For many school districts across Colorado, much of this year’s legislative session has come with swells of emotion, starting with a long-awaited moment of celebration when lawmakers and Gov. Jared Polis committed to funding districts to the level required by the state constitution for the first time since the Great Recession.
Even while fulfilling that promise, lawmakers still won’t meet the full funding needs of school districts, but many education advocates and leaders have echoed one another in saying it’s a significant step in the right direction.
Now, in the final weeks of the session, some of the excitement shared by districts is turning into something else: angst.
Serious questions about the long-term future of school funding are weighing heavily over education organizations and district leaders, who have been waiting for legislation that could significantly change how Colorado schools are funded and how much state funding they receive.
Colorado’s school funding formula has distributed dollars to Colorado districts the same way for 30 years, despite regular legislative attempts to modify it. The school funding formula largely doles out funding to school districts based on the number of students they educate and the number of kids with additional needs they serve, including students with disabilities, kids who come from low-income households and those learning English.
The funding formula will likely remain in place next year as lawmakers consider a bill introduced last month that carries few changes — apart from increasing base funding per student by about $420, up to $8,496 and designating a permanent source of additional funding for rural districts.
The legislation cleared the Senate on Friday and is up for consideration next by the House.
But there has been more reason to believe lawmakers could finally move forward with revisions this year that would take effect beginning in the 2025-26 school year. After a task force released 60 pages of recommendations on ways to more effectively fund schools, lawmakers including House Speaker Julie McCluskie, a Dillon Democrat, began trying to figure out how to realistically implement some of their suggestions within the constraints of state funding.
McCluskie has not yet released legislation that would redesign how the state sends money to schools, but she told The Colorado Sun she plans to before the end of the session May 8.
“My formula, while it will certainly drive more dollars to the students that need it the most, I also want to make sure that all districts continue to see the current funding levels and that they don’t move backwards,” she told The Sun.
McCluskie has not spelled out specific details of the formula she plans to propose, but she said she wants to shift to a formula that will be “more student-centered,” in line with the task force recommendations. That means prioritizing state funding for students living in poverty, kids with special needs and students learning English.
“Our resources should match the needs of our students,” she said. “I am excited to bring forward a formula proposal that will make sure that we’re lifting up these students through our funding and driving more dollars again to our neediest kids in some of the neediest districts in the state.”
She also wants to consider a district’s size in the school funding formula, segmenting more funding for small districts across the state as well as account for how remote a district is since rural districts lack access to the same breadth of resources as districts in denser areas.
McCluskie has offered little information on how she would piece together additional funding needed to pull off her proposal: She says districts will receive no less funding than the amount they receive for the 2024-25 school year. She also aims to implement funding changes gradually, over four to six years.
Recommendations put forth by the task force call for an additional $539 million for education spending. McCluskie said she is looking at a dollar amount less than that. She wants to pull money from the state’s K-12 education fund and rely on increasing local revenues through a mechanism known as mill levy equalization, which has increased the amount of local tax dollars communities pump into their public education systems.
Education advocates and district leaders say that they won’t know how individual districts will fare until they see the full details of McCluskie’s legislation. But some are worried.
McCluskie has met with school district leaders in recent weeks after drafting at least three school funding proposals. One of her proposals sparked more questions than answers for some districts, prompting a group of 11 superintendents to band together to voice their concerns to McCluskie with a letter penned March 25.
“Each and every student in Colorado is worthy of a high-quality education with the best teachers, and that requires, first and foremost, adequate base funding, as well as funding that reflects the needs of each learner,” the district leaders wrote. “As superintendents, it is our responsibility to advocate for each and every one of our children and their futures. However, without a sustainable funding source and adequate base funding, we fear that your proposal will have a negative impact on the very students you wish to support.”
Does Colorado have a sustainable source of funding for K-12 education? It’s up for debate.
Colorado continues to fall behind other states with the amount of funding it devotes to education, trailing the national average by $2,000 to $2,500 in recent years, according to Tracie Rainey, executive director of the nonprofit Colorado School Finance Project.
Early next year, the state will have a better understanding of exactly how much money it takes to educate a Colorado student after results of two adequacy studies are released.
McCluskie is confident that Colorado has enough money in its K-12 education fund — a record $1.5 billion — to contribute part of it to her new funding formula as she introduces funding changes incrementally.
“I think the balance in the state (education) fund, well over $1 billion, ensures that we have got the space in there to be able to use these dollars now to ensure that all kids have a better opportunity at a world-class education,” she said.
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But education advocates and district leaders are wary of relying too heavily on the K-12 education fund, questioning whether it can sustain funding changes long term. Rainey said that the viability of the K-12 education fund for formula changes will depend on how many other lawmakers are eyeing that same fund for other education priorities, such as filling a funding deficit with the state’s Healthy School Meals for All program. Plus, McCluskie can’t obligate future lawmakers to stick with any kind of funding plan she crafts.
“The big question is, what kind of revenue is going to be available?” Rainey said. “And if you aren’t really looking at a sustainable revenue stream, then are you setting districts up for a surprise a couple years down the road that could be a major revenue loss for them?”
The K-12 education fund is made up of income taxes, which tend to grow from year to year. But under one forecast from state economists, they won’t grow enough in the next few budget cycles to maintain the expected growth in school funding requirements. As a result, the education account’s large balance could be nearly depleted over the next four years unless the state chips in more money from the general fund.
That happened repeatedly in the wake of the Great Recession, leading to persistent school funding shortfalls.
In the letter to McCluskie, superintendents call the K-12 education fund “a limited, one-time funding source.”
“Without an ongoing funding source, this sets all Colorado districts up to fall off a fiscal cliff,” the superintendents wrote. “In fact, the districts you are seeking to benefit with your proposal will have the most significant impact once the one time funding source runs out.”
That’s a particularly alarming prospect since districts are already approaching another funding cliff as federal relief dollars deployed to districts throughout the pandemic wind down this year, said Wendy Birhanzel, superintendent of Harrison School District 2 in Colorado Springs.
“Districts this year are falling off kind of the COVID cliff, and so this would be another cliff of falling off,” Birhanzel said.
Other education leaders worry about districts being held to 2024-25 levels of funding.
That approach would violate Amendment 23, said Scott Smith, chief financial and operating officer of Cherry Creek School District. That constitutional amendment requires the state to increase base per-pupil school funding by at least the rate of inflation each year.
Holding districts to 2024-25 funding levels would also handicap districts as their costs rise every year, including to address the mental health needs of students and provide services for students with special needs — both of which “are exploding,” Smith said.
“Our costs are going to continue to escalate and escalate, quite frankly, much faster than the rate of inflation,” he said.
When is the right time to decide on school funding changes?
Many Colorado education advocates and lawmakers on both sides of the aisle have long argued that the state’s decades-old school funding formula is inequitable and inadequate — shortchanging all schools of the full funding they need and failing to prioritize students with more significant learning needs.
One funding question has turned divisive: Can the state tweak the state funding formula so that it distributes dollars to schools in a more equitable way before it provides enough money to fully fund schools?
Superintendents behind the letter to McCluskie, including Douglas County School District Superintendent Erin Kane, say it is critical that the state first adequately fund education before it can effectively give funding to schools in a more equitable way.
“I think that you’re just going to end up helping some at the expense of others if you don’t have that additional funding to be able to apply equity across that funding formula,” Kane said.
Birhanzel, of Harrison School District 2, said her district would benefit from some of the changes McCluskie wants to push forward, particularly since her schools serve many kids learning English and kids growing up in poverty. She worries about her students gaining money off the backs of others.
“The funding can’t come from other students,” she said. “It should be additional money, not just moving dominoes on the board.”
Timing is another question in front of lawmakers and school districts amid two uncertain factors: calculations from the student adequacy studies and potential limits imposed on property tax increases in the state to ease homeowners’ financial burden.
Competing efforts to overhaul the state’s property tax code between lawmakers and outside organizations — including possible ballot measures — are underway. That has the potential to squeeze education funding.
“Given this possibility, its unknown impacts to the state’s overall financials, and the lack of a guaranteed carve out for K-12 funding, it is not the right time for changes to the funding formula,” the letter from the group of superintendents states.
Smith, of Cherry Creek School District, said it doesn’t make sense why lawmakers would change the funding formula before the adequacy study results are released and they’re aware of the amount of money they need to invest.
“We have a $40 billion state budget,” he said. “This is not a money issue. This is a priority issue, and our legislators continually run on education being a priority. It is. Start funding it like so.”