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Tempered good news on K-12 funding

Updated 4 p.m. – Improved state revenue forecasts have provided a nice present for Colorado school districts, but the gift isn’t as large as some might hope.

State budget chief Henry Sobanet told legislators Tuesday morning that the brightened revenue outlook would allow giving schools an extra $22 million this year for enrollment increases and eliminate the need for an $89 million cut in 2012-13, something Gov. John Hickenlooper proposed in his original budget for next year.

“Today is a good day to talk about the budget … the economy is improving,” Hickenlooper told reporters later in the day. “First and most critically,” he said, the additional revenue allowed the administration to roll back proposed K-12 cuts.

But holding school total program funding steady at about $5.2 billion effectively would be a cut, because statewide enrollment is expected to increase 1.2 percent in 2012-13, meaning average per-pupil funding would drop by about $70 a student. Under the governor’s original plan for 2012-13, the average per-pupil cut would have been $179. Actual per-student funding varies widely by district under the state’s school finance system.

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Gov. Hickenlooper’s comments on state revenues, education spending and Colorado’s economy.

And funding would be about $1 billion below the full amount called for by the previous interpretation of Amendment 23, the school-funding provision of the state constitution. In recent years, the legislature has used a “negative factor” to reduce projected school funding to a predetermined amount necessary to balance the state budget.

One proposed cut the administration is not planning to fully restore is what’s called the senior homestead property tax exemption. Hickenlooper is proposing the current suspension of that $100 million program continue in 2012-13 but that $17.5 million be budgeted to help low-income seniors.

House Republican leaders have said they’ll fight to restore the $100 million. Doing so could force K-12 cuts in exchange.

Forecasts seen as good news

Still the forecasts were greeted as welcome developments.

“Thanks for the good news,” said Rep. Cheri Gerou, R-Evergreen and chair of the Joint Budget Committee, after legislative and executive branch economists finished their presentations.

Rep. Tom Massey, R-Poncha Springs, told EdNews the forecast means, “We’re going to push very hard” to reduce K-12 cuts in 2012-13. Massey, chair of the House Education Committee, led efforts to minimize school cuts in the current budget and is expected to be a central figure on education issues during the 2012 session.

Jane Urschel, deputy executive director of the Colorado Association of School Boards, said, “This is good news for the 2011-12 fiscal year, and the governor’s willingness to retract the $89 million is good news.” Still, noting the precariousness of school funding, Urschel said, “We’re just living fiscal year to fiscal year, and that’s no way to fund schools.”

“Our students and schools so desperately needed a good-news day, and this is good news,” said Beverly Ingle, president of the Colorado Education Association.

Do your homework

In addition to discussing state revenues, both documents contain extensive information about Colorado economic and business trends.

Sobanet told legislators at the morning hearing that state revenues for the current 2011-12 year are projected to be $231 million higher than was predicted in September. Natalie Mullis, legislative chief economist, said her office estimates revenues will be $148 million more than projected in her last quarterly forecast. Both projected state revenue growth will slow in the immediate future.

“Obviously, this change is most welcome,” said Sobanet, who’s director of the Office of State Planning and Budgeting.

“The economy has definitely stabilized,” Mullis said. But she and executive branch economists warned that economic instability in Europe could cloud Colorado and U.S. economic prospects in the future.

The forecasts mean lawmakers will have a modestly larger amount to spend in 2012-13 than previously thought.

Sobanet said the administration would recommend the following steps related to education:

  • Allocation of an additional $22 million in the current 2011-12 budget year to help districts cover the costs of increased enrollment.
  • Transfer of an additional $110 million to the chronically underfunded State Education Fund, which is used to supplement school spending.
  • Keeping total program funding, the combination of state and local money that funds basic school operations, near the current level of about $5.2 billion. Hickenlooper had proposed cutting $89 million.

Sobanet also said higher revenues mean it will be possible to avoid a $30 million cut in the state’s $100 million student financial aid program. An additional $30 million cut in direct support of colleges and universities remains in the governor’s plan.

The legislature, of course, will have the final say on the 2012-13 budget. But if lawmakers take the administration’s suggestions, it would be the first time in several years that school districts would get a mid-year adjustment for enrollment increases and that base school funding remained stable.

The two forecasts also touched on other issues and trends of interest to education, including:

  • Local property taxes: School districts will see a 1.5 percent increase in property tax revenues, slightly reducing the pressure on the state to backfill local revenues.
  • Enrollment: Full-time equivalent enrollment will grow 1.2 percent in 2012-13 to nearly 795,000. Most of the growth will come in Front Range districts; many other areas of the state will see continued declines. The forecast from legislative staff contains a detailed analysis of where enrollment will grow and where it will fall.
  • Gaming revenues: Community colleges are expected to receive $6.1 million this year from their share of gambling revenue and $6.2 million in 2012-13.

The recent Denver District Court ruling in the Lobato v. State school funding case was referenced briefly during the hearing.

Sobanet said, “The governor is in consultation with the attorney general about the appropriate path forward. The most likely outcome is the state will appeal the district court ruling.”

Estimates of “full” K-12 funding under the Lobato ruling range from $2 to $4 billion more a year than the $5.2 billion currently spent.

Asked about the issue at his news conference, Hickenlooper said, “We’re just working out the details” and that an announcement on the appeal will come “hopefully in the near future.”