Gov. John Hickenlooper’s proposed 2016-17 state budget proposal contains a mix of good and bad news for K-12 education, given the financial squeeze facing the state.

The good news is that average per-pupil funding would rise to $7,397 from this year’s $7,284, up 1.4 percent. That would be driven by the constitutional requirement that school funding be increased annually by inflation and enrollment growth.

But there’s bad news in what’s called the negative factor, the device the legislature uses to control school spending and balance the overall state budget. For the last five years, the K-12 community has focused on the negative factor as its key indicator of school finance health.

Hickenlooper’s proposal would peg the 2016-17 negative factor at $904 million, up from $855 million in the current school year.

“I would expect there is going to be a lot of noise around that,” state budget director Henry Sobanet told reporters during a briefing before the budget plan was released late Monday afternoon.

Earlier this year, the Colorado Supreme Court rejected a challenge to the constitutionality of the negative factor, allowing the legislature to continue using it.

Sobanet also had bad news about an extra $70 million in additional funding school districts had hoped to gain in the current budget year.

“It’s out,” he said.

The school funding law passed last spring contains a non-binding clause saying that the 2016 legislature will retroactively increase funding if local revenues are higher than projected last spring. Typically, when local revenues rise the state contribution is reduced in the middle of the school year.

While local property tax revenues are expected to be higher than was forecast, Sobanet indicated the state won’t have the money to meet that promise.

Some districts also are fearful that needed mid-year adjustments in the current budget would force cuts in current school funding.

“We’re not going to support cuts,” Sobanet said. But he said he didn’t know yet if the state can afford the mid-year increases that often are made to cover high-than-projected enrollments.

Overall, the governor’s budget proposes K-12 total program funding of $6.4 billion from state and local funds, up from $6.2 billion this year.

The governor is required to deliver his budget proposal to the legislative Joint Budget Committee at the beginning of November. His plan is by no means the final word on the subject, as the ultimate decisions on the budget are up to lawmakers. A final budget usually isn’t passed until the second half of the legislative session in April.

Colorado is stuck in a paradoxical budget situation. Even as tax revenues rise, state government spending is constrained by a variety of constitutional provisions that in some cases limit state spending and in other cases require certain programs like K-12 to expand.

“I think we are at a point in time where we see many, many years of uncoordinated fiscal policies now colliding with each other,” Sobanet said.

He noted that $830 million would be needed to fully fund the four biggest drivers in the 2016-17 budget – K-12 costs, $289 million in required taxpayer refunds under the Taxpayer’s Bill of Right, refilling the state reserve and paying higher Medicaid costs.

But there’s only $457 million in projected new revenue available to meet those costs.

Learn more about school funding in this archive of Chalkbeat Colorado stories.