Ruling is in

Supreme Court rejects challenge to school funding formula

Ralph Carr Judicial Center

The Colorado Supreme Court in a 4-3 decision issued Monday rejected a constitutional challenge to part of the state’s school funding formula.

At issue in the case of Dwyer v. State of Colorado was the negative factor, a calculation the legislature has used to reduce school funding to balance the state budget.

“At the end of the day, the State has not reduced statewide base per pupil funding below its constitutional minimum. That fact torpedoes Plaintiffs’ lawsuit,” the opinion said. (See full opinion at bottom of article.)

The decision was not unexpected, but it deals a hard blow to advocates of increased school funding by closing the last big court option available to them.

“This disappointing decision has slammed the courthouse doors on the children of Colorado, cementing in place our uncompetitive levels of education investment,” said Kathleen Gebhardt, a lead lawyer for the plaintiffs.

“We just have to keep trying” to strengthen school funding, she added. “The new normal, it’s just not acceptable. … The next step has to be the voters,” perhaps with a ballot proposal to tweak constitutional requirements for school funding.

The suit was filed just over a year ago by a group of parents and school districts organized by Children’s Voices, the Boulder nonprofit law firm that also put together the Lobato v. State of Colorado lawsuit. That case challenged the state funding system on broader grounds and was rejected by the high court in 2013.

The target in the Dwyer case was much narrower — the negative factor and the proper interpretation of Amendment 23, the constitutional provision that requires K-12 funding to increase annually by population growth and the rate of inflation.

The plaintiffs asked 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 didn’t ask that lost funding be restored.

The case boiled down to a fundamental disagreement between the plaintiffs and the state on two key issues — the definitions of base school funding and per-student funding.

“Plaintiffs’ challenge to the negative factor presents a surprisingly straightforward question of constitutional interpretation. Quite simply, this case is about one thing: the meaning of the term ‘base,'” the ruling said.

The court’s majority came down on the state’s side.

“By its plain language, Amendment 23 only requires increases to statewide base per pupil funding, not to total per pupil funding,” the majority wrote. “The Supreme Court therefore holds that the negative factor does not violate Amendment 23.”

The ruling said that principles of ballot measure interpretation “compel the conclusion that Amendment 23 only requires increases to statewide base per pupil funding, not total per pupil funding. We know that this is what Amendment 23 means, because this is exactly what Amendment 23 says.”

The ruling also said those legal principles required that “We presume that the negative factor is constitutional, and we will only void it if we deem it to be unconstitutional beyond a reasonable doubt.”

The negative factor has been an issue of increasing concern — and even bitterness — among school board members, administrators and teachers since the legislature first used it in 2010, when state revenues still were reeling from the recession.

State and local funding for basic school operations totals about $6.23 billion this school year, an average of $7,295 per pupil. Without the negative factor, total funding would be $885 million higher. (See this spreadsheet of how negative factor affects individual districts.)

Legislators from both parties have been sympathetic about the negative factor’s impact on schools, if not to the argument that it was unconstitutional. They have concerns about reducing the legislature’s budgeting flexibility and about impacts on other state programs.

But for the last two legislative sessions, lawmakers have worked to reduce the negative factor, which had produced a funding shortfall as high as $1 billion in past years.

Budget experts fear it will be increasingly difficult to shrink the negative factor more in the future. Despite rising state revenues, constitutional requirements for annual state spending caps and taxpayer refunds make it unlikely significantly larger amounts of money will be available for K-12 in 2016-17 and beyond. (See the 2016-17 projection from the Colorado School Finance Project and these models of future negative factor impacts.)

How Amendment 23 works

Passed by voters in 2000, Amendment 23’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.

State funding for schools comes in two major 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 individual 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. That money is not distributed by the same formula that governs total program funding.

A 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.

Behind the negative factor

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 Amendment 23 applies only to base funding, not to factor funding. The original legal rationale for the negative factor is based on a 34-page 2003 memo issued by the Office of Legislative Legal Services.

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 Amendment 23’s multiplier in the future.

Behind the Dwyer lawsuit

The suit was filed about a month after the 2014 legislative session, during which supporters of increased school funding were unable to persuade lawmakers to make a big cut in the negative factor.

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

But discussions about a challenge to the formula had been in the works long before that.

The lead plaintiffs were Lindi and Paul Dwyer, who have four daughters in the Kit Carson district.

Other plaintiffs  included 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 were the Colorado Rural Schools Caucus (now known as the Rural Alliance) and the Colorado PTA. Four sets of parents with children in the Kit Carson, Lewis-Palmer and Hanover districts also signed on to the suit.

The case also drew several friend of the court briefs supporting either the plaintiffs or the state.

Briefs supporting the plaintiffs were filed by the Colorado Association of School Boards and the Colorado Education Association, among others. A brief supporting the state’s position was filed by several business groups, including the Denver Metro Chamber of Commerce.

Monday’s ruling was written Chief Justice Nancy Rice and supported by justices Brian Boatright, Nathan Coats and Allison Eid. Justices Monica Marquez, William Hood and Richard Gabriel dissented.

Incentives

Westminster district will give bonuses if state ratings rise, teachers wonder whether performance pay system is coming

PHOTO: Nicholas Garcia
Students work on an English assignment at M. Scott Carpenter Middle School in Westminster.

Teachers and employees in Westminster Public Schools will be able to earn a bonus if they help the struggling district improve its state ratings next year.

The district’s school board on Tuesday unanimously approved the $1.7 million plan for the one-year performance stipends, the district’s latest attempt to lift the quality of its schools.

School employees can earn $1,000 if their school meets a district-set score, or up to $2,000 if they reach a more ambitious goal the school sets. District employees, including the superintendent, can earn $1,000 if the district as a whole jumps up a rating next year.

“We recognize that everyone plays a critical role in increasing student achievement and we decided that if a particular school or the district as a whole can reach that next academic accreditation level, the employees directly responsible should be rewarded,” board president Dino Valente said in a statement.

The district is one of five that was flagged by the state for chronic low performance and was put on a state-ordered improvement plan this spring.

District officials have disputed state ratings, claiming the state’s system is not fairly assessing the performance of Westminster schools. Middle school teacher Melissa Duran, who also used to be president of the teacher’s union, drew a connection between that stance and the new stipends, saying any extra pay she gets would be based on one score.

“The district has gone to the state saying, ‘Why are you rating us on these tests, look at all the other things we’re doing’” Duran said. “Well, it’s the same thing for teachers. They’re still basing our effectiveness on a test score.”

Teachers interviewed Thursday said their first thoughts upon learning of the plan was that it sounded like the beginnings of performance pay.

“I already get the point that we are in need of having our test scores come up,” said math teacher Andy Hartman, who is also head of negotiations for the teacher’s union. “Putting this little carrot out there isn’t going to change anything. I personally do not like performance pay. It’s a very slippery slope.”

District leaders say they talked to all district principals after the announcement Wednesday, and heard positive feedback.

“A lot of the teachers think this is a good thing,” said Steve Saunders, the district’s spokesman.

National studies on the effectiveness of performance pay stipends and merit pay have shown mixed results. One recent study from Vanderbilt University concluded that they can be effective, but that the design of the systems makes a difference.

In Denver Public Schools, the district has a performance-pay system to give raises and bonuses to teachers in various situations. Studies of that model have found that some teachers don’t completely understand the system and that it’s not always tied to better student outcomes.

Westminster officials said they have never formally discussed performance pay, and said that these stipends are being funded for one year with an unanticipated IRS refund.

Westminster teachers said they have ideas for other strategies that could make a quick impact, such as higher pay for substitutes so teachers aren’t losing their planning periods filling in for each other when subs are difficult to find.

Waiting on a bonus that might come next year is not providing any new motivation, teachers said.

“It’s a slap in the face,” Duran said. “It’s not like we are not already working hard enough. Personally, I already give 110 percent. I’ve always given 110 percent.”

Last month, the school board also approved a new contract for teachers and staff. Under the new agreement, teachers and staff got a raise of at least 1 percent. They received a similar raise last year.

Human Resources

Leanne Emm, Colorado education department’s chief financial officer, to retire

Leanne Emm, the state education department's retiring chief financial officer. (Photo courtesy Colorado Department of Education)

A long-running joke among Colorado education officials, policymakers and activists is that only a handful of people really know how Colorado’s complex school funding system works.

One of those people — Leanne Emm, the state’s education department’s deputy commissioner — is retiring later this month after nearly 30 years in public service.

Emm announced her retirement in an email to other school finance officers late last month. Her last day at the department is Sept. 22.

“Each of you helps your students, communities, stakeholders and decision makers with a huge array of issues,” she said in her email. “I can only hope that I will have helped contribute to an understanding of budgetary pressures that we have within the state.”

Emm was appointed to her position in 2011 — about the same time the state’s schools were grappling with deep budget cuts due to Great Recession. She worked at Jeffco Public Schools for 14 years before joining the education department.

Katy Anthes, the state’s education commissioner, said Emm’s exit will be felt at both the state and local school district level.

“Leanne’s leadership and her deep knowledge of the school finance system will be sorely missed by all of us at CDE and by the districts she has supported over the years.” Anthes said in a statement. “I will be forever grateful for her support as I transitioned to this role. I’m sad to see her leave CDE, but I suspect that her love for the state of Colorado and passion for improving education will cause our paths to cross again.”