chicago Teachers Union organizer and Cook County Commissioner candidate Brandon Johnson pointed out in an impromptu press conference earlier this week in front of district HQ, the budget is still “woefully short” on school psychologists, nurses, and counselors. And it doesn’t address the calls from parents to restore librarians and instructors in such subjects as art, music, physical education — positions that have experienced dramatic cuts since 2011. “What is proposed today still leaves us short of when (Mayor Emanuel) took office,” Johnson said. “The needs of our students must be met.”

Principal Elias Estrada, who oversees two North Side schools, Alcott Elementary and Alcott High School, said he was still figuring out how the additional staffing would work. He’s getting another social worker – but he oversees two campuses that sit three miles apart, so he figures he’ll have to divide the person’s time between campuses. Estrada asked the board at Monday’s budget hearing to help him understand the criteria it uses to determine which schools get extra staff or additional programs, like IB. “I need a counselor, a clerk, and an assistant principal,” he said; currently those positions also are shared between the elementary and the high school.

After the meeting, he said that schools might have gotten slightly bigger budgets this year, but the increase was consumed by rising salaries and he wasn’t able to add any positions. What’s more, his building needs repairs, but it didn’t get picked for any of the facilities upgrades in the $1 billion capital plan that accompanied the budget.

“What is the process?” he asked. “The need is everywhere.”

At two public hearings on Monday, fewer than a dozen speakers signed up to ask questions of the board, central office administrators, or Jackson.

To see if your school is getting one of the newly announced positions or any funding from the capital plan, type it in the search box below.