money matters

Colorado’s superintendents want (a lot) more money for schools and a new way to divvy it up

PHOTO: Denver Post file
Patyn Hooper, right, and Rowan LaPiano compare their reporting videos during class at Mammoth Heights Elementary School in Parker, Colorado.

Colorado’s superintendents want to change how the state distributes money to school districts – but only if voters are willing to approve a $1.7 billion tax increase for education.

The new formula would give more money to school districts whose students have more needs, but without more money in the pot, many districts would actually lose funding. Hence, the need for a lot more money.

Voters have twice rejected statewide tax increases to fund education, most recently in 2013, but supporters of this new funding model say this time is different. This November, voters approved local tax increases in districts that had previously struggled to raise money, raising hopes that the political climate is shifting. And unlike previous attempts, people who want more money for schools have the backing of local school leaders who will be able to say exactly how a statewide tax increase would benefit students in their districts.

“We have a unique opportunity in that people who have deep knowledge of our schools, this diverse group of superintendents, have reached a consensus that we haven’t seen before,” said state Rep. Dave Young, a Greeley Democrat who has sponsored a bill to enact the formula change pending voter approval of a tax increase.

Young added: “It would be a real mistake at a time when our economy is doing well and we have this sort of collaboration to miss this opportunity to respond to the needs of our students.”

Lawmakers who oppose tax increases look at the large dollar amount attached to this proposal and don’t see much to talk about.

“We probably have more interest in drinking month-old milk than we do to revisit an issue that voters already said, by a margin of 2 to 1, ‘We don’t want to go down this path,’” said state Sen. Owen Hill, the Colorado Springs Republican who chairs the Senate Education Committee.

This proposal lands in a complicated political environment. A bipartisan committee has been meeting to talk about school finance issues, but they’re months away from proposing legislation. Some state officials, including the governor, are more focused on a looming crisis provoked by a constitutional provision that reduces local tax revenue in rural districts. Republicans, meanwhile, have their eye on a transportation bond proposal.

The superintendents who brought this proposal forward have two goals in mind: “equity” and “adequacy.” Equity is how the school funding pie gets divided fairly among districts, and adequacy is the size of the pie.

The proposal calls for a “student-centered” distribution model to replace the state’s school finance formula created in 1994. At its most basic, this approach gives districts and schools more money for students who have more needs, whether that’s learning English or being gifted and talented or both.

This is a national trend in school funding that’s more common at the district level. Denver Public Schools already distributes money within the district using this approach, as does Indianapolis and New York City. The U.S. Department of Education recently invited districts to apply for a “weighted student funding” pilot program that would attach more money to students with more needs and have that money follow students wherever they go. 

Colorado’s current funding model already gives schools more money if they have more students who qualify for free lunch, a proxy for poverty. The state formula also includes factors like cost of living and personnel costs. Money for students with disabilities, students who are gifted and talented, and students who are learning English is in a separate pot and isn’t distributed as part of per-pupil funding.

In examining funding for specific populations, analysts with the Education Commission of the States wrote that so-called “formula funding” – what the superintendents are proposing – provides more equity and predictability for school districts, while keeping money for students with particular needs in a separate fund gives the state more control over how that money is spent but is less stable. In Colorado, that second pot of money for students with additional needs gets larger with inflation, but it doesn’t get larger to account for more students with those needs.

That’s a key difference, superintendents say, between their proposal and the status quo. Their proposal would account for those additional student needs within the per-pupil funding formula. In addition, districts that provide full-day kindergarten would get an entire student’s worth of money for each kindergartner, instead of a little more than half a student’s worth, as they do now. School leaders say this approach is fairer and better reflects the real costs to educate students.

Colorado schools are serving more students and a more diverse student population than they were in 1994, said Walt Cooper, superintendent of the Cheyenne Mountain School District in Colorado Springs, and they’re more accountable for educating those students to the same level as their classmates.

“If you could go back in time and take a snapshot of what students looked like in Colorado in 1994 and what schools looked like and what accountability systems looked like and compare them to now, the world of K-12 is so exponentially different from the world of K-12 in 1994, it’s even hard to draw these direct comparisons,” Cooper said. The School Finance Act has “outlived its usefulness. And it’s not even fully funded.”

In 2000, Colorado voters decreed that per-pupil funding should increase by inflation each year. But the amendment they passed didn’t provide any new money for education. During the Great Recession, lawmakers started applying a “negative factor” or “budget stabilization factor” to reduce the amount by which they funded schools. This year, Colorado schools are getting $6.6 billion in state and local funds – $828 million less than they would if voters’ demands were fully realized. Colorado consistently ranks as one of the lowest states in per-pupil funding.

Cooper said the group working on this proposal started from an assumption that no district should lose money, and if you divide $6.6 billion using the new formula, a lot of districts lose money. To get to a point where no districts are losing money and many are getting more money – in some cases as much as 50 percent more – total annual spending on K-12 education needs be closer to $8.4 billion.

Colorado’s Taxpayer’s Bill of Rights requires that voters approve any tax increases. Either the legislature or private citizens’ groups can place these requests on the ballot, but a tax increase for schools is very unlikely to come from the General Assembly. Republicans have said that transportation, not education, is their top spending priority, and even a roads bill sponsored by the Republican senate president couldn’t get out of a Republican-controlled committee last session because it involved a tax increase. This year, Republicans want to ask voters to approve new debt for road construction without a tax increase.

That leaves private citizens to get something on the ballot. State elections officials have signed off on language for eight potential tax measures that would raise between $1.4 billion and $1.7 billion, each with a slightly different funding mechanism. Supporters of those measures still need to decide which version they’ll pursue.

“The $64,000 question is what is the tax policy and the mechanism that actually generates the revenue,” Cooper said.

Great Education Colorado, which is consulting with the supporters of the ballot measure, sent out an email praising the superintendents’ proposal and Young’s bill as “step one of what we’re calling ‘the Colorado Two Step.’”

“First we establish how new dollars would be fairly distributed,” Great Education Executive Director Lisa Weil wrote. “Then we give voters a chance to do right by kids.”  

Young said Colorado’s school funding situation is dire, and change can’t wait. He’s found a Republican co-sponsor, state Sen. Don Coram of Montrose. Within his caucus, Coram is a moderate on fiscal issues, and his name alone won’t get this bill through Senate committees hostile to the idea of raising taxes. Young said he hopes to find support among rural Republicans, similar to the support they gave to last year’s compromise on a hospital fee with major implications for their districts. And the bill itself does not ask for a tax increase to be placed on the ballot, only that the funding formula be changed if voters approve more money.

Even sympathetic Democrats aren’t sure this is the right approach, though.

Gov. John Hickenlooper said that when it comes to schools, his top priority is getting closer to full funding under the existing formula and dealing with an impending crisis caused by the Gallagher Amendment. That provision in the state constitution caps the share of property taxes paid by residential property owners. As property values have skyrocketed along the Front Range, residential tax rates have ratcheted down, and that’s led to drastic cuts in rural communities with smaller tax bases.

Some state officials would like to change the Gallagher Amendment, but figuring out which change will be acceptable to voters and then selling it is no easy task. That task doesn’t get any easier if it’s sharing the ballot with a transportation bond measure and a tax increase for schools.

“That’s my first priority: What would the voters be willing to consider in terms of changing the Gallagher Amendment so that it stops squeezing rural communities?” Hickenlooper said. “A billion and a half in revenue, I’m not sure what it would take to generate that.”

A bipartisan group of lawmakers have been meeting to look at changing how the state funds its schools. The interim school finance committee spent the off-season gathering information, and its members hope to propose legislation for the 2019 Colorado General Assembly.

Hill, the Republican senator, is vice-chair of that committee, and he said the superintendents’ proposal – “just to fly in with a magic bullet” – undermines the effort to come up with bipartisan solutions.

State Rep. Alec Garnett, a Denver Democrat and the committee chair, said that if Young’s proposal made it into law and if voters approved a major tax increase, he’d have to ask the members of the committee if it makes sense to keep meeting.

Cooper said the superintendents started meeting on their own, informally at first, before the interim committee was even conceived, and they confined their efforts to a narrow focus: how money is distributed to districts. There are still plenty of questions for the committee to work on, including how costs are shared between the state and local districts, another major inequity in Colorado.

Cooper said major policy changes take time, and this one is important.

“If we fall short this year, regardless of how far we make it, we’re further ahead than if we had not gone forward, and we’ll be back next time,” he said. “We will not be easily dissuaded.”

Round up

What Colorado lawmakers did for and to schools in 2018

Jefferson County educators Joel Zigman and Elizabeth Hall march during a teachers rally for more educational funding at the Colorado State Capitol on Thursday, April 26. (Photo by AAron Ontiveroz/The Denver Post)

The Colorado General Assembly’s 2018 session ended with a down-to-the-wire compromise on pension reform that left some teachers feeling bruised, but Gov. John Hickenlooper said there should be no confusion. In a world of competing priorities, education came out ahead.

The 2018-19 budget puts more into K-12 education than the state has spent in years, and Republicans agreed to put ongoing taxpayer dollars into stabilizing the Public Employees Retirement Association system, something they had long resisted.

Making those investments is why lawmakers ended up budgeting far less money into transportation infrastructure, another top priority, than Republican leaders wanted.

“That money went to PERA and school teachers,” Hickenlooper said. “Let’s be bluntly honest about that.”

Hickenlooper, who began the session with a certain futility about increasing education spending, called it “pretty remarkable” that Colorado’s education funding shortfall is down to $672 million, when it was over $1 billion just a few years ago.

“We made major investments in K-12 education,” he said.

The education bills this year were not just about money. Lawmakers also took modest steps to address the teacher shortage, tightened up the school accountability system, made it a little easier for foster children to graduate from high school – and enabled more children from low-income families to take AP exams or just eat lunch at school.

Here’s a look at the education legislation that made it through this year:

School finance

A little more than $7 billion in base spending will go to K-12 education in 2018-19, a 6.95 percent increase from the current school year, with the state portion going up considerably more than the local share.

In addition to mandated budget increases, the bill adds $150 million more for education. That means Colorado fell $672 million short of its constitutionally required level of education funding, a gap known as the negative factor or budget stabilization factor. That gap is the smallest it has been since this budget maneuver was created during the Great Recession, but for some, its persistence is a major source of frustration.

Average per-pupil spending for 2018-19 will be around $8,137, a $475 increase from this year. That translates into millions of additional dollars for many districts. Lawmakers also sent an extra $30 million to cash-strapped rural districts and set aside $5.5 million for state-authorized charter schools to make up for local property tax revenue they don’t get.

This abundance was made possible by a booming state economy and a major compromise last year that eased the impact of constitutional restrictions on state spending. With teachers marching on the state Capitol, legislators urged local school boards to turn some of this new money into pay raises.

Two efforts to change how schools are funded failed to gain traction, though. One bill would have changed how Colorado shares money with school districts, giving much more weight to student characteristics like disability, poverty, and the need to learn English. It would have only gone into effect if voters approved a major tax increase in November.

A proposal to use incentives to get more school districts to ask voters to raise local taxes never even got introduced. It was one solution to the long-standing problem of unequal mill levies around the state, and its proponents hope that an off-season interim committee on school finance will consider it for next year.

Also going to an interim committee: some sort of fix to constitutional provisions that have had the unintended consequence of ratcheting down property taxes in rural districts.

Teacher shortage

Colorado lawmakers set aside $10 million and passed nine bills to address the shortage of teachers in some subjects and in many rural areas. The bills send $2 million to the Colorado Department of Higher Education to work with educator preparation programs and $3 million to school districts to design their own incentives to keep teachers. There are $10,000 fellowships and $6,000 stipends for rural teachers and a “grow your own” program that pays the final 36 credit hours for student teachers if they make a three-year commitment to a district.

There are also two bills that make it easier for teachers moving here from other states to get licensed and another that simplifies the background check process for student teachers.

Several hundred teachers are likely to benefit directly from these programs, but without money to raise teacher pay, especially in rural districts, the impact will be modest. Bills on loan forgiveness and improving school leadership – two strategies supported by research – didn’t pass.

Pension benefits

To address the unfunded liability in the public employee retirement system, legislators raised the retirement age to 64, increased employee contributions by 2 percentage points, and cut retirement benefits. They also boosted contributions from school districts by 0.25 percentage points.

The deal also promises that $225 million a year in taxpayer money will go into the public pension fund, something Republicans had long opposed.

The Colorado Education Association, the state’s largest teachers union, sees the compromise approved in the final hour of the 2018 session as putting too much burden on teachers.

Accountability

Struggling Colorado schools being monitored by the state will have to show more sustained improvement to avoid intervention under legislation passed this session. Requested by the Colorado Department of Education, this bill also clarifies the next steps after a school or district implements a state-ordered improvement plan, allows the state to step in earlier, and requires more communication with parents.

Lawmakers also approved changes to the READ Act, which requires schools to identify struggling readers in the early grades and provide additional support. The update seeks to ensure that schools are using appropriate materials and that they’re using money for its intended purposes. The law also creates a working group to study the READ Act plans developed by schools and recommend additional changes.

There were two changes to the factors schools use to reach state accreditation. One bill gives schools credit for the number of students who enlist in the military after graduation, similar to the credit they get for students who enroll in college, and the other gives schools credit for students who take Advanced Placement or International Baccalaureate classes or who enroll in college classes while in high school.

Colorado lawmakers also took an additional step to prevent schools from pressuring students to take state assessments, prohibiting the use of rewards like pizza parties or raffle tickets.

College credit

Colorado has had a big push in recent years to expand access to concurrent enrollment and AP courses, particularly for low-income students and students of color. Because the courses allow students to get college credit while they’re still in high school, they’re seen as offsetting some of the cost of college, allowing students to graduate with less debt.

Lawmakers created a $500,000 grant program to help high schools cover AP exam costs for students from low-income families. At $94 apiece, the cost can really add up, yet a passing score on an exam can excuse a student from an entire college course. A federal program that reduced the cost of the exam ended in 2017.

Legislators also continued an existing pilot program that pays rural school districts for every student who takes an AP class and exam. The goal is to encourage school districts with fewer resources to offer more college-prep courses.

Lawmakers also passed a bill that requires school districts to provide more information to students and parents about the benefits of concurrent enrollment options, along with deadlines and requirements.

At the same time, they voted to restrict the expansion of so-called “early college” high schools that allow students to stay in school a fifth and sixth year while taking college classes. These programs in Eagle County and Denver Public Schools are small now, but state budget writers feared that their expansion could put a strain on school finance.

Foster youth

Youth in foster care have the lowest graduation rates in the state, much worse than homeless youth. One bill makes it easier for these children to make it across the finish line. It provides money to pay for transportation to allow them to stay in their home school, and it also provides flexibility in graduation requirements.

This makes Colorado one of the first states to comply with federal requirements about providing school transportation for youth in foster care.

School security

After a deadly shooting in Parkland, Florida, students twice marched on the state Capitol, many of them calling for more gun control. In Colorado’s split legislature, gun control is a non-starter. Instead, lawmakers voted to set aside $30 million for school security. The money can be used to provide additional training to school resource officers who are already employed, to train school staff in crisis response, and to improve the physical security of school buildings. It can’t be used to hire new school resources officers, a provision drafted in response to advocates concerned about the criminalization of students of color.

Legislators also dedicated $5 million for interoperable radio systems to allow rural school districts to more directly communicate with emergency responders.

Schools will have to apply for grants to use this money.

Well-being

Colorado elementary school students who qualify for reduced-price lunch could already get the meal for free, thanks to a state program that picks up the 40-cent cost not covered by the federal lunch program.

A new law extends that benefit to middle school students. School nutritionists had seen a big drop-off in lunch participation in middle school, and they hope this program encourages more kids to eat at school. Advocates also hope it reduces the practice of “lunch shaming,” in which kids are denied hot lunch and given crackers or other small snacks to get their parents to pay outstanding lunch debt.

Lawmakers also made a small step to address youth suicide, the second leading cause of death of people aged 10 to 24 in Colorado. Grants will help schools train staff in recognizing the warning signs of suicide and in how to get help for children in crisis.

Early childhood

Lawmakers extended a tax credit for people who donate to child care centers. This credit, which allows donors to take half the value of their donation as an income tax credit, is an important incentive in the eyes of people who run these businesses.

Another bill created a licensing process for substitute early-childhood teachers that advocates hope will ease staffing shortages.

Of more significance to middle- and upper-class families, Colorado lawmakers expanded the income tax credit for child care expenses. Parents can take a percentage of their federal child care credit as a state tax credit. This bill raises the income limit to take advantage of this tax credit from $60,000 to $150,000 and increases the percentage of the federal credit that can be applied to state taxes.

Rural broadband

Money from a fund previously used to subsidize rural telephone service will be invested in broadband construction through 2023. Bringing high-speed internet to remote parts of Colorado is key to economic development and the provision of modern health care. It also will allow students in rural schools to use the same online resources that other students do. This is a long-standing priority of Hickenlooper, realized in his final year in office.

School construction and repair

Colorado will put more marijuana tax money into the BEST program, which gives out grants to school districts for building repairs and, occasionally, new buildings. A bill lifted a $40 million cap on marijuana excise tax revenue going to the program. However, the money won’t go as far as it could have because lawmakers are hesitant to borrow against pot money in an uncertain regulatory environment.

reality check

Colorado lawmakers’ pension compromise raises teacher retirement age, cuts benefits

Colorado General Assembly in the House of Representatives. (Photo by Joe Amon/The Denver Post)

In the final hour of the 2018 legislative session, Colorado lawmakers adopted a compromise plan they hope will bring solvency to the state’s public employees retirement system.

The deal that emerged from 12 hours of negotiations Wednesday was not the deal that many people expected to see when the day started. It raises the retirement age for new teachers from 58 to 64, requires public employees to put an additional 2 percent of their pay into the retirement system, and reduces cost-of-living raises for retirees. The Colorado Education Association said it shows a serious disregard for the thousands of teachers who rallied at the Capitol just weeks ago.

But the teacher rallies were far from the only political backdrop to the negotiations. This is an election year, and a Republican might be sitting in the governor’s office come January, namely Colorado Treasurer Walker Stapleton. His plan for the Public Employees Retirement Association system includes a freeze on cost-of-living increases for retirees until the fund becomes more financially stable, something that could take decades, and no additional taxpayer contributions.

That gave Democrats an incentive to get a deal done this year. And beyond politics, the problems with PERA only increase every year that more money doesn’t go into the system.

PERA is estimated to have an unfunded liability of between $32 billion and $50 billion, endangering retirement benefits down the road, along with the state’s credit rating.

The bill that passed commits $225 million a year in taxpayer money to shoring up the pension system, something long opposed by Republicans, as well as by Democratic Gov. John Hickenlooper. In an unusual late night appearance to lobby for the bill with skeptical Democrats, Hickenlooper stressed the significance of that compromise.

But last minute changes to the bill mean that the taxpayer contribution won’t increase over time. Instead, public employers – like school districts – will put in an additional 0.25 percent.

Colorado teachers can’t participate in Social Security, which means they rely on PERA benefits in retirement. Those are based on a percentage of what they made in their highest earning years, along with other factors. In 2016, the average pension for a school district retiree was $37,000. The bill freezes pensions for two years, then offers 1.5 percent cost-of-living raises, not the current 2 percent.

“We are very disappointed in our elected officials who did not support educators and retirees, and even chose to take money out of their pockets,” CEA President Kerrie Dallman said in a statement emailed after the vote. She called the bill “an unfortunate lesson in politics, reminding us that those in power who represent the people can still be completely tone deaf to their constituents. … This is bad policy done in haste.”

The version of the pension overhaul that passed the Republican-controlled Senate in March called for employee contributions to gradually go up 3 percentage points, to 11 percent, and for cost-of-living raises to go down to 1.25 percent. The version that came out of the Democratic-controlled House spared employees any increase in contributions. The $225 million taxpayer contribution was secured as a set aside in the budget process.

The final version was always going to be somewhere in the middle, but the reaction from Democrats indicates this deal was not the one they had in mind. Several lawmakers asked to be removed as co-sponsors from the legislation.

Brian Eason of the Associated Press reported that the teachers union was willing to accept a retirement age of 63, but no higher. The union lost that battle. The final bill still does not allow teachers to opt into a 401(k)-like defined contribution plan, something the union adamantly opposed.

House Majority Leader K.C. Becker, a Boulder Democrat and co-sponsor of the bill, pleaded with her colleagues to think of the long-term problems that need to be solved.

“We have to reform the system in a way that spreads the burden and has shared sacrifice,” she said. “Some people are not happy that there’s an additional taxpayer contribution. Some people are not happy that there’s an additional employee contribution. But the system is not going to fix itself.”

She said a no vote was a vote to “leave a $32 billion problem unaddressed.”

On the floor of the House, with the clock ticking down, no Democrats argued against the bill, but 25 of them voted against it, including Speaker of the House Crisanta Duran and every Democratic member of the House Education Committee.

On Thursday morning, Duran said she thought the retirement age and the employee contributions in the bill were too high.

“These are tough conversations,” she said. “PERA could have been solvent without the proposal that was passed last night. There were some things they didn’t have to push as hard.”

Some conservative Republicans also voted no in the House – they don’t think this bill does enough to fix the public pension system. But over in the Senate, where state Sen. Jack Tate of Centennial led negotiations, the GOP presented a unanimous bloc of yes votes. All 11 no votes came from Democrats.

Senate Majority Leader Chris Holbert, a Parker Republican, said that the PERA bill represented a compromise for both sides, and he had no criticism of it after all the effort that went into making a deal.

“I see folks on the right saying it doesn’t go far enough, and I heard that people from the teachers union were quite upset,” he said. “In a split legislature, I don’t know how much better it could have got done, but it got done.”

This story has been updated with comments from House and Senate leadership.