Expecting a cash infusion after the Colorado Supreme Court gave its blessing to raising local school district taxes, lawmakers are proposing major changes to how the state spends its education dollars.
House Bill 1325 would expand the definition of children living in poverty and qualifying for additional funding and, for the first time, give districts more money for every English language learner enrolled in their schools.
The bill also proposes a matching fund to help districts that have struggled to pass special property tax increases for schools, known as mill levy overrides. By offering state dollars, proponents hope to create an incentive for voters in districts with low property wealth and high tax rates to put more local money into the pot.
Lastly, it proposes a new special committee on school finance — a previous committee met for three years without producing legislation — to work on more changes.
The legislature has about two weeks left in the session and a long backlog of major bills. The bill is set for its first hearing in the House Education Committee this week. A fiscal analysis that would show the impact on individual districts had not been completed as of late Tuesday afternoon.
Lawmakers for years have debated how Colorado funds its schools. In particular, many education advocates say the current system sends too much money to wealthier districts and not enough to those serving the students with the highest needs.
But making big changes had proved too politically challenging until now. Without new revenue, the only way to send more money to districts serving large numbers of students in poverty or with a lot of English language learners would have been to send less to other districts. And no school leader in Colorado wanted to give up resources.
But now, Colorado lawmakers expect to have an additional $91 million to put toward K-12 education in 2021-22 and even more in future years after the state Supreme Court ruled that a proposal to raise district property taxes without getting new voter approval was constitutional.
Education advocates hailed the ruling as a game-changer for Colorado students. New revenue has been hard to come by as voters have repeatedly rejected statewide tax increases for schools.
Bill sponsor state Rep. Julie McCluskie, a Dillon Democrat and former chair of the special committee on school finance, said the impact of disrupted learning over the last year was the greatest on Colorado’s low-income and immigrant communities, where many parents are frontline workers and families have limited internet access.
While it ultimately will be up to local leaders how to spend new money, she hopes having more resources will help districts make up for lost learning time.
“We’re putting more resources into those populations where we anticipate there would be the most learning loss,” said McCluskie, who also serves on the Joint Budget Committee. “I don’t think there has ever been a more important time for us to invest resources into the communities that have been most affected by the pandemic.”
And with the passage of the property tax changes, “we have new money to put into the school finance formula and make sure we’re covering these expenses,” McCluskie said. “We’re able to do this without taking money from elsewhere in the formula.
Instead of distributing this new revenue evenly among districts, the bill would target it toward needier students. Some districts would get less than they would have if the formula remained unchanged.
The new legislation takes several ideas from the previous special committee but leaves behind the most controversial changes. For example, the legislation doesn’t make any changes to the cost-of-living factor, which has had the effect of giving more money to districts that serve wealthy communities and have a strong property tax base.
The current system sets a base dollar amount for each student and then adds extra money based on a number of factors, including district size, cost of living, and how many students qualify for free lunch. A separate pot of money known as categoricals provides more money for students with disabilities and those learning English, among other groups, but that money hasn’t kept pace with growth in the student population.
The new bill would also count students who qualify for subsidized lunch toward the number of students who live in poverty, giving districts more money to support students from low-income families. And districts would get 8% more per-pupil funding for students who are learning English as a new language — about $118 million next school year, according to McCluskie.
These changes would be permanent and on top of one-time money to help these same students that was set aside in the School Finance Act.
The special committee proposed by the legislation would look at whether counting students enrolled in the federal lunch program is actually the best way to measure child poverty and might propose additional changes.
The matching fund to encourage local tax increases proposed in the legislation could prove more controversial than the formula changes.
State Rep. Colin Larson, a Littleton Republican who sits on the House Education Committee, said he has concerns about rewarding communities that have held off on taxing themselves. With the mill levy override matching provision, he’ll likely vote no on the bill. Without it, he’d be an enthusiastic yes.
“This is probably the most significant thing we could do for education,” he said. “The formula has been out of date for at least the last decade if not longer.”
Bill sponsor state Sen. Bob Rankin, a Carbondale Republican and member of the Joint Budget Committee, for years has raised concerns that districts with low property wealth struggle to pass additional school taxes, known as mill levy overrides. These taxes generate an additional $1.5 billion for K-12 education but are concentrated in districts with higher property wealth.
He said putting $10 million to $20 million in a special fund could create an incentive for voters to approve modest local property tax increases, whereas that same money wouldn’t make much difference if added to the $7.8 billion Colorado spends on K-12 public education each year.
“I represent rural and small districts,” he said. “This is an attempt to have equal opportunity for all students no matter what district they live in.”