Unfortunately, like most key issues, K-12 funding has become partisan. Often it comes down to a debate centered on whether more funding creates better schools. I want to avoid that particular topic here. It is clear from the November ballot that our school districts believe they need more money to provide a quality education.
The flurry of ballot measures led me to research K-12 funding. From that research, I conclude that a combination of constitutional amendments (the Tax Payer Bill of Rights and Amendment 23) and statutory measures the Public School Finance Act (1994) and House Bill 1369 (2010) have shaped the education funding policies in our state.
School Revenue Sources in Colorado – A Summary
In general, the State and local school districts provide roughly 93 percent of the revenues that fund education. Local school districts receive local property tax allocations but this alone cannot cover school district expenses. The State devotes a majority of its general fund dollars to education. For example, in the 2016-2017 State budget, 39 percent of Colorado’s general fund budget is allocated to education; that’s more than any other program.
Even so, most school districts have also asked voters to approve mill-levy overrides (additional property tax mills) for operation expenses and/or bond measures for capital construction to supplement local property taxes and State funding. For example, according to a report prepared by the State, in 2014-2015 the Poudre School District received $33 million from mill levy overrides and Boulder Valley received $57 million. In Northern Colorado, the only school district without a mill levy override in effect is Greeley District 6
Public School Finance Act (1994)
The Public School Finance Act (the Act) is the primary mechanism for authorizing and distributing K-12 funding by the State. The Act defined the concept of a statewide base — the per pupil funding amount that all districts receive before adjustments are made. The base is adjusted in each school district using a complicated formula that takes into account the school district’s annual pupil count, the district’s local share of revenue, and the district’s cost of living. The purpose of all these adjustments is to equalize funding and the result is that districts receive different levels of per pupil funding.
TABOR and Amendment 23
The Tax Payer Bill of Rights (TABOR) was approved as an amendment to the Colorado Constitution in 1992. It restricts revenues for all levels of government (state, local, and schools). Under TABOR, state and local governments cannot raise tax rates without voter approval and cannot spend revenues collected under existing tax rates without voter approval if revenues grow faster than the rate of inflation and population growth. Revenue in excess of the TABOR limit, commonly referred to as the “TABOR surplus”, must be refunded to taxpayers, unless voters approve a revenue change as an offset in a referendum.
Amendment 23 (2000) was proposed as a reaction to TABOR. Its purpose was to reverse a decade of education budget cuts. Amendment 23 amended the Constitution to require that the statewide base, defined by statute (the Public School Finance Act) be increased by at least inflation plus one percent for ten years and at the rate of inflation thereafter. It also required that total funding for all categorical programs be increased by at least inflation plus one percent for ten years and at the rate of inflation forever.
When the recession hit, the legislature couldn’t fulfill its constitution requirements – it couldn’t balance the State budget and it couldn’t fund K-12 as required by Amendment 23. This quandary led the legislature to pass House Bill 1369 in 2010, which required a reduction in the amount of the annual appropriation to fund the State’s share of total program funding to school districts. This reduction is applied after the total program funding is calculated and is referred to as the “Negative Factor.”
The Negative Factor was intended to reduce funding to school districts to help balance the State’s budget. According to the Colorado Department of Education, the Negative Factor resulted in reductions to State program funding of approximately $1 billion in Fiscal Years 2013 and 2014, respectively, and $880 million in Fiscal Year 2015.1
Comparing Education Funding
In 2016, the national average spending per pupil per year is $11,840. However, in Colorado, the average spending per pupil is $9,120.
As outlined above, each school district is allocated a portion of State general fund dollars. That amount is established by a per pupil base that is adjusted by a complicated formula. Local property taxes assessed within each district, including mill levy overrides in most districts, augment the funding provided by the State. Adding local and state funding together, it is possible to calculate what each district spends per student per year.
In most of our school districts in Northern Colorado the per pupil spending is less than the state average, as the table below indicate:
District 2016 Per Pupil Spending
St. Vrain $7,208
As I said in the beginning, I’m not going to offer an opinion as to whether more funding leads to better education. But it is a fact that per pupil funding in Northern Colorado is, with the exception of the Boulder Valley School District, lower than the State average. The Greeley Area REALTOR® Association and the Loveland-Berthoud Association of REALTORS® support their local school funding ballot measures. Other local associations have chosen not to take positions. Ultimately each voter has to decide if their school district has made the case that it needs more funding and if will spend the money wisely.
1 From Colorado School Districts Fiscal Health Analysis 2013-2015, Colorado Office of the State Auditor, August 2016.
2 U.S. Census, 2016