A school funding proposal that Colorado House Speaker Julie McCluskie said she plans to unveil in a bill this week would give schools slightly more funding than she previously proposed and guarantee all Colorado districts receive at least as much funding for the next two years as they received for the current school year.
Still, in an especially tight budget year, her proposal would give schools about $16 million less next year than what they would receive if the new school funding formula went into effect as originally designed. That means some districts are almost certain to receive less money next year under her proposal than what they would get if lawmakers kept their promise and fully implemented the new funding formula next year.
During a news briefing Tuesday morning, McCluskie shared details of her funding proposal, which has bipartisan support with Colorado Senate Minority Leader Paul Lundeen, a Monument Republican, also sponsoring the forthcoming legislation. At least one of Lundeen’s Republican colleagues, Barbara Kirkmeyer, a member of the Joint Budget Committee, has repeatedly pushed back on launching the new school funding formula next year with concerns that the state can’t afford it.
The long-awaited funding proposal — also sponsored by Democratic lawmakers state Rep. Meghan Lukens, of Steamboat Springs, and state Sen. Jeff Bridges, of Greenwood Village — would give schools more than $10 billion next year, up from about $9.8 billion budgeted for the current school year. That represents about $82 million more than what districts would receive if the state’s current school funding formula stayed in place next year, according to legislative budget documents.
McCluskie’s plan would also extend the implementation of the new school funding formula from six years, as originally agreed upon, to seven years. That means the state will gradually increase funding each year, with schools getting an additional $500 million total.
And her proposal would keep a budgeting tool known as averaging in place next year, calculating the total amount a district nets by averaging their student enrollment figures over four years. Averaging enrollment counts across multiple years prevents districts facing declining enrollment from suffering major funding cuts abruptly.
Under the current school funding formula, districts receive funding based on a five-year average of their student counts. Gov. Jared Polis has proposed stopping averaging altogether, insisting that it diverts funding to districts for students they no longer educate.
McCluskie, a Dillon Democrat, said she is “very excited” to put forward a bill that “meets the needs of a challenging budget scenario” and will “drive more equity into our school financing system.”
“With the budget pressures this year, it was important that we think in a very sustainable way in addressing how much of that formula we drive to schools this year and what our ultimate plan will be to make sure that the State (Education) Fund remains robust and capable of supporting school funding in the years ahead,” McCluskie said.
The State Education Fund is a sort of bank account holding reserves that contribute dollars to the school funding formula and also support a variety of other school programs. Lawmakers will rely more on the state education fund this year to pull off the new school funding formula next year, with McCluskie describing that fund as having “a very healthy, robust balance.”
While the State Education Fund is expected to end this year with a $1.1 billion balance, state budget documents show the state will have to ramp up its contributions from the general fund in the future to keep the account solvent.
McCluskie’s proposal comes as the JBC endorsed a smaller-than-typical budget increase for K-12 schools next year, calling for an additional $150 million in spending compared with this year’s funding. Schools would normally receive an extra $200 million to $220 million to keep up with rising costs, McCluskie said.
The JBC signed off on that $150 million in general fund money before finalizing a budget proposal last week, after many legislative debates over how to address a $1.2 billion budget shortfall.
Meanwhile, Kirkmeyer, a Brighton Republican, said she has been collaborating with state Sen. Chris Kolker, a Centennial Democrat and chair of the Senate Education Committee, on a separate piece of school funding legislation. Kirkmeyer said she has not yet introduced her bill. She did not share any details but said in a text message to The Sun that their proposal is “prioritizing K-12 funding and ensuring the state keeps its promises under (House Bill) 1448.”
“It is disappointing the Speaker hasn’t addressed sustainability (in) her proposal,” Kirkmeyer said in the text. “Every analysis I have seen has shown this bankrupts the State Education Fund. We should never be balancing the budget on the back of education.”
Kirkmeyer also takes issue with McCluskie’s proposal to keep funding flat in some districts.
“That’s not good enough,” Kirkmeyer said. “With our proposal we will implement (House Bill) 1448 and all students will have more money and not just be frozen in place.”
“The devil’s always in the details”
McCluskie also said she wants to rev up the amount of funding pumped into the new formula each year, with 30% of the additional $500 million directed to schools for the 2026-27 school year and 45% of that total funding supporting schools for the 2027-28 school year.
Additionally, McCluskie recommends scaling down the state’s approach to averaging in future years. She suggests shifting to funding schools based on enrollment figures over three years for the 2026-27 school year, so long as lawmakers drive 30% of the funding formula into schools that year. Otherwise, Colorado will keep four-year averaging in place next year. In the following years, the state would pivot to three-year averaging or would figure out a way to support districts that are at risk of facing serious funding cuts.
Kate Bartlett, superintendent of Lake County School District in Leadville, said this latest school funding proposal marks major steps forward from Polis’ first budget proposal in November, when he proposed ending the practice of averaging.
Bartlett anticipates that McCluskie’s funding plan would boost her district’s budget by 1% to 2% from this year to next year. Earlier this year, she worried that her district may have to divert dollars from a successful mill levy override to help fill in a budget hole. Should lawmakers accept McCluskie’s proposal, Lake County School District could steer mill levy override funds toward the priorities they were intended to cover: increasing staff pay and deferred maintenance projects.
“We’re living in a world with significant volatility at the local, state and federal level that’s probably greater than anyone might have anticipated when (House Bill) 1448 was passed,” she said, referring to the legislation behind the new school funding formula. “While I appreciate the difficulty of the circumstances, it’s also critically important to keep K-12 at the forefront and to protect it as this school finance act does its best to do.”
Scott Smith, CFO of Cherry Creek School District, said he is encouraged by McCluskie’s proposal, though some of its elements give him “a little bit of pause.”
Among them, Smith said he is concerned about the way McCluskie’s proposal leaves some districts without a funding increase between this year and next year, noting that the new school funding formula promised to dole out more funding to all districts.
“Flat funding is a de facto cut” when considering inflation and higher health care costs, he said.
He also believes the state should not trim averaging to three years until it is implementing at least half of the additional $500 million segmented for K-12 education under the new formula.
And Smith said it is critical that legislators devise a way to calculate how much the state withholds from schools in the future similar to the budget stabilization factor, or negative factor. The Great Recession-era accounting tool allowed the General Assembly to fund schools less than what they were owed under the Constitution for 14 years.
“We have already gone through one deal, which the state won’t honor,” he said. “If we want to sign onto another deal in the future, there must be some sort of negative factor mechanism to track if and when the state fails its obligation to fund this deal.”
Tracie Rainey, executive director of the nonprofit Colorado School Finance Project, said it’s hard to fully understand how much McCluskie’s proposal will impact school districts until a bill is on the table.
Rainey noted that lawmakers still must make critical decisions about important factors like how they will count and fund at-risk students, which includes kids from low-income families. They must also determine if they want to set aside additional funding for districts in especially remote parts of the state, though they must first decide what criteria constitutes a remote district.
“The devil’s always in the details,” Rainey said, “so we need to just make sure we see everything before we can really determine what this means for school districts.”