Colorado lawmakers adopted a school funding plan Wednesday afternoon in the final hours of the 2025 legislative session, setting up a new school funding formula that would solidify increases for most of the state’s 178 districts next year.
Members of the House passed a school finance act with a vote of 57-8 on House Bill 1320 while reviewing a flurry of bills before the end of the regular session.
The bill next heads to Gov. Jared Polis’ desk. Polis on Wednesday signaled support for the bill.
Final legislative decisions around school funding carry good and bad news for public education — the state will spend more money on education next year than this year, allocating more than $10 billion to schools for the 2025-26 school year. However, the amount going to schools is about $16 million less than what lawmakers promised last year when they established a new school funding formula designed to pump an additional $500 million into schools over six years.
Lawmakers revised total funding for schools and made other adjustments to the new school funding formula following a $1.2 billion state budget shortfall this legislative session that forced them to cut programs and services across state agencies. That budget deficit stirred up major debates over whether the state could afford to implement its new school funding formula next year and how much the state should continue softening the blow of significant funding cuts in districts experiencing declining enrollment through a longtime budgeting tool known as averaging.
Under the new school finance act, schools next year will get about $75 million of the $500 million in additional dollars that will flow to them once the new funding formula is fully implemented. When lawmakers designed the new school funding formula last year, they intended to dole out about $90 million of the $500 million in additional funds during the first year of the new formula.
Still, lawmakers have worked to shield schools from budget cuts as much as possible this session, with a decision by the Joint Budget Committee to route $150 million from the general fund to school funding next year.
Additionally, the General Assembly’s spending plan for schools next year increases how much districts will receive for every student they educate, also known as per-pupil funding. Colorado will boost base per-pupil funding by about $195 to spend about $8,692 on every student.
Since districts receive extra state dollars tied to factors like where they are located and the kinds of students they serve, such as kids with disabilities and students learning English, actual per-pupil funding amounts will vary across districts.
The new school finance act will also stretch the rollout of the state’s new school funding formula from six to seven years and will ensure all school districts receive at least as much funding next year as they received this year. It will also fund districts based on an average of their student counts over four years, which helps districts seeing a decline in student counts avoid sudden funding drops. That keeps the state’s averaging tool in place for now, with a plan to incrementally move away from averaging over the next few years.
Polis, who has been a vocal opponent of the state’s use of averaging, has indicated he will sign the legislation into law.
“With this bill, Colorado has made good on our promise to fully fund K12 education under Amendment 23, supporting students and educators,” Ally Sullivan, a spokesperson for the governor, wrote in a text message Wednesday to The Colorado Sun.
Polis “appreciates the sponsors for working to increase school funding and turning on the new, student-focused school finance formula by funding it in a sustainable way,” Sullivan wrote.
Questions about how to fully fund schools, navigate declining enrollment remain
Before members of the House voted on the school finance act, many raised concerns about deeper challenges with funding schools — challenges that will be waiting for them to address come the start of the next legislative session.
Some representatives called on their colleagues to commit to begin finding a way to fully fund schools after two recent adequacy studies revealed the state needs to put an additional $3.5 billion to $4.1 billion into schools to meet students’ needs.
“We are going to encourage and ask everyone to commit to getting it done, that we fund K-12,” State Rep. Jennifer Bacon, a Denver Democrat, said Wednesday before lawmakers took a vote. “And that means we may have to come together to figure out a multiyear implementation plan and figure out the question on revenues — if we can bring more in or retain them so that we can be able to fund our education in a way that’s somewhat remotely closer to adequacy than what we are doing now.”
State Rep. Eliza Hamrick, a Centennial Democrat, dubbed the state’s new school funding formula “a great step towards fair and full funding of education in our state” but also pointed out that Colorado’s school funding levels resemble those of the late 1980s when adjusted for inflation.
“If Colorado were funding our schools fully and fairly as defined by the adequacy studies, every student would have the individual attention they need from teachers, counselors, health professionals, support staff to succeed and thrive,” Hamrick said. “Every teacher would have a reasonable workload, professional development, coaching and a salary that would allow them to live where they work. And every community would enjoy the benefits of a vibrant public school, a high-quality workforce and an engaged citizenry.”
Legislators have already put some measures in place to “safeguard” school funding next year. A late amendment to the school finance act designated a new account known as the Kids Matter Fund within the State Education Fund, which holds reserves to help fund schools and education programs. The Kids Matter Fund will help power the new school funding formula in future years, setting aside an estimated $230 million for school operations for the 2026-27 school year using 0.00065% of income tax revenue.
How to carve out additional funding for schools long term, so that Colorado invests as much as what one of the adequacy studies suggests, is a conversation lawmakers must still have, Tracie Rainey, executive director of the nonprofit Colorado School Finance project, told The Sun.
“Now the question is the funding and actually making the differences that everybody is saying they’re committed to,” Rainey said.
Some lawmakers, however, pushed back on automatically giving schools more funding before first understanding how schools are using their dollars, particularly at a time many students are lagging in their literacy and math skills.
State Rep. Ken DeGraaf, a Colorado Springs Republican, said he worries about bloated administrations across school districts while student enrollment is falling, creating what he refers to as “an unsustainable model.”
“We need to start getting into the nitty-gritty on where this money’s going because I think it’s one thing if the performance was there, but it’s not,” DeGraaf said. “And when we talk to the teachers, the administration, the rise in the administration is largely due to administrative burdens that are put on the schools by the General Assembly. So we, the General Assembly, are again driving rules, regulations, restrictions onto these schools.”
Meanwhile, how to handle declining enrollment is becoming a more pressing question for leaders at the state level and in districts. More than 100 Colorado districts saw drops in their student counts from last year to this year.
“They have a lot of expensive infrastructure,” State Rep. Matt Soper, a Delta Republican, said Wednesday ahead of the House vote. “And we’re going to have to grapple in the future with a deteriorating infrastructure, declining enrollment, increases in salaries and how we make all this work. And that’s going to be a challenge for future legislatures to have to grapple with.”
Colorado House Speaker Julie McCluskie, a Dillon Democrat, has repeatedly raised questions about what role the state must play in helping districts adapt to serving fewer students.
Soper on Wednesday turned the focus to superintendents, asking them to be “creative” and to begin taking stock of their assets and explore how they can “relook at education.”
“To me, this is critically important that we fund our schools,” he said, “but we also need to be saying, we cannot continue to spend like we have an unlimited bank account and we also need to look at the reality that we aren’t repopulating our state at such a level that our school districts are always going to have continually new students coming through, and so there is going to be a rectification moment unless we’re able to change the path we’re on.”