pocket change

Why Colorado lawmakers are fighting over a ‘rounding error’ in school funding

DENVER, CO - January 10: Opening day of the second session of the 71st General Assembly in the House of Representatives at the Colorado State Capitol. January 10, 2018 in Denver, Colorado. (Photo by Joe Amon/The Denver Post)

Fewer students showed up in Colorado this year than predicted, and they were a little better off economically too. That slight discrepancy between the forecast and the actual student count has created some wiggle room in the state’s $6.6 billion education budget. That wiggle room, in turn, has led to a partisan fight over the fate of a few million dollars, less than one-tenth of 1 percent of what the state spends on K-12 education.

Democrats want to hold total education spending steady and send an additional $12.9 million to school districts, an average of $8 more per student. Republicans want to keep average per-pupil spending steady at $7,662 and put $7 million in savings into the general fund.

That’s the substance of the dispute, but it’s also a symbolic fight that could herald a bigger budget battle to come.

“Going into the session, the precursor was how much we would fight over transportation versus education,” said state Rep. Millie Hamner, a Dillon Democrat and chair of the Joint Budget Committee. “And that’s what this would appear to be about.”

Colorado has more money available for the state budget this year, thanks in part to a historic compromise at the end of the last session that freed up room under the revenue cap imposed by the Taxpayer’s Bill of Rights. Republicans want to use that new fiscal freedom to dedicate $300 million a year toward a transportation bond program. The governor’s office has proposed an amount less than half that.

Democrats, meanwhile, want to use that extra money for a range of needs, including putting more money toward K-12 education. Since the Great Recession, the state has not funded schools at the levels dictated by the state constitution, instead applying a “negative factor” or “budget stabilization factor” to reduce the total amount. But every dollar that goes toward paying down the negative factor is a dollar that isn’t available for roads.

“This year you would think it would be easier because we have more money, but that is not what is happening,” Hamner said. “There is so much pent-up need.”

A bill that makes mid-year adjustments to school funding is now going into its fifth round of debate because the two sides can’t agree. The Republican position prevailed on the Joint Budget Committee back in January, but when the bill got to the floor of the state House, Democrats amended it to add money back in. But in the Senate Appropriations Committee, most of that money got stripped back out, returning the bill to the form it had when it left the Joint Budget Committee. Then the Republican-controlled state Senate spent nearly two hours over two days in fierce debate over the bill as Democrats argued in vain to keep the $7 million in schools.

This week, House Democrats, joined by a few Republicans, declined to accept the Senate amendments. The bill is going to conference committee to see if some compromise can be worked out.

“Our K-12 system is significantly underfunded,” state Rep. Brittany Pettersen, a Lakewood Democrat and chair of the House Education Committee, argued on the floor of the House. “We have the opportunity with the reduction in the pupil count to ensure that our school districts can benefit from the increased funding, and they’re not cut in the middle of the year.”

On the Senate floor, state Sen. Kevin Priola, a Republican from Brighton, called the $7 million a “rounding error” in the billions the state spends on K-12 education – yet it’s a rounding error that Republicans very much want to see land in the general fund.

“The JBC made that decision because there are a lot of needs around our state, and we are holding the line,” said state Sen. Kevin Lundberg, a Berthoud Republican and member of the Joint Budget Committee. “That money goes into the general fund, and that money is available for all the other needs of our state.”

It’s not clear what will happen at conference committee. Both sides have staked out hard positions.

Meanwhile, the lack of a resolution on the mid-year funding adjustment for this year leaves some uncertainty about the 2018-19 K-12 education budget – which the Joint Budget Committee is supposed to debate next week. State law says that the negative factor can’t be any larger than it was the previous year, and budget analysts use that number as a starting point when they draft the education budget.

But right now, no one knows how big the budget stabilization factor is for the 2017-18 budget year because the legislature hasn’t agreed on the mid-year adjustment. The Democratic proposal would leave a budget stabilization factor of $815 million, while the Republican proposal would land at $822 million.


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.