What's the way forward?

Education leaders put on brave face in wake of Supreme Court ruling

Colorado education leaders say they will continue fighting for stronger education funding at the Capitol and perhaps at the ballot box following a Supreme Court ruling upholding the state’s current finance system.

But supporters of more funding face steep hurdles in their quest, based on the state budget situation and past history.

The Colorado Supreme Court on Monday rejected a constitutional challenge to the so-called negative factor, a formula the legislature uses to reduce annual school funding.

The decision in the Dwyer v. State lawsuit pretty much dashes the last hope for a sweeping fix to the tight funding situation that has vexed district leaders since 2010, when the negative factor was first used.

In that same time period, the Supreme Court has rejected two school funding lawsuits and voters defeated a proposed $1 billion tax increase to help support schools.

“K-12 is in for a bumpy ride,” said Tracie Rainey, executive director of the Colorado School Finance Project, a research organization.

Jane Urschel, deputy executive director of the Colorado Association of School Boards, had a slightly different take. Quoting the just-departed Yogi Berra, she said, “When you come to a fork in the road, take it. That’s where we are,” she added, saying education now faces “a short-term route and a long-term path” on funding.

The heart of the issue

School funding is driven by two things — Amendment 23 and a 1994 school finance law. The constitutional amendment, approved by voters in 2000, requires school funding to increase by enrollment growth and inflation every year.

Negative factor history
  • Fiscal year 15-16: $855.1M
  • FY14-15: $880M
  • FY13-14: $1.004B
  • FY12-13: $1.001B
  • FY11-12: $774M
  • FY10-11: $381M
  • FY09-10: $130M

The finance law divvies money up in two ways: Base funding, through which districts receive an equal amount per student, and factor funding, which gives districts varying amounts based on unique characteristics like size, number of at-risk students and staff cost of living.

Before the negative factor was created, the Amendment 23 formula was applied to both base and factor funding. The legal rationale behind the negative factor allows the formula to be applied only to the base, essentially allowing the legislature to reduce factor funding. Some argue the negative factor also has the effect of cutting the base.

It’s estimated use of the negative factor has cut school funding by about $5 billion since 2009-10. Support for basic school operating costs is about $6.2 billion this school year.

“The negative factor has had a devastating impact on school districts across Colorado,” said Lesley Dahlkemper, a member of the Jefferson County school board.

Does education face a “new normal?”

District leaders have been resisting the negative factor for five years, but some observers have concluded that tight funding is “the new normal” for schools. Opinions still differ in the wake of the court ruling.

“I don’t know how it’s not,” said Reilly Pharo Carter, executive director of Climb Higher Colorado, a group that advocates for high academic standards.

Others hope the situation will be temporary.

Milestones
  • 2000 – Amendment 23 passed
  • 2010 – A23’s 1 percent annual “bonus” expires; negative factor imposed
  • 2013 – Supreme Court rejects Lobato funding lawsuit; voters defeat $1 billion tax increase to help fund schools
  • 2014 – Despite intense lobbying, legislators make only modest trim in negative factor
  • 2015 – High court rejects Dwyer lawsuit

“We can’t allow it to be the new normal,” said Lisa Weil, executive director of Great Education Colorado, a funding advocacy group.

“We should not let anyone, legislators or the general public, think that because it’s the new normal it’s OK,” said Democratic state Sen. Andy Kerr of Lakewood, a Jeffco teacher and member of the Senate Education Committee. “We shouldn’t let anyone forget what the old normal was.”

Legislative prospects are dim

With the state courthouse door closed for now, education leaders are turning toward Urschel’s short-term route: the 2016 legislative session.

Advocates made a hard push to trim the negative factor in 2014 and tried again during the 2015 session. But lawmakers were able to make only small reductions.

“If we are serious about providing a high quality education to the students of Colorado, the legislature and the governor need to make increased school funding a high priority,” said Kerrie Dallman, president of the Colorado Education Association, the state’s largest teachers union.

But none of the more than a dozen education leaders interviewed by Chalkbeat Colorado are optimistic.

“I hold absolutely no hope that our funding problems might be solved by the governor or the legislature,” said George Welsh, superintendent of the Canon City schools and a long-time advocate for smaller districts.

“It is not realistic to think that the governor and legislature will be able to ‘buy down the negative factor’ in the next few years,” said Chris Watney, president of the Colorado Children’s Campaign.

The key problem is that refunds required by the Taxpayer’s Bill of Rights, a slowing of state revenue growth, automatic increases in base school funding and required support of transportation will leave lawmakers with little extra cash for the 2016-17 budget.

“There aren’t extra dollars, there is no unused pot of money and the legislature does not have the power to create more dollars by printing them, deficit spending or by raising taxes. Thus, lobbying ‘pressure’ won’t succeed here because it can’t,” said Republican Sen. Chris Holbert of Parker, a member of Senate Education.

“I think we’re going to be lucky to keep the negative factor where it is,” said Kathleen Gebhardt, a lead attorney for the plaintiffs in the Dwyer lawsuit.

Some people are looking to changes in the hospital provider fee for short-term relief. That fee is assessed on hospitals to attract higher federal Medicaid funding, with the money paid back out in Medicaid reimbursements. Even though it’s not a tax and can’t be spent for non-Medicaid purposes, the $800 million a year generated by the fee counts against the state’s TABOR revenue cap and helps trigger tax refunds.

Gov. John Hickenlooper wants lawmakers to reclassify the fee so it doesn’t count as state revenue. Doing so would free up money for state spending.

Many education leaders support the governor.

“It’s a short-term strategy that would give us some breathing room,” said Boulder Valley Superintendent Bruce Messinger, who has been a leading voice on school funding.

Hickenlooper was unsuccessful in selling the idea to the 2015 legislature and likely will face a challenge in 2016, particularly with majority Republicans in the Senate, who don’t want to roll back TABOR refunds.

Going to the ballot

The long-term path for education leaders is developing some sort of education-funding ballot proposal for voters.

“I think it’s very likely we’ll have to go to the ballot,” Weil said.

But no one is predicting yet what a ballot proposal would look like. Options include raising the state revenue ceiling, a dedicated tax increase for K-12 or tinkering with Amendment 23.

Constitutional thicket
A variety of constitutional and legal provisions affect the state budget, including:
  • Balanced budget – The state constitution requires this
  • Taxes – TABOR says tax rates can only be raised by voters
  • Revenue cap – The amount of money the state can spend in a year is limited by TABOR
  • Refunds – If revenue exceeds the cap, the excess must be refunded to taxpayers, or lawmakers can propose a ballot measure allowing the excess to be spent
  • Other spending – State Medicaid spending is driven partly by federal requirements, and state law requires transfers to transportation and construction under some circumstances

Kerr and others note a ballot proposal could be a tough sell.

“There are people who have been talking about it all along, but I don’t see any appetite for going back to the ballot at this point,” he said, alluding to voter rejection of a proposed tax increase for K-12 education in 2013.

Any ballot proposal also would reopen discussions within the education community about changing school finance formulas. Both education reform advocates and poorer districts argue the formulas are outdated and inequitable.

“Equity, accountability and innovation … should be top of mind as we look for answers,” Watney said.

Broader constitutional fixes are being discussed in other quarters.

A group of civic and business leaders named Building a Better Colorado is holding public meetings around the state and studying a possible list of constitutional changes, not just to the state budget.

If that group moves ahead with a proposal, it will have to consider education, Gebhardt believes.

“If you don’t have K-12 support it’s going to be very difficult,” she said, because any campaign will need the “boots on the ground” provided by teacher and parent groups.

One last lifeline

There is one other court case still pending that could affect education funding.

A 2011 federal court lawsuit filed by some legislators, other elected officials and private citizens argues that TABOR violates federal constitutional guarantees that states have “representative” forms of government – including legislatures with the power to tax.

The case hasn’t been tried while procedural issues are being considered by the federal courts.

Learn more about school finance in Chalkbeat’s archives

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.”