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New Race to Top idea surfaces

Could Colorado improve its chances to win federal Race to the Top funds by, in effect, coming up with matching funds? One state legislator thinks so.

Sen. Chris Romer, D-Denver, floated that idea with Interim Committee on School Finance Thursday. It’s a refinement of an idea that Romer’s been talking about for months – that the 2010 legislature could raise revenue and ease a bit of the state’s budget crunch by closing some sales tax exemptions that now benefit business.

Romer and some other lawmakers interpret a Colorado Supreme Court decision issued earlier this year as allowing the legislature to do that without a vote of the people.

“Some of us believe we actually are going to have a need to think through some short-term solutions to fund some of the reforms we are thinking about for K-12,” Romer told fellow members of the 10-member panel. (He’s co-chair.) “This senator, if not this committee, is interested in looking at some of the tax exemptions.”

The idea Romer sketched out would have the legislature create an advisory panel of business leaders who would come up with a short list of tax exemptions that would be repealed in order to raise money to continue education reforms after federal R2T cash runs out. The exemptions would be repealed only if Colorado actually received R2T funds. Romer tossed out a figure of $200 to $300 million to be raised from closing tax loopholes.

“I think it would send a very powerful statement to D.C.,” Romer said.

He tried to get other panel members to react to the idea, but the only one who rose to the bait was Sen. Keith King, R-Colorado Springs, a conservative who’s well versed in school finance and who helps run a charter school.

“I think you’re talking about a lot of risk,” was all King would say – with his usual big smile.

Minority Republicans undoubtedly would see Romer’s idea as an unacceptable tinkering with the Taxpayer’s Bill of Rights, and such a bill likely would be the focus of intense partisan debate in the 2010 session. Such a fight dragged on for weeks this spring over a bill to change limits on annual increases in general fund spending. Majority Democrats ultimately prevailed.

Whether Romer’s idea would have any impact on the state’s R2T application is also a very open question. Applications for the first round of funding in the $4.3 billion R2T sweepstakes are due in December. Lt. Gov. Barbara O’Brien, who is coordinating planning of the state’s application, says Colorado will apply in the first round. Estimates vary, but the state could receive in the neighborhood of $300 million. State education leaders consistently put a good face on Colorado’s chances, but some other observers aren’t as optimistic.

Since the legislature doesn’t convene until January, a “matching funds” proposal such as Romer’s would only be a possible bill at the time the application is filed, and a long way from becoming law.

The interim committee is studying a wide range of school finance issues, but it seems likely that it won’t recommend any sweeping changes in the formula that has controlled state aid to schools for nearly two decades.

The state’s ongoing budget crunch means no new money will be available for schools in the immediate future. Despite Amendment 23’s school-funding guarantees, it looks like state K-12 support will take a $110 million cut in the current 2009-10 budget year, and perhaps a 2 percent cut in 2010-11. K-12 will have “a target on its back” in the 2010 session, Romer quipped.

Interim committee meetings so far this summer have focused on fact-finding and general discussion. But, with only three more meetings left on its formal agenda, the time is fast approaching for the panel to draft concrete plans.

The committee is allowed to propose eight bills to the 2010 session, although individual members also are free to introduce their own proposals. The panel is expected to discuss specific bill concepts at a Sept. 15 meeting, review bill drafts on Oct. 1 and vote Oct. 22 on which bills to propose. (Between now and then, some committee members also will be holding informal meetings in Summit County and in the San Luis Valley to gather input from non-metro school districts.)

Part of the committee’s work has been done in informal breakout groups, which include non-legislators and that focus on at-risk students, funding formulas, new funding sources and rural schools.

Those small groups met Thursday afternoon and then reported back to the full committee. Based on those reports and other committee discussions, here’s a rundown on some of the ideas likely to come up when the committee gets down to discussing possible bills:

Redefining the description of at-risk students, for whom districts receive extra funding. The current definition is basically eligibility for free, or free and reduced lunch.

Providing financial incentives to secondary schools that show academic improvement and have high percentages of at-risk students. (A specific proposal to do that was made during the 2009 session but ultimately died.)

Beefing up online programs for rural districts.

Creating incentives for rural districts to share administrative services. District consolidation, a largely taboo subject in Colorado, appears not to be on the table.

Creation of a separate base funding formula for very small districts.

Establishment of a broader “cost of doing business” formula to aid districts with high costs. Currently some districts receive extra state support based on a survey of comparative living costs for teachers.

Somehow providing extra money for district technology costs.

Committee chair Rep. Karen Middleton, D-Aurora, suggested some of the panel’s eventual recommendations could be delayed until after the state budget picture improves. “Maybe the things we’re adding on can be phased in.”

A similar committee studied school finance during the summer and fall of 2005, but few of its recommendations were implemented.

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