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A school funding compromise bill passed its first hearing Monday, with the support of many district leaders and advocates in Colorado who testified that it would limit cuts during a difficult budget year.
House Bill 1320, known as the School Finance Act, would scale back previously approved changes to the state’s school funding formula in order to save money while also appeasing districts worried about a proposal from Democratic Gov. Jared Polis that would have reduced funding to districts with declining enrollment.
Colorado Speaker of the House Julie McCluskie, a Dillon Democrat, spent weeks working on the compromise, and numerous school district leaders said they felt the proposal found a middle ground. School leaders from districts such as Cañon City, Greeley, and Colorado Springs testified in favor of the bill during the Monday hearing.
“We’re appreciative of the direction this bill is heading,” said Aurora Public Schools Chief Financial Officer Brett Johnson. “We’re also appreciative of the level of outreach that the sponsors have afforded the K-12 community.”
The bill, which included several amendments, passed the House Education Committee with a unanimous vote. The bill is sponsored by McCluskie, state Rep. Meghan Lukens, a Steamboat Springs Democrat who chairs the committee, as well as Senate Minority Leader Paul Lundeen, a Monument Republican, and state Sen. Jeff Bridges, a Greenwood Village Democrat.
The bill will now be heard in the House Appropriations Committee before being heard on the House floor. After, the bill will be sent to the Senate for consideration.
District leaders and education groups also testified Monday that the changes maintain some stability for schools after uncertainty about how lawmakers might curtail spending in the face of a $1.2 billion budget shortfall in the 2025-26 budget year.
The bill will slow the phase-in of $500 million more in state funding for a new funding formula from six years to seven years. The state would spend 15% of the total cost of enacting the formula next year.
Overall, the proposal sends about $256 million more to schools next year through a mix of new money and state education savings, according to a legislative fiscal analysis. The funding would be about $16 million less than what was called for in the funding formula approved last year.
The investment would increase total education funding to $10 billion statewide and would set per pupil funding at $11,852 statewide, according to the fiscal analysis.
Last year’s funding formula revamp based districts’ funding on a four-year student enrollment average. House Bill 1320 wouldn’t change enrollment calculations next year or the four-year average, which would soften the funding blow for districts with declining enrollment.
The bill would then reduce the average to three years in 2026-27, unless the state’s education savings drops below $200 million.
Some district leaders have adamantly disagreed with any change to enrollment calculations, an idea first proposed by Polis. He said the change would eliminate funding for “ghost students,” or students who are still counted as part of a district’s population despite leaving years ago.
Polis said his proposal would save the state money, but school districts with declining enrollment have pointed out it would also disproportionately impact their state funding.
One of the amendments to the bill would create a state working group with an association that represents Colorado school officials to help figure out how to address student averaging in future years.
The bill also said no school district would get less money than the 2024-25 fiscal year. A fiscal analysis concluded that 21 districts would see no increase in state funding over this year because their enrollment is on the decline. Those schools would have received less money without the “hold harmless” provision.
The bill also includes an amendment that would cap the Building Excellent Schools Tomorrow grant program, which helps districts fund construction projects, at $150 million. The state would save $45 million next year, which could then be used for school operations.
While the bill received favorable support, some lawmakers worried about the long-term financial impact. State Rep. Eliza Hamrick, a Centennial Democrat, questioned how the state would sustain funding into future years, especially because budget scenarios forecast future shortfalls.
The bill would use the State Education Fund, which is a type of state savings account specifically for education, to partially fund schools next year. Money in the savings isn’t a recurring source of funding, however, and lawmakers have worried that the pot of money could run dry.
“I don’t want to drain the State Education Fund,” Hamrick said. “I look forward to working with sponsors to find sustainability.”
McCluskie said during the testimony that the state’s budget woes are expected to continue — but those funding challenges shouldn’t stop the passage of the bill. Budget modeling indicates the state will be able to cover the changes for the next three years, she said, but lawmakers will need to review the plan every year because of future budget constraints.
House Majority Leader Jennifer Bacon, a Denver Democrat, said the changes the bill calls for need to happen this year and lawmakers have to figure out more sustainable funding for schools into the future.
“We cannot keep operating like this,” Bacon said.
Jason Gonzales is a reporter covering higher education and the Colorado legislature. Chalkbeat Colorado partners with Open Campus on higher education coverage. Contact Jason at jgonzales@chalkbeat.org.
