School districts in urban, suburban and rural parts of Colorado fear serious funding cuts — amounting to as much as 30% of their total budget — that could force tough decisions next year under Gov. Jared Polis’ latest budget proposal.
The prospect of less funding for those districts adds another complication to the school finance puzzle as district leaders in the upcoming months begin piecing together their budgets. Not only are districts grappling with rising costs driven by inflation, but they have also had to figure out how to sustain — or eliminate — programs, resources and staff positions they funded with federal COVID relief dollars that expired in September.
The school finance outlook for most Colorado districts began to appear brighter last year after state leaders committed to paying down a debt owed to schools, commonly called the budget stabilization factor, worth $141 million. State officials also adopted a new funding formula that set out to boost education funding by about $500 million.
Now, with the state trying to fill a roughly $1 billion budget deficit, districts experiencing declining enrollment may encounter a plot twist: funding cuts that state leaders originally promised to avoid.
Lake County School District Superintendent Kate Bartlett said she has seen Colorado districts be “incredibly resilient for a long time” and wonders when that resilience will run out. “The question I’m asking myself is, where is the limit to our resilience?”
Polis partially softened the financial blow for districts in his revised budget proposal released earlier this month. In November, the governor proposed rolling out the state’s new school funding formula over seven years instead of six as initially planned. But better-than-expected revenue projections paved the way for him to revise his proposal and return to a six-year implementation. Polis has recommended pouring $150 million into the new formula, an additional $35 million from his November proposal, Chalkbeat Colorado reported.
However, the governor has repeatedly called for Colorado to change the way it counts students to determine how much state funding districts receive. At a basic level, districts net a specific amount of funding for every student they serve. Colorado has employed an averaging tool for several years, which calculates funding for districts by averaging their student counts over the prior five years. That approach shields districts facing enrollment dips from major funding losses. Under the new school funding formula, the state would scale down averaging to four years.
Polis wants to abandon the averaging mechanism altogether and shift to funding districts based on a one-year student count.
He reinforced a push to pivot to a one-year student count during his State of the State address Thursday, calling Colorado “an outlier” with its use of averaging.
“We are talking about counting students that attended nearly half a decade ago,” Polis said during his speech. “To fully fund our new school finance formula and ensure we never have to go back to the budget stabilization factor, we have to start funding students where they’re at in their schools today in ways tailored to their needs. It is truly past time to eliminate the antiquated system that funds empty chairs rather than actual students.”
Polis’ office projects his proposal could save as much as $145 million. His main focus is ensuring the state can optimize dollars set aside for individual students and meet all their needs. Currently, if a student leaves one district to attend another, their original district can count them in their enrollment for four years after they move. At the same time, their new district can also count them and receive funding. The governor’s office argues that the extra funding should flow to the student’s new district so that it can help that district best educate that student.
House Speaker Rep. Julie McCluskie, a Dillon Democrat and a key architect of the new school funding formula, briefly commented on the challenges in addressing declining enrollment during her opening remarks on the first day of the legislative session last week. She gave no specifics on how to preserve funding in districts counting fewer students.
“The hard truth is that we will need to grapple with declining student enrollment,” McCluskie said. “We will navigate this issue carefully while listening to our partners in public education. Our guiding principle must be to keep equity for our students at the heart of our decision making.”
After Polis’ first crack at the state budget in November, district leaders and education organizations raised concerns that a new budget stabilization factor was in the making, a claim Polis’ office has rejected.
Bartlett, of the Leadville school district, said the bottom line is that districts like hers, where enrollment has been trending downward, will have to cope with less funding.
“Whether you call it the budget stabilization factor or you call it a change to the formula, the mechanism doesn’t matter so much to those of us on the ground,” said Bartlett, who previously oversaw the public school finance unit at the state education department. “The practical impact is that our funding is reduced.”
Districts will have a clearer idea about how Polis’ updated budget proposal will impact their budgets within the next few weeks, according to Colorado Department of Education spokesperson Jeremy Meyer.
“A difference between rhetoric and reality”
School district leaders and education organizations say they understand both sides of the burgeoning debate over relying on a single year of counting students to inform how much funding districts get.
Moving away from averaging would help the state evolve toward a system that meets “real student needs in real time,” said Madi Ashour, director of youth success for the nonprofit Colorado Children’s Campaign.
“If we want to build an education system that is responsive in real time to individual student needs,” Ashour said, “then it does make a lot of sense to track and fund them in real time rather than averaging that over a handful of years.”
But she also understands the need for a compromise, anticipating the state may take a beat and dole out funding to districts next year based on averaging enrollments across two or three years.
Scaling down averaging rather than immediately doing away with it would give districts more time to adjust, said Tracie Rainey, executive director of the nonprofit Colorado School Finance Project.
Other states that use a current-year count to inform school funding may be pumping more money into education while Colorado is short of adequately funding its education system by a few billion dollars, according to two recent studies.
Those figures raise a broader question about what it will take to fully fund public education in Colorado, Rainey said.
“The real conversation that we’re going to need is to have a conversation about tax policy because that is what is stopping us from funding our schools adequately and equitably,” she said, “and we begin having a different conversation versus a conversation around how are we going to cut funding and do it in a way that is supposedly helpful for districts?”
Lake County School District, which serves about 900 students in preschool through 12th grade, could see a funding drop to the tune of $443,000 next year under the governor’s November budget proposal, according to Bartlett. She noted that the district may suffer slightly less of a funding cut under Polis’ most recent proposal.
Enrollment tends to swing up and down in the rural resort community, where families migrate in and out of the district for seasonal work, she said. Overall, enrollment has been down, largely driven by families leaving due to the rising cost of housing.
Losing out on hundreds of thousands of dollars next year would stall new projects, rerouting the district’s attention to simply staying the course, Bartlett said.
“We will have to look at everything basically, which we’ve already been doing,” she said. “I think that that’s what’s really important. Districts are already running right on the edge, and so it’s not like we haven’t been looking to squeeze every excess expenditure out of the budget already. Now we’re at a place where we’ll have to look at more core functions and activities.”
Local voters approved a mill levy override in November, greenlighting $1.2 million a year for 15 years for the district. That money is earmarked for critical deferred maintenance projects and compensation that district leaders hope will help with staff recruitment and retention at a time when first-year teachers earn a $43,000 salary. Passing that measure gave the district the resources to “move the ball forward,” Bartlett said.
Should lawmakers accept Polis’ budget proposal and send less money to districts enrolling fewer students, those mill levy override dollars will likely instead help plug the budget hole in Lake County School District, she said.
“Now this budget cut moves the ball back so we have to get the ball back to the line of scrimmage,” Bartlett said. “We’ve got to get it back to where we started. It is a gut punch.”
Student counts also fluctuate throughout the school year in Eagle County School District, where families tend to follow tourism seasons more than academic calendars. Eagle Superintendent Philip Qualman said his district of about 6,400 students in preschool through 12th grade regularly sees an influx of kids in December — well after the October count day when districts tally their students.
That leaves Eagle County School District responsible for educating about 100 students they don’t receive state funding for each year, Qualman said, explaining that the district adds those students to existing classrooms, ultimately increasing class sizes.
He has watched enrollment fall slightly as declining birth rates and the region’s soaring cost of living has priced out families. But he expects his student count to rebound as local affordable housing projects take shape.
Qualman said Eagle County School District won’t lose money next year under Polis’ latest proposal, based on initial projections. He remains “cautiously optimistic” and is grateful that Polis is pledging to phase in the new school funding formula over six years as originally planned.
However, he still worries about the possible return of a budget stabilization factor. Qualman said he is also concerned the state could run into other financial speedbumps should a tough economy trigger a pause of the new school funding formula.
“I know that we’re hearing from both sides of the aisle the desire to protect K-12 funding, but there’s a difference between rhetoric and reality,” he said.
“Penalizing the districts with the kids with the highest needs”
Qualman said he understands the logic behind only funding students in seats. On the other hand, he predicts that approach will lead to “greater volatility” in the district’s budget and its labor force.
“For those districts with declining enrollment, they’re not able to smooth out those peaks and valleys in their enrollment count that then translates … into their financing,” he said.
He offered one scenario to illustrate the complexities of lining up budgets with district needs: Imagine a district’s student count significantly jumps one year, sparking a budget increase. The district hires the teachers they need, but during the school year a sudden emergency — a fire, flood, pandemic or a recession, for example — causes the community to lose a crop of students. That would likely prompt the district to let go of some of its teachers.
“You’re introducing significant volatility for people in an already understaffed sector,” Qualman said. “And we’re trying to recruit people to say, ‘Hey, come be a teacher. This’ll be awesome. But be prepared for your job to disappear as enrollment changes. Be prepared to move as kids and families move. Don’t expect to set roots anywhere. Don’t expect to be a part of a community because as demographics change, your job will be mobile and you’re going to have to go where the kids are.’”
He also worries that using the state’s October count day to inform how much funding districts receive will deepen divides between more affluent districts and those that educate greater numbers of kids who live in poverty, are learning English and tend to move around.
“Those students typically have poorer attendance,” Qualman said. “So you’re looking at penalizing the districts with the kids with the highest needs because they won’t have great attendance. It’s very common for our immigrant students to leave for a month at a time.”
Bartlett echoed that concern, saying the state must analyze whether a single count day in October is a fair and equitable approach when transitioning from five-year averaging to a one-year count. Other states use different methods of counting kids, including holding multiple count days or relying on average daily attendance.
Not every student shows up on a sole count day, she said, so the state would flip from “funding students who aren’t here to not funding students who are here.”
Bartlett added that she hopes lawmakers will avoid making blunt changes to school funding that will further strain districts already working to be nimble with their dollars.
“It’s one thing to use a chain saw,” Bartlett said, “not a scalpel.”