School Finance

EdNews guide to Amendment 66

When Coloradans cast their votes on Amendment 66 this fall, they will be making a historic decision on both how much money to devote to schools and on how that money is spent.

LogoThe proposed constitutional change would increase state income rates, with the additional revenue earmarked for P-12 education.

But the amendment is joined at the hip to Senate Bill 13-213, a law passed earlier this year that significantly changes how funds are allocated to school districts. If the amendment is defeated, the law doesn’t go into effect.

EdNews has been following the issue since before SB 13-213 was introduced in the legislature last winter. What follows is a guide to what the law and the amendment would do.

Dollars and cents

In this guide

Current spending: The state and school districts currently spend about $5.5 billion a year on school operating costs, called total program funding. Overall school spending is higher, more than $10 billion a year, including payments on bonds and spending of federal and other local funds that aren’t included in total program funding.

New revenue: Passage of A66 would raise about $950 million in new state revenue in its first year, rising to about $1.01 billion in 2015-16, the first year the new funding formula would go into effect.

Proposed spending: The P-12 budget in the first year would rise to about $6.4 billion because of extra spending required by SB 13-213. Average statewide per-pupil spending would rise from the current $6,652 to an estimated $7,426.

“Optional” spending: Parts of SB 13-213, such as grants for innovative programs, additional funding for special education and gifted and talented students and charter school facilities funding, might or not be fully funded in the first year, depending on how much revenue A66 actually brings in. Legislative staff analysts estimate A66 revenues could be $300 million short of funding all the bells and whistles in SB 13-213.

Back to square one: On a per-pupil basis, A66 would bring average statewide per-pupil funding to $7,426, about $200 higher than the $7,242 per student spent in 2009-10, the high point of school funding before the recession forced the legislature to cut more than $1 billion from what funding would have been otherwise.

What the new system would do

The state’s current school finance system attempts to achieve “equity” in school funding by giving different districts varying amounts of per-pupil funding to account for the higher costs of educating students in small districts, for the greater expense of teaching at-risk students and for staff cost of living in more expensive regions of the state.

The SB 13-213 system makes a similar attempt to achieve equity, but it uses different “weights” to do that. Fewer districts would receive compensation for size, and the cost-of-living factor would be eliminated. Instead, districts with the highest concentrations of at-risk students would gain the most from the new plan.

Here are the key features of the SB 13-213 system:

Base funding: The starting point would be per-student funding in 2013-14, the last year of the old finance system is A66 passes. Spending would increase annually by inflation.

Early education: A key feature of SB 13-213 would be full funding of half-day preschool for the estimated 20,180 at-risk students eligible for the Colorado Preschool Program. There’s not enough funding now to serve all eligible students. (The preschool program uses a different definition of at-risk that the K-12 system does.) The new system also would provide funding of full-day kindergarten for families that want it. (Many districts provide full-day kindergarten now. Some pay for out of their own funds; others charge parents tuition. Half-day kindergarten is free, but kindergarten is optional for families; mandatory school attendance laws don’t apply until first grade.)

At-risk students: The new system proposes a major shift of funding to at-risk students, currently defined as children eligible for free school meals. (There’s endless debate over whether that is the appropriate “proxy” for identifying whether students are in fact at risk of falling behind academically.) SB 13-213 proposes no change in that definition and would expand it to include students eligible for reduced-price meals.

Under the current system districts can receive no more than 130 percent of base funding for at-risk students. The new plan would give some districts 140 percent of base funding for at-risk students and English-language learners. In addition to expanding the definition of at-risk, students who are both at-risk and ELL would be counted twice. (Students could be classified as ELL for five years, as compared to the current two years.)

Money for reform: Recent education reform laws, such as the educator evaluation law (Senate Bill 10-191) have been criticized because they were passed without state funding for implementation. The new system would include a $411 per-student payment to all districts (called the Teaching and Leadership Investment) intended to help districts pay for rollout of new content standards, new tests and the new teacher evaluation system.

“Backpack” funding: An article of faith for many education reformers is giving schools and principals greater autonomy in spending. SB 13-213 gives a nod to that ideal, saying principals should have more flexibility in spending the additional state funding for at-risk students. But, in one of the many political compromises made to get the bill passed, superintendents and school boards retain review power over principals’ plans.

Innovation grants: The new system proposes a $100 million fund, overseen by a governor-appointed board, that would make grants to school districts for programs such as longer school days and years. The exact amount of money available would depend on how much revenue A66 actually raises.

Capitol signing ceremony
Gov. John Hickenlooper shakes hands with Sen. Mike Johnston after signing SB 13-213.

Counting students: Under the current finance system, attendance is counted in a narrow time period around Oct. 1 every year. The new system would use a method called average daily membership, under which student attendance is tallied throughout the year. The idea is that a more accurate counting system means that districts will get funding for students actually in classrooms. The new counting system would take effect in 2017-18 because of the time needed to set it up.

Charters: The new system’s funding mechanisms for at-risk and ELL students will apply to both district-chartered schools and to schools overseen by the state Charter School Institute. The state also would supply additional funding for institute schools, and both types of charters would receive increased support for facilities costs. The bill did not give district charters a mandated share of local tax override revenues, which was a major goal for charter interests and a disappointment when it didn’t happen. So SB 13-213 advantages institute schools more than it does those overseen by districts.

State and local shares: SB 13-213 creates a formula for determining how much each district should contribute to total costs through its property taxes and how much the state should be responsible for. The formula uses property values, income of district residents and percentages of at-risk students.

Under that calculation, many districts are currently raising less local revenue than they could – about $81.8 million statewide. SB 13-213 does not reduce the amount of state money to such districts, but they theoretically could spend more money on their students – if voters approve local tax-rate increases. With full district support the average statewide per-pupil funding is estimated at $7,522 instead of $7,426.

Everything else: In an effort to attract support from wide segments of educators and interest groups, Democratic Sen. Mike Johnston of Denver loaded SB 13-213 with a variety of other provisions, including more money for special education students, greater flexibility for districts in raising local tax override revenues, state matching funds for poor districts to increase local taxes and additional funding for students being educated in juvenile treatment and detention facilities.

Stacks of cashExtra cash: Even though the new system wouldn’t kick in until 2015-16, the new tax revenue would start flowing next Jan. 1 if voters pass A66. That “early” revenue, about $1.45 billion, currently is set to flow into two reserve funds for use later and into an educational technology fund. Up to 40 percent of the money would go to the Building Excellent Schools Today construction program.

A23 vs. A66: There’s a key policy question embedded in the A66/SB 13-213 proposal. The current finance system is driven by Amendment 23, a 2000 constitutional change that requires base school funding increase every year by enrollment and the rate of inflation.

That requirement would be stripped from the constitution by A66, although the inflation requirement remains in SB 13-213. But because that’s just a law, it could be changed by future legislatures.

A66 creates a new requirement that 43 percent of state general fund revenues be earmarked for basic school funding. That could mean dollar amounts go down when state revenues decline during a recession. The new revenue produced by the higher tax rate would be deposited in a separate education fund and dedicated to school innovations.

Some education leaders are nervous about the changes, fearing they provide a less reliable guarantee of school funding than A23 does.

Other backers of A66 argue that making the change is vital to remove the pressure on other state spending that is forced by a constitutional guarantee of increased school spending. Other observers note that the A23 guarantee was weakened during the recession when lawmakers reinterpreted the amendment and found a way to cut K-12 spending by about $1 billion from what it otherwise would have been.

How it’s paid for

Tax rates: A66 increases individual tax rate on adjusted income from 4.63 percent to 5 percent on incomes up to $75,000. Income above $75,000 would be taxed at 5.9 percent. Small business owners who file taxes as individuals would be affected. (The rate was 5 percent until 2000.)

Your tax bill: Legislative analysts who prepared the state voter guide estimate that A66 would increase taxes by $97, or 8 percent, for taxpayers with gross income of $50,000 and taxable income of $26,300. At the higher end, taxes would increase 18 percent, or $1,281 for a taxpayer with gross income of $200,000 but taxable income of $154,000 after deductions and credits.

How will we know if it works?

SB 13-213 requires a series of reports on the new system’s costs and on its return on investment, plus creation of a state website that would include data on individual schools’ spending, including information on staff salaries and benefits. The first cost study wouldn’t be done until 2016, and the first return on investment study in 2020.

What the sides are saying

Colorado Commits to Kids logoThe campaign over a new system as complex as A66/SB 213 inevitably is reduced to sound bites, slogans and oversimplification.

Supporters, organized by a committee named Colorado Commits to Kids, argue that A66 would lead to smaller class sizes, more individual attention to students, restoration of programs that have been cut, improved student achievement, more accountability and a better educated workforce to fill the jobs of the future – all while keeping Colorado taxes low compared to neighboring states.

The amendment is widely supported by school administrators, teachers, education advocacy groups and liberal-leaning think tanks; the business community is split.

Opponents argue that the new system doesn’t provide real education reform, doesn’t have effective accountability measures, that more spending doesn’t necessarily yield better student achievement and the Colorado’s economic recovery is too fragile to bear higher taxes. Critics also point out that part of the higher taxes paid by residents of larger and wealthier counties won’t go back to their schools but to districts elsewhere in the state.

Opponents include conservative advocacy groups, pretty much every Republican elected official and some business groups. There’s a range of opinions among school boards and school board candidates, often reflecting local community views about higher taxes.

The prospects

Campaign logoMany observers believe the A66 election boils down simply to whether a majority of citizens who stir themselves to vote are willing to raise the income taxes they pay. Coloradans have been skeptical about statewide tax increases in recent decades (see this EdNews story for the history), although voters have a history of supporting local increases.

The vote is expected to be close, regardless of whether A66 passes or fails.

Proponents, having raised about $5 million through the end of September, are much better funded and organized than opponents, but the campaign has been relatively low-key. Colorado Commits has been running a steady TV ad campaign throughout the state but also is focusing heavily on social media, door-to-door canvassing, phone banks and get-out-the vote efforts.

Turnout generally is lower in odd-numbered years, when there are no high-profile governor, Senate or other races to draw voters. Turnout this year also is expected to vary locally, depending on the intensity of school board and local government races in different towns and counties. The election is being conducted with mail ballots, so all registered voters receive ballots at home, but it’s up to them to return them by mail or at voting centers.

Don’t forget the marijuana tax

The only other issue facing all voters statewide this year is Proposition AA, and it also has an education component.

The measure would impose a 15 percent state excise tax on the average wholesale price of retail marijuana, with the first $40 million of that revenue going to the BEST program. (Revenue is expected to be less than $40 million in the first two years of the tax.)

Proposition AA also would impose a 10 percent sales tax on retail marijuana sales, with that revenue going to state regulation and enforcement efforts. (Medical marijuana would not be taxed.) The state voter guide (link in the grey box above) has more information on the proposition.

Voter information

Image of voter putting ballot in ballot box.Election matters generally are handled by county clerks. So if you have questions about your registration, receiving a ballot, how to return your ballot or other questions, contact your local clerk’s office. This page on the Department of State’s website has links to clerk’s offices.

If you’re registered, your ballot should arrive in the mail shortly, as clerks can mailing them out starting Tuesday, Oct. 15.

If you’re not registered, a recent change in election law makes it possible to register online through Oct. 28 or in person at a county clerk’s office through Election Day, Nov. 5. You can check your registration or register online here.

Alliance

Memphis just gained an important ally in its legal battle with Tennessee over school funding

PHOTO: MNPS
The board for Metropolitan Nashville Public Schools voted Tuesday to become a co-plaintiff in Shelby County Schools' funding lawsuit against the state of Tennessee.

For more than two years, a funding lawsuit by Memphis school leaders has been winding through the state’s legal system.

Now, as the litigation inches closer to a court date next year, Shelby County Schools has gained a powerful ally in its battle with Tennessee over the adequacy of funding for its schools and students.

The board for Metropolitan Nashville Public Schools voted unanimously Tuesday to become a co-plaintiff in the case.

The decision ends almost three years of talk from Nashville about going to court.

In 2015 at the urging of then-director Jesse Register, the district’s board opted for conversation over litigation with Gov. Bill Haslam’s administration about how to improve education funding in Tennessee.

But Register moved on, and the board’s dissatisfaction grew as the percentage of state funding for the district’s budget shrank. Adding to their frustration, Haslam backed off last year from an enhanced funding formula approved in 2007 during the administration of his predecessor, Phil Bredesen.

“We’ve just come to grips with the harsh reality that we are a chronically underfunded school system,” said Will Pinkston, a board member who has urged legal action.

Nashville’s decision is welcome news for Memphis. A statement Wednesday from the state’s largest district called the lawsuit “the most important civil rights litigation in Tennessee in the last 30 years.”

“When you have the two largest school districts in Tennessee on the same side, I think it’s very powerful,” added former board chairman Chris Caldwell, who has championed the lawsuit in behalf of Shelby County Schools.

Both boards are working with Tennessee-based Baker Donelson, one of the South’s largest and oldest law firms. It has offices in both cities.

“We believe that our original case had a strong message about the inadequacy of education funding in Tennessee,” said Lori Patterson, lead attorney in the case from Memphis. “We believe that having the second largest district in the state join the suit and make the same claims only makes the message stronger.”

PHOTO: TN.Gov
Gov. Bill Haslam

Haslam’s administration declined to comment Wednesday about the new development, but has stood by Tennessee’s funding model. In a 2016 response to the Shelby County lawsuit, the state said its formula known as the Basic Education Plan, or BEP, provides adequate funding under state law.

But Shelby County, in its 2015 suit, argues that not only does the state not adequately fund K-12 schools, it doesn’t fully fund its own formula. And the formula, it charges, “fails to take into account the actual costs of funding an education,” especially for the many poor students in Memphis. To provide an adequate education, the lawsuit says the district needs more resources to pay for everything from math and reading tutors to guidance counselors and social workers.

States often get sued over funding for schools — and frequently lose those cases. In Tennessee, state courts heard three such cases from the late 1980s to the early 2000s, siding with local districts every time. Those suits keyed in on built-in inequities in the state’s funding formula that cause some districts to get more money than others.

This time, the argument is about adequacy. What is the true cost of educating today’s students, especially in the shift to more rigorous academic standards?

Tennessee is also the defendant in a separate funding lawsuit filed in 2015 by seven southeast Tennessee school districts including Hamilton County Schools in Chattanooga.

Pinkston said Nashville opted to join the Memphis suit because its arguments are most applicable to the state’s second largest district. “Our student populations are very similar in terms of high socioeconomic needs,” he said.

transportation

Parent concerns prompt Denver Public Schools to change how it’s spending a chunk of tax dollars

PHOTO: RJ Sangosti/Denver Post
An RTD bus heads downtown along Colfax Ave. in 2016.

Denver Public Schools is changing course on how it will spend $400,000 in local tax dollars earmarked for student transportation after parents and community organizations claimed the district had not followed through on a promise to increase options for high school students.

The dollars are part of a $56.6 million tax increase voters approved in November. This school year, the district allocated $273,000 to buy bus passes for 630 additional students at two schools: Northfield High and Denver School of Innovation and Sustainable Design. However, it earmarked the remaining $127,000 to pay for transportation for special needs students.

Superintendent Tom Boasberg announced Monday evening that the $127,000 set aside for special needs transportation would be immediately reallocated so that all $400,000 is being spent on bus passes for high school students.

“We’ve heard loud and clear from the community,” Boasberg said.

Parents and other advocates say that while the reallocation is a move in the right direction, it doesn’t relieve all of their worries about how the money will be spent.

“That’s great,” parent Karen Mortimer said. “But what is your next step?”

Transportation is a hot-button issue for Denver Public Schools. The district has been nationally recognized for its school choice system, which allows its 92,000 students to request to attend any one of its more than 200 schools. However, DPS does not provide transportation to most students who choose a school that is not the assigned school in their neighborhood.

Critics argue that not providing transportation to all students leaves families who don’t have a vehicle or the means to transport their children across town with no choice at all.

Nearly half of the district’s 20,623 high school students — 9,256 — don’t qualify for DPS transportation because they don’t attend their assigned schools, according to numbers presented to the school board at a work session Monday night.

Another 4,394 don’t qualify for transportation because they live within three and a half miles of their assigned schools, a distance the district considers walkable.

In a bid to reduce those numbers, a committee of 75 parents, students, teachers and taxpayers tasked with recommending how to spend the tax revenue suggested earmarking $400,000 each year for a “new effort to increase high school students’ access to high quality schools and educational opportunities through greater transportation options.”

Whereas most ideas for how to spend the $56.6 million in tax revenue came from DPS staff, the idea to expand transportation originated with the committee members.

The final recommendation, which was adopted by the school board, said DPS would “work with community stakeholders to secure matching funds, and design and implement a test effort to positively impact students,” which has not yet happened.

If the test effort wasn’t working, the recommendation said, the district could use those funds “for other efforts to increase access to educational opportunities.”

In a statement Friday, Superintendent Tom Boasberg said the district was using the funds “as promised,” a contention advocates disputed, to pay for transportation for high school students and students with special needs. DPS saw an increase this year of 78 students whose needs exceed the district’s capacity to serve them and who are being bused elsewhere by third-party companies, according to a district spokeswoman and information provided to the school board.

But Boasberg said Monday that as of this month, the $127,000 that was earmarked for special education transportation would be spent on high school students instead. District officials estimated that sum would buy an additional 370 bus passes. Boasberg said they “look forward to a discussion with the community” about how to distribute them.

Meanwhile, community members said they’re still confused about how DPS distributed the 630 additional passes it already purchased with the $273,000 in tax revenue.

“The community was left out of the loop,” said Matt Samelson of the Denver-based Donnell-Kay Foundation, which has been pushing for the district to come up with a plan for how to use the $400,000 before February, when families must make their school choices for next year. (The foundation is a financial supporter of Chalkbeat).

District spokeswoman Nancy Mitchell told Chalkbeat that most of the 630 passes went to students at Northfield High, a comprehensive high school that opened in northeast Denver in 2015. The district had been providing yellow bus service to Northfield because the Regional Transportation District didn’t serve the area. But it does now, Mitchell said, so Northfield students who meet the district’s criteria for bus passes got them this year.

To qualify for transportation, high school students must attend their assigned schools and live more than three and a half miles away. District policy allows other students to receive transportation, too. That includes those learning English as a second language, for example, or those attending certain types of schools, including magnet and Montessori schools.

Students at Denver School of Innovation and Sustainable Design, which also opened in 2015, received a portion of the 630 passes because the district “determined DSISD most resembles a pathway school for purposes of transportation, as they do not have an enrollment boundary,” according to a statement from DPS spokeswoman Jessie Smiley.

“Pathway” schools are alternative schools that serve students who’ve struggled elsewhere. DSISD is not a pathway school. It was rated “blue” this year, the highest rating on the district’s five-color scale.

Not counting the students who received the 630 extra passes purchased with the tax money, 2,565 high school students were eligible this year for Regional Transportation District bus passes, according to district officials. That’s up from 2,376 last year. In addition, nearly 5,000 high school students qualify for yellow bus service because they attend a school in an “enrollment zone,” which is essentially an enlarged boundary that contains several schools.

Boasberg said that while the district would like to provide transportation to even more students, it must balance spending money on buses with spending money in classrooms. DPS already spends $26 million of its nearly $1 billion budget on transportation, according to information provided to the school board. Even if it wanted to hire more drivers, district officials said they’re having a hard time finding them in a thriving economy; DPS is down 40 drivers this year.

To come up with a solution, Boasberg said the district must collaborate with the city and the Regional Transportation District, which has commissioned its own task force to come up with new pricing recommendations. DPS officials have been participating in that group.

“Ultimately, RTD has assets and abilities as a transportation entity to specialize in what they specialize in,” Boasberg said at Monday’s school board work session. “Our specialty is in educating students. The more we can be collaborative with RTD … the better.”

But advocates said participating in other agencies’ processes isn’t enough. DPS should be leading its own investigation into how to expand transportation options by gathering parents, students and community members to come up with ideas, they said.

“There have been lots of conversations but DPS hasn’t led any of them,” Samelson said.

Unlike other programs and initiatives funded by the tax increase and suggested by district staff, the transportation expansion proposal hasn’t gotten the attention it deserves, he said.

“We’re trying to help the district increase access to schools for students but we feel pushback, we feel stonewalled, we feel like we have to argue our way into this premise that increased transportation is good for kids,” Mortimer said. “We just don’t understand it.”