Colorado’s school finance act would boost K-12 funding next year to more than $9 billion — $150 million more than described in the recently finalized 2023-24 budget and a 7.5% increase from this year.
“The change to school finance is historic,” said Joint Budget Committee Chair Rachel Zenzinger. Average per-pupil spending is proposed to reach $10,579, a 10% increase from this year.
The bill could set Colorado on the path to fully funding its schools according to constitutional requirements by the 2024-25 school year. Zenzinger said an amendment will lay out a two-year process to eliminate the practice of diverting K-12 dollars to other priorities, known as the budget stabilization factor.
The school finance act would also set aside money for rural districts and those with limited property wealth and give more assistance to charter schools authorized by the state, which miss out on local revenue-sharing.
But the school finance act also kicks the can down the road — for at least one more year — on any bigger changes to how Colorado distributes money to K-12 schools.
Lawmakers on a special school finance committee had proposed in November to take on a major rewrite of Colorado’s school funding formula. Instead, the committee concluded its work after five years without recommending changes to the General Assembly.
Most districts opposed changing how the state distributes money to schools without significantly increasing the overall education budget. That made a formula rewrite a heavy political lift in a session already consumed with contentious fights over gun control, housing policy, and access to abortion and gender-affirming care.
But Zenzinger, an Arvada Democrat who also served on the school finance committee, saw another opportunity in the school finance act — an annual bill separate from the budget that dictates how education money gets distributed.
Zenzinger had proposed using the school finance act to tweak the formula to send more money to rural districts and small urban and suburban districts and to send less money to large districts serving better-off communities.
By taking money from the state education fund, which functions somewhat like a savings account, lawmakers could have ensured every district saw an increase, Zenzinger said. But districts that traditionally have been disadvantaged by the current funding formula would have come out ahead.
“That was a proposal we put on the table, but the K-12 lobby rejected it,” Zenzinger said. “They were just really nervous about making a permanent change.”
Instead, the school finance act proposes to keep the existing funding formula and convene a new task force to take on the unfinished work of the school finance committee.
School funding formula widely seen as unfair
Colorado’s 1994 school funding formula sets a base for per-pupil funding and then makes adjustments based on factors such as how many students live in poverty or are learning English, the size of a district, and the cost of living.
But the formula gives far more weight to cost of living than it does to student needs, with the effect that wealthier districts often get more money than those serving high-poverty communities.
There is widespread agreement that this formula is unfair — and also widespread resistance to change.
“Everyone is dealing with staff shortages, everyone is dealing with inflation and the impact of that on our staff,” said Bret Miles, executive director of the Colorado Association of School Executives. “This was not the time to say it would be OK to have some districts not get as much of an increase.”
While per-pupil spending is going up, many school districts are losing students and face tough budget decisions even with more state funding. Districts like Jeffco Public Schools, which Zenzinger represents, benefit from the cost-of-living factor and are using those dollars to ease the budget hit from lower enrollment.
Miles praised Zenzinger and the other bill sponsors for hearing the concerns of school districts and changing course. There’s less than three weeks to go before the legislature adjourns, not enough to work through the implications of any changes, he said. Meanwhile, lawmakers still may take up property tax changes this session that would leave districts with fewer local dollars.
Some advocates, though, see a missed opportunity.
“I was hoping they would do something more interesting with $150 million than pump it into a formula that everyone knows is bad,” said Leslie Colwell of the Colorado Children’s Campaign.
Both Miles and Colwell said the task force may make progress where the committee could not.
The committee was made up of legislators, while the task force would be made up of school administrators, educators, advocates, and finance experts. And it would have a narrow charge, to recommend specific changes to the funding formula and to study how much Colorado should spend on K-12 education, known as an adequacy study.
“It’s a scary question to ask because you may get back a number that says, ‘Wow, we have a long way to go,’” Miles said.
Budget stabilization factor could be be phased out
Colorado’s constitution requires that school funding increase every year by the rate of inflation plus population. But every year since the Great Recession, lawmakers have withheld money to pay for other budget priorities. This withholding, known as the budget stabilization factor, adds up to more than $10 billion.
This budget year, lawmakers withheld $321 million, about 3.7% of base K-12 spending. The school finance act proposes a $171 million withholding for the 2023-24 budget year, less than 2% of K-12 spending.
Zenzinger said she plans to ask for an amendment that would eliminate the withholding entirely next year. Gov. Jared Polis had called for a three-year plan.
The school finance act also would set aside $30 million for rural schools to mitigate their higher costs and smaller student populations. Colorado rural schools have received similar annual payments since 2017.
Zenzinger said her intention is for this to be the last year with a “one-time” rural allowance and that going forward rural schools will get more through the funding formula.
The school finance act would put $23.4 million into a matching fund to help school districts with low property wealth get more benefit from local property tax increases known as mill levy override. The fund was created last year and seeded with $10 million.
The school finance act also allocates:
- $2.5 million to charter schools authorized by the state Charter School Institute to make up for local tax revenue that isn’t shared. Coupled with money pledged in the budget, these schools will get an extra $27 million next year.
- $1.1 million for universal screening to identify gifted and talented students
- $500,000 for school districts to translate draft versions of individualized education plans or IEPs into parents’ home languages.
- $300,000 to reimburse school districts for costs associated with replacing Native American mascots.
The school finance act gets its first hearing Wednesday in the Senate Education Committee.
The school finance act and the budget are the only two pieces of legislation the Colorado General Assembly must pass before adjournment.
Bureau Chief Erica Meltzer covers education policy and politics and oversees Chalkbeat Colorado’s education coverage. Contact Erica at emeltzer@chalkbeat.org.
