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.

Local funding

Aurora board to consider placing school tax hike on November ballot

A kindergarten teacher at Kenton Elementary in Aurora, Colorado helps a student practice saying and writing numbers on a Thursday afternoon in February 2017. (Photo by Yesenia Robles, Chalkbeat)

Seeking to boost student health and safety and raise teacher pay, Aurora school officials will consider asking voters to approve a $35 million tax plan in November.

The school board will hear its staff’s proposal for the proposed ballot measure Tuesday. The board may discuss the merits of the plan but likely would not decide whether to place it on the ballot until at least the following week.

Aurora voters in 2016 approved a bond request which allowed the district to take on $300 million in debt for facilities, including the replacement building for Mrachek Middle School, and building a new campus for a charter school from the DSST network.

But this year’s proposed tax request is for a mill levy override, which is ongoing local money that is collected from property taxes and has less limitations for its use.

Aurora officials are proposing to use the money, estimated to be $35 million in 2019, to expand staff and training for students’ mental health services, expanding after-school programs for elementary students, adding seat belts to school buses, and boosting pay “to recruit and retain high quality teachers.”

The estimated cost for homeowners would be $98.64 per year, or $8.22 per month, for each $100,000 of home value.

Based on previous discussions, current board members appear likely to support the recommendation.

During budget talks earlier this year, several board members said they were interested in prioritizing funding for increased mental health services. The district did allocate some money from the 2018-19 budget to expand services, described as the “most urgent,” and mostly for students with special needs, but officials had said that new dollars could be needed to do more.

The teacher pay component was written into the contract approved earlier this year between the district and the teachers union. If Aurora voters approved the tax measure, then the union and school district would reopen negotiations to redesign the way teachers are paid.

In crafting the recommendation, school district staff will explain findings from focus groups and polling. Based on polls conducted of 500 likely voters by Frederick Polls, 61 percent said in July they would favor a school tax hike.

The district’s presentation for the board will also note that outreach and polling indicate community support for teacher pay raises, student services and other items that a tax hike would fund.



School Finance

Key lawmakers urge IPS to lease Broad Ripple high school to charter school

PHOTO: Scott Elliott

Several Indiana lawmakers, including two influential state representatives, are calling on Indianapolis Public Schools leaders to sell the Broad Ripple High School campus to Purdue Polytechnic High School.

In a letter to Superintendent Lewis Ferebee and the Indianapolis Public Schools Board sent Tuesday, nine lawmakers urged the district to quickly accept a verbal offer from Purdue Polytechnic to lease the building for up to $8 million.

The letter is the latest volley in a sustained campaign from Broad Ripple residents and local leaders to pressure the district to lease or sell the desirable building to a charter school. The district is instead considering steps that could eventually allow them sell the large property on the open market.

But lawmakers said the offer from Purdue Polytechnic is more lucrative and indicated they wouldn’t support allowing the district to sell the property to other buyers.

The letter from lawmakers described selling the property to Purdue Polytechnic as a “unique opportunity to capitalize on an immediate revenue opportunity while adhering to the letter and spirit of state law.”

It’s an important development because it was signed by House Speaker Brian Bosma and chairman of the House Education Committee Bob Behning, two elected officials whose support would be essential to changing a law that requires the district to first offer the building to charter schools for $1. Both are Republicans from Indianapolis.

Last year, the district lobbied for the law to be modified, and Behning initially included language in a bill to do so. When charter schools, including Purdue Polytechnic, expressed interest in the building, he withdrew the proposal.

The district announced last month that it planned to use the Broad Ripple building for operations over the next year, which will allow it to avoid placing the building on the unused property registry that would eventually make it available to charter operators.

The plan to continue using the building inspired pointed criticism from lawmakers, who described the move in the letter as an excuse not to lease the property to a charter school. Lawmakers hinted that the plan will not help win support for changing the law.

“It certainly would not be a good faith start to any effort to persuade the General Assembly to reconsider the charter facility law,” the letter said.

The legislature goes back in session in January.

The Indianapolis Public Schools Board said in the statement that they appreciate the interest from lawmakers in the future of the building.

“We believe our constituents would not want us to circumvent a public process and bypass due diligence,” the statement continued. “We will continue to move with urgency recognizing our commitment to maximize resources for student needs and minimize burdens on taxpayers.”

Indianapolis Public Schools is currently gathering community perspectives on reusing the property and analyzing the market. The district is also planning an open process for soliciting proposals and bids for the property. The district’s proposal would stretch the sale process over about 15 months, culminating in a decision in September 2019. Purdue Polytechnic plans to open a second campus in fall 2019, and leaders are looking to nail down a location.