Amendment 73: What happens if voters put an extra $1.6 billion into Colorado’s broken school finance system?

Alison Corbett has little trouble ticking off the ways that more money would make a difference for her students at High Tech Early College in Denver’s Montbello neighborhood.

One more teacher for students learning English would allow for separate classes for different levels of proficiency. More counselors could help the school’s highest achieving students successfully apply to more prestigious schools. Smaller classes would allow more time to address students’ individual needs. With higher salaries, teacher turnover might go down. Students would have more consistency, and teachers could work together more collaboratively.

With all these unmet needs, Corbett, who teaches English and college-level classes, doesn’t think it’s fair that Denver taxpayers pay some of the highest property tax rates in the state, even as wealthy communities like Aspen pay low rates and let the state fill in the rest.

“The inequities of public education, particularly in Colorado, a lot of them start with funding,” she said. “It becomes a question of the quality of education that we can provide for the kids with the highest need.”

A bipartisan group of lawmakers on a special committee has spent nearly two years wrestling with school finance. It’s been a challenging conversation in which consensus has been elusive on many points — except that the current system is broken and needs to be fixed. But gradually committee members have come to agree that money should be distributed based on students and their needs, rather than haphazardly. There’s a catch: Districts that come out ahead under the status quo have become “significantly reliant” on the current funding model, in the words of one consultant, and any changes will create winners and losers — a political minefield.

On Tuesday, Colorado voters will decide whether to give the state $1.6 billion in additional taxes to increase school funding. It’s a request they’ve rejected twice before, and this time it faces a higher bar — Amendment 73 will need 55 percent of the vote to pass. Many Democrats, district leaders, teachers, and advocates believe schools need more money — period — but they also believe additional revenue can soften the blow for those who depend on the current system.

“With the money there, the process moves forward pretty smoothly,” said state Rep. Alec Garnett, a Denver Democrat who serves as vice chair of the interim school finance committee. “I think there’s a lot more consensus on policy solutions if the money is there.”

But conservatives believe it’s the opposite, that putting more money into the current system will only make it harder to change.

“It eliminates the possibility of a grand bargain,” said Luke Ragland, executive director of the conservative education reform advocacy group Ready Colorado. “If you pass Amendment 73, we give you the money, and we’ll be right where we are now.”

Once districts have more money, he said, they’ll be just as reluctant to give it up as they are now, exacerbating a “chicken-and-egg” problem.

How did we get here? Once upon a time, every school district in the state had the same property tax rate and provided most of their own school funding. The state decided how much  districts should get for each student — with adjustments for district size and cost of living, as well as the number of students from low-income families or who are learning English — and the state made up the difference for districts that didn’t have the property tax base to support themselves.

Over time, the interaction of two constitutional provisions — one pushing down residential tax  rates and one barring tax increases without a vote of the people — has meant that many districts raise less money and the state provides a lot more. And school districts have no incentive to ask voters to raise the base property tax rate because per-pupil funding wouldn’t actually go up; they’d just get less money from the state.

This is why Colorado voters see “mill levy overrides” on their ballot. This is a kind of local property tax increase that doesn’t cut into state money and allows district voters to increase the overall level of funding for schools. But communities vary a lot in their willingness to approve such increases — and in how heavily homeowners would have to tax themselves. This adds one more layer of inequity to school funding around the state.

A recent Colorado Sun analysis found that the nine wealthiest districts by median income all get more of their funding from the state than the average district, even as homeowners there have lower tax rates than many other districts. Denver homeowners, meanwhile, pay the highest base tax rate in the state, even though the typical resident earns slightly less than the state’s median income.

This is a selling point for proponents of Amendment 73. An increase in state income tax rates for high earners and corporations would generate far more money for districts with a low tax base than those districts could generate for themselves. The amendment also encourages the legislature to adopt a more equitable school finance formula — but until that happens, the additional revenue will mostly be distributed according to current law.

And that’s where another layer of unfairness comes in.

A report prepared for the legislature’s school finance committee by consultant EdBuild highlights numerous problems with the way Colorado distributes money to districts, including a cost-of-living factor that gets applied to per-pupil funding. Districts with a higher cost of living get more money to cover those expenses and offer competitive teacher salaries. This often ends up sending money to districts that are wealthier and whiter. EdBuild estimated the cost-of-living adjustment eats up more than $1 billion — an “astronomical” 23 percent of the state portion of school funding.

With limited total funds, this practice “will ultimately reduce funding for poorer and more diverse school districts,” the consultants wrote. “This is a real concern from a policy perspective and also may pose a legal problem, as some scholars argue that it constitutes a violation of the Equal Protection Clause of the U.S. Constitution.” (The Colorado Supreme Court upheld the constitutionality of the school funding system in the Lobato case in 2013; later that same year voters soundly rejected a statewide tax increase for schools.)

Colorado’s funding formula doesn’t ignore student needs. The state gives 12 percent more money for each “at-risk” student, defined as those who qualify for free lunch or are learning English. Districts in which the portion of at-risk students is higher than the state average get more, up to a 30 percent bump.

But this increase is applied after making adjustments for district characteristics, like cost of living and size. This results in absurd disparities. One district might get an additional $809 for each at-risk student, while another gets an extra $1,882 per student, “a substantial gap and one not calibrated to any difference in the needs of at-risk students from district to district,” the report said.

And those at-risk students only get counted once, so a student from a low-income family who speaks English at home gets the same additional funding as one who doesn’t. Most states give additional money for each factor that might affect a child’s education, with some giving substantially more. EdBuild called Colorado’s funding for at-risk students “quite low by national standards.”

“Are the districts that are getting the most state aid the districts that should be getting the most? And are the districts that get the least state aid the ones that should be getting the least?” asked state Rep. Millie Hamner, a Dillon Democrat. “By asking those questions, the committee can come to some agreement about the problems that we must be compelled to fix.”

Colorado also sends additional money to districts for English learners, disabled, and gifted students, but these separate pots of money don’t grow as the number of students grows. And for students with more significant disabilities, the amount is paltry. All students with identified disabilities get an additional $1,250. Those with diagnoses of autism spectrum disorders, hearing and visual impairments, intellectual disabilities, serious emotional disabilities, traumatic brain injury and multiple disabilities can get up to an additional $6,000. But in the 2017 fiscal year, students in that higher-needs category got just $1,997 because that’s what was left.

“There is no state other than Colorado with a policy of funding special education students at a level based on the amount of money left over after an initial appropriation,” the consultants wrote.

Amendment 73 would send a lot more money to each of these areas, even as it also suggests lawmakers create a new funding formula that ties student funding to these needs. The majority of Colorado’s superintendents proposed a formula using these principals earlier this year — but only on the condition that voters approve a tax increase so that no district would lose money. It didn’t even make it out of committee.

State Rep. Paul Lundeen, a Republican from Monument who chairs the school finance committee, calls school finance the “biggest, thorniest, Gordian knot in state policy.” Ragland called our system “outdated and indefensible.” Hamner called it “broken” and the disparities in local and state share “a debacle.”

People used the phrase “bite off what we can” to describe what success would look like. That’s a more modest goal than was envisioned when this committee was created in 2017. But even as some try to temper their expectations, Lundeen has asked a big question: Should we open up the constitution?

Lundeen asks because one possible solution is to lower the amount of money that every student gets to allow the state to put more money into English learners or students with disabilities without spending more money overall. Addressing local tax policy would also require constitutional changes.

Lundeen has little patience for the idea that districts need to be protected.

“The reason we have so many loops in the Gordian knot is all the political interests of all the political stakeholders who are seeking to serve their portion of the system,” he said. “We’re trying to change that conversation to see how we can serve the needs of the students.”

Many people involved in education reject the idea that more money isn’t needed.

“We’re underfunded by whatever metric you want to use,” said Tracie Rainey of the Colorado School Finance Project. “You look at the problems of teacher recruitment and retention, the districts on four-day weeks, and the programs that have been cut. It’s not a matter of having the resources and not distributing them right.”

EdWeek’s Quality Counts puts Colorado’s per-pupil education spending at $2,800 below the national average when regional cost differences are taken into account. The state is closer to the middle of the pack but still below average when straight dollars are used. More Colorado teachers are new to the classroom than in most other states, in part a reflection of low pay and high turnover. More than 100 Colorado districts are on four-day weeks.

Douglas Bissonette, superintendent of the 2,300-student Elizabeth district in Elbert County, southeast of Denver, agrees that the way Colorado funds its schools needs to change. Rural districts have challenges that aren’t accounted for in a formula that considers size but not geography. Elizabeth serves more students than some urban areas, but the district has much higher transportation costs and a less access to specialists to serve students with special needs. 

But the biggest problem he sees is lack of money. Across the state, rural districts struggle to attract teachers and to pay them enough. Students pay the price, he said.

“You know there are many examples where our expectations are coming up short,” he said, “and it’s not because the money isn’t being spent wisely or because it’s not distributed fairly.”

The school finance committee is scheduled to meet three more times after the election but before the start of the 2019 legislative session in January. Amendment 73 is just one of several measures on the ballot with fiscal implications. With new information in hand about revenue and the political makeup of state government, they’ll look for any bipartisan legislation they can recommend.

If Amendment 73 fails, that doesn’t mean advocates have to give up on the idea of more money for schools. For years, there has been talk of asking voters for permission to keep additional revenue from existing taxes generated by a strong economy. Right now, Colorado has to return money to taxpayers if the state earns too much. Advocates for this approach think 2020 might be the year.

Lisa Escárcega of the Colorado Association of School Executives, which represents district leaders, said the superintendents’ proposal earlier this year reflects a recognition that the finance formula must address student needs, as well as a willingness to change how money is distributed. But she declined to discuss the possibility of some districts getting less money than they do now.

Any bipartisan solution will require compromise.

“The happy medium is saying, yes, the formula is underfunded but we have to be more precisely transparent about how we’re spending the money,” Garnett said.

And it might take a few more years to get there, Garnett predicted.

“Everything is at stake,” said Corbett, the teacher. “We are increasingly demanding results from teachers — as we should be — particularly from our teachers who teach low-income kids, but we are not providing the resources to meet their needs. So many of our schools are not doing what we set out to do. We can’t demand equity of results without providing equity of funding.”


A Chalkbeat roundtable: What would a better school funding system look like?

We asked a group of teachers, school leaders, advocates, and academics to tell us what they think is missing in the school funding conversation and what a better school funding system would look like. Here’s what they told us.