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.”

More money

What Colorado’s booming economy might mean for the state education budget

More money is forecast to appear below the gold dome (Denver Post photo).

Gov. John Hickenlooper wants to put an extra $200 million into education next year and another $100 million in the 2019-20 fiscal year, but a lot of that money could go to offset hits to districts from anticipated reforms to the state’s pension program and reductions in local tax revenue.

The proposal comes in response to new economic forecasts released Monday that show Colorado having more money than previously expected.

Legislative economists predict that lawmakers will have a whopping $1.3 billion or 11.5 percent more to spend or save in 2018-19 than is budgeted in 2017-18. The forecast from the governor’s Office of State Planning and Budget predicts similar increases in revenue. After meeting the reserve requirement of 6.5 percent, Colorado will have an additional $492 million in reserve for this fiscal year, and even with a higher reserve of 8 percent proposed for next fiscal year, the state would have an additional $548.1 million in 2018-19. 

It’s normal for the forecasts to be slightly different because the economic analysts often use slightly different assumptions. In this case, the governor’s office predicts that the additional revenue will be more spread out over this fiscal year and the next one, while legislative economists think more of the money will be coming in next year. That difference means the legislative forecast shows the state potentially hitting the revenue limits imposed by the Taxpayer’s Bill of Rights, despite lawmakers making more room under the cap just last year, while the governor’s forecast does not.

These are the numbers that the Joint Budget Committee has been waiting for to finalize its recommendations for the 2018-19 budget year. Republicans and advocates for more transportation spending have already seized on the numbers to support a plan to ask voters to approve new debt to pay for road construction and dedicate up to $300 million a year to pay off that debt.

Of course, these forecasts are also inherently speculative – and legislative economists warned these forecasts contain even more uncertainty than usual.

State Rep. Millie Hamner, the Dillon Democrat who chairs the Joint Budget Committee, summed up the message as one of caution about dedicating too much of the new revenue to ongoing expenses. The more that gets committed, the harder it will be for the state to meet all of those commitments in future years.

Those who want to see Colorado spend more on K-12 education have pushed back on the Republican roads bill out of fear that the commitment could make it harder to send more money to schools in the future.

The governor’s budget director Henry Sobanet recommended treating much of this new money as “one-time” funds that should go to “one-time” uses. In a letter to the Joint Budget Committee, he laid out a plan.

In the case of roads spending, he’s recommending an extra $500 million for road construction in 2018-19, but only $150 million in 2019-20. And in the case of education, he’s recommending an additional $200 million in 2018-19 and an additional $100 million the following year.

However, this extra money might not show up in classrooms – or rather, it might show up in a lack of cuts rather than new money.

The governor’s budget request already called for a reduction in the budget stabilization factor of $100 million. That’s the amount by which Colorado underfunds K-12 education compared to the requirements of Amendment 23. In this budget year, it’s $822 million, after a mid-year adjustment. Some of the extra money could go toward reducing it even further.

However, Sobanet said he envisions most of it going to offset reductions in local property tax revenue that will be caused by a provision of the Colorado constitution that governs the ratio between residential and commercial property tax revenue.

It’s also possible that school districts could end up having to pay more toward some sort of agreement on changes to the Public Employees’ Retirement Association, or PERA. The final form of reforms to PERA is far from certain.

“Another downgrade in the residential assessment rate means more state share to keep total per pupil spending up,” Sobanet said. “We know that since the December announcement of property taxes and since we know PERA might be on the table for something, let’s set aside some resources and make sure we can handle this.”

Keep Out

What’s wrong with auditing all of Colorado’s education programs? Everything, lawmakers said.

Students at DSST: College View Middle School work on a reading assignment during an English Language Development class (Photo By Andy Cross / The Denver Post).

State Rep. Jon Becker pitched the idea as basic good governance. The state auditor’s office examines all sorts of state programs, but it never looks at education, the second largest expenditure in Colorado’s budget and a sector that touches the lives of hundreds of thousands of children. So let the auditor take a good, long look and report back to the legislature on which programs are working and which aren’t.

The State Board of Education hated this idea. So did Democrats. And Republicans. The House Education Committee voted 12-0 this week to reject Becker’s bill, which would have required a systematic review of all educational programs enacted by the legislature and in place for at least six years. Even an amendment that would have put the state board in the driver’s seat couldn’t save it.

As he made his case, Becker, a Republican from Fort Morgan in northeastern Colorado, was careful not to name any specific law he would like to see changed.

“I don’t want people to say, ‘Oh, he’s coming after my ox,’” he told the House Education Committee this week. “I know how this works. And that’s not the intent of this bill. It’s to look at all programs.”

But members of the committee weren’t buying it.

State Rep. Alec Garnett, a Denver Democrat, pressed school board members who testified in favor of the bill to name a law or program they were particularly excited to “shed some light on.” If there’s a law that’s a problem, he asked, wouldn’t it make more sense to drill down just on that law?

They tried to demur.

“I feel like you’re trying to get us to say, we really want you to go after 191 or we really want you to go after charter schools,” said Cathy Kipp, a school board member in the Poudre School District who also serves on the board of the Colorado Association of School Boards. “That’s not what this is about.”

Kipp said committee members seemed to be “scared that if their pet programs get looked at, they’ll be eliminated. Why be scared? Shouldn’t we want these programs to be looked at?”

But proponents’ own testimony seemed to suggest some potential targets, including Senate Bill 191, Colorado’s landmark teacher effectiveness law.

As Carrie Warren-Gully, president of the school boards association, argued for the benefits of an independent evaluation of education programs, she offered up an example: The schedules of administrators who have to evaluate dozens of teachers under the law are more complicated than “a flight plan at DIA,” and districts have to hire additional administrators just to manage evaluations, cutting into the resources available for students, she said.

The debate reflected ongoing tensions between the state and school districts over Colorado’s complex system for evaluating schools and teachers and holding them accountable for student achievement. The systematic review bill was supported by the Colorado Association of School Boards, the Colorado Association of School Executives, and the Colorado Rural Schools Alliance.

Lawmakers repeatedly told school officials that if they have problems with particular parts of existing legislation, they should come to them for help and will surely find allies.

Exasperated school officials responded by pointing to the past failure of legislation that would have tweaked aspects of evaluations or assessments — but the frustration was mutual.

“Just because people don’t agree with one specific approach doesn’t mean people aren’t willing to come to the table,” said committee chair Brittany Pettersen, a Lakewood Democrat.

There were other concerns, including the possibility that this type of expansive evaluation would prove expensive and create yet another bureaucracy.

“When have we ever grown government to shrink it?” asked state Rep. Paul Lundeen, a Monument Republican. “There’s a paradox here.”

And state Rep. James Wilson, a Salida Republican who is also a former teacher and school superintendent, questioned whether the auditor’s office has the expertise to review education programs. He also asked what standard would be applied to evaluate programs that are implemented differently in more than 170 school districts across the state.

“If it’s effective more often than not, will they keep it?” Wilson asked. “If it doesn’t work in a third of them, it’s gone?”

State Board of Education members had similar questions when they decided earlier this year that this bill was a bad idea. Many of Colorado’s education laws don’t have clear measures of success against which their performance can be evaluated.

The READ Act, for example, stresses the importance of every child learning to read well in early elementary school and outlines the steps that schools have to take to measure reading ability and provide interventions to help students who are falling behind their peers.

But how many children need to improve their reading and by how much for the READ Act to be deemed effective or efficient? That’s not outlined in the legislation.

Proponents of the bill said outside evaluators could identify best practices and spread them to other districts, but state board members said they already monitor all of these programs on an ongoing basis and already produce thousands of pages of reports on each of these programs that go to the legislature every year. In short, they say they’re on the case.

“The state board, I can assure you, are very devoted and intent to make sure that we follow, monitor, and watch the progress of any programs that go through our department and make sure they’re enacted in the best way possible within the schools,” board member Jane Goff said.