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

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.

Investment strategy

Here are the initiatives Memphis’ education philanthropists will focus on in 2018

PHOTO: Matt Detrich/The Indianapolis Star
A charter leader from Indianapolis, Marcus Robinson is now CEO of the Memphis Education Fund, a philanthropic collaborative that invests in education improvement initiatives for Memphis schools.

A Memphis philanthropic group has shed its “Teacher Town” name but still plans to spend this year recruiting new teachers while also investing in growing the city’s single-site charter operators.

Unlike similar organizations in other cities across the country, the Memphis Education Fund plans to center its search locally — by helping local universities and groups prepare teachers for the challenges of urban education.

Originally called Teacher Town, the fund was created in 2014 by Memphis education leaders and local philanthropists with a goal of transforming Memphis into a destination city for talented teachers. That vision built on a major investment by the Bill & Melinda Gates Foundation to improve teaching in the city.

In 2016, the group adopted a broader goal of improving all schools; brought in a new leader, Marcus Robinson, from Indianapolis; and joined Education Cities, a national collective of local groups seeking to reshape schools in their cities

In part inspired by changes that have taken place in Indianapolis, where Robinson had worked as a charter leader, Education Cities coordinates local groups advocating for the “portfolio model,” a vision in which cities have more charter schools and let district schools operate more like charters.

Robinson told Education Cities a year ago that his next step for Memphis would be “to unite everyone around a common set of operating principles, expectations, and evaluations to create a level playing field for each operator to perform optimally.” This appears to be in line with the portfolio vision, which aims to give all schools flexibility to operate as they see fit, while holding them equally accountability for results.

But instead of bringing the Shelby County Schools district and local charter operators closer together, 2017 saw them waging open competition for students.

For 2018, Robinson is tackling priorities that are not likely to inflame divisions. The fund will continue to focus on principal training, along with helping single-site charter organizations, boosting reading skills among the city’s youngest students, and recruiting new Memphis teachers.

“We’re hell-bent to fill classrooms with teachers,” said Robinson, pointing to elementary schools as having some of the greatest need.

Memphis will need an estimated 3,600 new teachers by 2020, said Lesley Brown, who directs how the fund invests its money to attract, develop and retain talent for local schools.

Rather than recruiting teachers from outside of Memphis, Teacher Town’s original focus, Robinson said the fund is strengthening partnerships with local universities and teacher preparation programs, such as one launched at Rhodes College in 2016 with the help of a $7 million gift from the fund.

The Memphis Education Fund receives support from several local philanthropies, including The Pyramid Peak Foundation and the Hyde Foundation. (Chalkbeat also receives support from Hyde; read about our funding here.)

Robinson added that the fund also is ramping up its support for single-site charter operators, such as helping teachers implement new literacy curriculum at Memphis Delta Preparatory Charter School and STAR Academy Charter School.

“There’s less of an appetite for national charter organizations to move into Memphis,” he said. ”The next phase isn’t national CMOs (charter management organizations), but how do we encourage single-site schools to evolve.”

The group has doled out such grants to charters as part of a larger effort to boost student reading levels and develop teacher training for Core Knowledge Language Arts and KIPP Wheatley.

“Early literacy is a huge focus,” Robinson told Chalkbeat. “When we look at the test scores, early elementary scores are horrific. What’s the root? Access to quality literacy instruction.”

Paying for school

Sweeping study proposes major changes to the way schools are funded in Michigan

Michigan needs to change the way it funds education so that schools get more money for students who need extra attention — such as those who live in poverty and those who don’t yet have a strong command of the English language.

That’s the top recommendation from a prominent group of educators, policymakers, and business leaders who have been studying Michigan’s school funding system for much of the past two years.

While many states use a complex formula that gives schools more money if they serve children facing extra challenges, Michigan has long used a system that distributes the same amount of money for virtually all students, regardless of their needs.

The state provides some extra funding for students with disabilities — but not nearly enough, according to a state study last year that found schools across Michigan are getting $700 million less a year than they need to serve those students.

The study released Wednesday recommends a major restructuring so that schools would be fully funded for special education programs and would get extra funds to provide resources to students who need extra help. With that money, schools could offer lower class sizes, add counselors and social workers, and give teachers more support, the report says.

The study was conducted by Augenblick, Palaich and Associates on behalf of the Michigan School Finance Research Collaborative.

The collaborative — including top business and education leaders across the state — came together in 2016 after an earlier “school adequacy study” was largely ignored by political leaders.

The earlier study, which was funded by the state legislature, recommended that the state significantly increase the amount of money it sends to schools per student.

The collaborative hopes this new more robust study, which clocks in at more than 300 data-packed pages, will have a greater impact.

Since this study used multiple methods to determine the right funding level for schools, it will be more difficult to ignore, the group hopes.

The study — paid for with $843,000 from major foundations and 18 county school districts — included interviews with hundreds of educators, including district and charters school teachers. Those interviews helped researchers determine how much money schools need to more effectively do their jobs.

The study examined geographic cost differences in different parts of the state, labor cost differences, and other factors and determined that schools need approximately $9,590 each for students who don’t have special needs, including funds that would come from the state and federal governments.

The study recommends that schools get 35 percent more for students living in poverty, between 50 and 70 percent more for students who are learning English, 70 percent more for students with mild disabilities and 115 percent more for students with moderate disabilities.

Among other recommendations in the  report is that charter schools receive the same per-student funding as districts. Currently, the state’s funding system pays some districts more per student than others based largely on historic funding levels as opposed to current needs. Some districts — including most charter schools — are currently getting around $7,600 per child from the state while others get thousands of dollars more

It’s difficult to compare how much funding schools are getting now with the proposed $9,590 per student because schools get a mix state and federal dollars and the $9,590 doesn’t include things like transportation dollars.

The report suggests that the state use a new approach to student transportation in which transportation dollars are distributed differently, taking into account differences between urban and rural school districts.

The report did not put a price tag on the cost of implementing the recommendations and did not spell out how Michigan could come up with the extra money. But members of the collaborative said they hope lawmakers will consider the report as they make policy changes. 

“The issue here is not about whether you live in Farmington or whether you live in Ingham County, it’s about every child ought to have the opportunity to be successful and that ought to be our goal in Michigan,” said Randy Liepa, the Superintendent of Wayne County’s intermediate school district. “I don’t think there will be significant pushback on that.”

The findings were released Wednesday morning, with press conferences planned in Lansing, Grand Rapids, and in the Detroit area.

Read the full report here: