Abundance of Caution

In a Trump world, Colorado lawmakers hesitate to borrow against pot money for school construction

Construction crews work on Riverdale Ridge High School in Thornton, the newest in the Brighton 27J School District in May 2017 (Photo by Kathryn Scott/The Denver Post via Getty Images)

More marijuana tax money will go toward school construction starting next year, but the funds won’t go as far as they could have.

That’s because some lawmakers are nervous about borrowing against pot money when the industry faces an uncertain regulatory future. They removed a provision in a bipartisan bill that would have allowed the state to issue more debt for school construction and repay that debt with pot taxes. Their fear is that the state could end up on the hook for that debt if marijuana money went away.

Members of the board that administers school building funds believe it’s likely they’ll use up their borrowing authority later this month for the 2018-19 fiscal year. Going forward, they’ll only be able to approve smaller projects whose cost can be covered with cash grants.

Kathy Gebhardt, vice chair of the Capital Construction Assistance Board, which administers the BEST program, called the fears about borrowing against marijuana money “overblown” and said it means Colorado will fall further behind on keeping its school buildings safe. She contrasted legislator’s caution on pot money to their willingness to borrow against the general fund, which goes up and down with the economy, for transportation projects.

The BEST program – Building Excellent Schools Today – provides grants to replace or repair aging school buildings. Most of its money comes from state school trust lands and marijuana excise taxes and goes out both as cash awards and as certificates of participation, a kind of debt that doesn’t require voter approval.

An independent board reviews applications from school districts with a priority on fixing health and safety problems. The board has never been able to move beyond this “tier one” priority level – though starting this year, the board is also supposed to treat technology upgrades at the same priority level. Many of the school districts that receive money don’t have the property tax base to fully fund their own building needs.

Later this month, the board will approve somewhere from $150 million to $200 million in grants, out of $900 million in requests. Districts have to come up with matching funds depending on their own financial resources.

Gebhardt described reading the grant requests while knowing most of them will not be funded “heartbreaking.” Most of the grants go not to new schools but to basic but pricey repairs like new roofs and HVAC systems.

The marijuana money going into the program has been capped at $40 million a year, even though for the last several years the state has taken in considerably more revenue from pot taxes. A bipartisan bill on its way to the governor’s desk would send 90 percent of recreational marijuana excise tax revenue each year to the BEST program or $40 million, whichever was larger. Of this money, 12.5 percent will be set aside for charter school facilities needs.

This accounts for almost all of the marijuana tax money going to schools – almost none goes to operational expenses – and the only state money going to school building needs.

Legislative analysts predict this change will provide $74 million in pot tax money to the school construction program in 2018-19 and $75 milion the following year.

The original version of the bill would have raised the limit on how much debt the BEST program can issue from $100 million to $110 million next year and $120 million the following year. Using certificates of participation allows the money to go further and fund larger projects like entire new schools, just like taking out a mortgage allows someone to buy a home that costs more than they could afford in cash.

However, some lawmakers and the governor’s office raised concerns about borrowing against marijuana revenue. U.S. Attorney General Jeff Sessions is hostile to legal marijuana, and the Trump administration has sent mixed signals, at one point withdrawing the Obama-era Department of Justice guidelines that have allowed pot to become a multibillion industry in Colorado, only to offer new assurances months later. At the same time, more states are liberalizing their marijuana laws, making it harder to go back.

And so the debt limit, like a credit card limit, will remain at $100 million. That means only $19 million of the new revenue can be used on certificates of participation. At that point, the program will have used up all its debt authority until it pays off some of its existing debt, a years long process.

Gebhardt said that means the state – and local districts – will miss out on the ability to build larger projects at today’s prices.

“Inflation is going up, construction costs are going up, so we can get a lot more bang for our buck trying to build something now instead of saving up and building later,” she said.

Local control

Change in Colorado law sets up a ‘David and Goliath’ school choice battle no one saw coming

PHOTO: Andy Cross/The Denver Post
Paraprofessional Ben Johnson washes of the back window of a bus at the Denver Public Schools Hilltop Terminal November 10, 2017. (Photo by Andy Cross/The Denver Post)

Buses from other school districts already pass through the tiny Sheridan school district, picking up homeless students who are entitled by law to transportation to their home districts in nearby Littleton or Denver.

What if those buses could make a few additional stops, picking up perhaps dozens more students who aren’t homeless but prefer to attend higher-performing schools in other districts — and taking with them tens of thousands of dollars in state funding?

That’s the concern of small, relatively poor districts in Colorado after a last-minute provision tacked onto an unrelated bill in the closing days of the legislative session became law. It allows school districts to run buses through other districts’ boundaries without first getting consent, a change from current law.

“Will we start to see the David and Goliath of school choice, where a large district with lots of resources starts to do a marketing campaign and send buses into smaller districts?” Sheridan’s outgoing Superintendent Michael Clough asked in an interview with Chalkbeat.

The Colorado Association of School Executives, which represents superintendents, is exploring the possibility of a lawsuit. The Sheridan district is among the potential plaintiffs, after publicly opposing this change when it was part of a stand-alone bill earlier in the session, though no district has made a formal decision about legal action.

The lawsuit wouldn’t target the substance of the policy, but the way it was enacted. Colorado’s constitution requires that each bill deal with a single subject, clearly expressed in the title of the bill, and that any amendments also relate to that subject.

The transportation provision in question was slipped into a bill on educational stability for youth in foster care that also has a transportation component. In a signing statement attached to the foster youth bill, Gov. John Hickenlooper said it likely represents a violation of the single-subject rule and would be open to a legal challenge.

“We make no judgement today on whether this language is sound policy,” Hickenlooper wrote of the amendment. “However, we have serious concerns about the process in which this amendment was bolted onto such an important bill.”

Foster youth have the lowest four-year graduation rates in the state, much lower even than homeless youth and students whose parents are migrant workers. The bill seeks to make it easier for these students to graduate by requiring child welfare officials and school districts to work out transportation to the student’s home district when that’s in the child’s best interest. It also creates flexibility around graduation requirements when students do change schools. The bill’s title is “Improving Educational Stability for Foster Youth.”

The tacked-on language, added in the Republican-controlled State Affairs committee five days before the end of the session, sounds relatively benign. It says that a school board “may furnish transportation” to students who are enrolled in the district but who live in another district. The provision applies to all students, not just those who are in the foster system. It also strikes language from an existing law that requires the consent of the school district from which students are being bussed.  

Where did this come from and why was it added on?

State Sen. Owen Hill, a Colorado Springs Republican and chair of the Senate Education Committee, sponsored a bill earlier in the session with the same transportation provision. It was called “Improving School Choice in Traditional Schools” and also contained requirements to standardize the open enrollment process.

Students in Colorado can enroll in any school that has room for them and can meet their needs, but deadlines and procedures vary from district to district. Most students who go somewhere besides their neighborhood school don’t get transportation, something that advocates for school choice have long criticized as a major barrier for students from low-income families, whether they’re moving between districts or within one.

Hill’s bill was opposed by the Colorado Association of School Executives and by the Colorado Association of School Boards. They said allowing districts to run school buses in neighboring jurisdictions at will would represent a serious erosion of local control and call into question the entire purpose of school district boundaries. 

Wendy Rubin, superintendent of the suburban Englewood district south of Denver, raised the specter of neighboring districts offering bus service to more affluent neighborhoods and siphoning off the funding associated with those students while leaving Englewood to educate those with greater needs.

Like Sheridan, Englewood is a small district surrounded by larger, wealthier neighbors that post better test scores.

“If we lose a class of kids, we lose a teacher or we offer one AP class when we used to offer three,” Rubin said. “We do not have the economies of scale to withstand losses of kids of 30 or 40 in a year. We would be cutting programs left and right. And what does that do to the kids who stay?”

Rubin and Clough also worried that the legislation would allow districts to cherry-pick students – offering transportation to, say, a star athlete but telling a student with disabilities that it was unable to meet her needs.

To be clear, both superintendents said they have no reason to believe their neighboring districts have immediate plans to come after their students, but they fear future school boards might make different decisions, particularly if declining enrollment increases competition for per-student dollars. 

Supporters of expanding transportation options say such possible challenges do not outweigh the importance of students being able to pursue the best education available to them. If districts want students to stay, they should offer a high-quality education, not block buses from entering their borders, they say.

Kelly Caufield of the business-oriented education reform group Colorado Succeeds pointed to a 2015 case from Pueblo. The lower-performing Pueblo 60 district is surrounded by the higher-performing Pueblo 70 district, and roughly 150 students who lived in 60 used their open enrollment rights to go to school in 70. Pueblo 70 had 10 bus routes within the boundaries of Pueblo 60 – until Pueblo 60 said no.

“Why should a superintendent worried about neighborhood lines get in the way of that student having access to a better education?” Caufield asked. “This is the exact example where that kid and their family deserve to be in a better district. And if transportation is a barrier, this bill would address that.”

The Colorado Springs area that Hill represents also has numerous districts in close proximity to each other. None of them have weighed in publicly on this issue. Hill said he brought the bill forward at the request of constituents, but none of them testified before the committee.

Hill’s bill passed the Republican-controlled Senate but died in a Democratic-controlled House committee near the end of the session. The next day, the foster youth bill came up for its first vote in the Senate State Affairs committee. Filling in as chair, Hill amended the bill without explaining what his addition would do. With the 2018 legislative session nearing its close, the committee members had a long agenda in front of them representing hours of testimony and votes, with tight deadlines to move bills to the floor. No one asked any questions or raised any objections, and the amended bill was adopted.

Hill has pushed back repeated interview requests with promises to try to talk soon. He’s involved in a heated three-way primary campaign – the election is Tuesday – to unseat sitting U.S. Rep. Doug Lamborn. When his school choice bill was heard in committee, he expressed surprise that the transportation provision was controversial and suggested it could be struck from the bill to save the rest of it.

Caufield said Colorado Succeeds wasn’t involved in the decision to amend the foster youth bill, but said, “we care about what’s good for kids, so we’re excited that it crossed the finish line, even if it’s in a different form.”

Clough said Sheridan is prepared to sign on to a lawsuit. Rubin stressed that she had had only a very preliminary conversation with her school board informing them of the situation and the possibility of a lawsuit.

The law is scheduled to go into effect Aug. 9, but school districts may seek an injunction stopping the transportation provision.

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.