Saying he had to go where the money is, Gov. John Hickenlooper has proposed cutting K-12 spending in 2011-12 by $332 million from current levels.
Funding of state colleges and universities would drop by only about $28 million from this year to about $519 million.
If approved by the legislature, the cuts would drop school spending to 2007-08 levels and reduce average per-pupil funding from $6,823 this school year to $6,326.
Total program spending, the combination of state and local funds used to pay for basic school operations, would drop from $5.4 billion this year to about $5.1 billion.
And the governor’s K-12 spending plan would be $836 million below what full funding would be under the terms of Amendment 23.
“The largest single area of reduction is K-12 education,” Hickenlooper Tuesday told members of the Joint Budget Committee and a crowd packed into the Old Supreme Court Chambers, the Capitol’s largest hearing room.
In a letter to the JBC, Hickenlooper noted that while revenue to the state’s general fund has grown only $481 million since 2000-01, general fund spending for K-12 has increased by about $800 million.
He repeatedly used the word “unsustainable” when discussing the budget situation.
Speaking to reporters later in the afternoon, Hickenlooper said, “41 percent of the state budget is in K-12 education. … It’s where the money is. … The four-letter word in the room is math.”
“We didn’t go after K-12 education” for some policy reason. … There is no choice.”
While serious cuts of some level weren’t unexpected, education leaders and Democratic legislators reacted with dismay, some hinting they will do what they can to minimize the reductions. Senate Republicans have made protecting education a priority and have even introduced a bill that would create an income tax checkoff to raise money for schools.
Republican legislative leaders praised Hickenlooper’s calls for fiscal responsibility and economic development but didn’t wring their hands about education cuts.
The announcement also brought renewed calls from Democrats and civic groups for a voter-approved solution to Colorado’s fiscal system.
Cuts have been building
Because of the budget crunch, the 2010 legislature approved funding lower than the $5.8 million that would have been required had the full Amendment 23 formula been applied.
About a quarter of school funding is allocated based on what are called “factors” – district size, numbers of at-risk students and personnel costs.
The legislature last year created a new “budget stabilization factor,” a mathematical device that allows lawmakers to reduce the amount of money spent on other factors and thereby giving wide flexibility in cutting K-12 spending.
Last year’s school finance law also determined that Amendment 23’s requirements that school spending must increase annually by inflation and enrollment apply only to base school funding, about 75 percent of the total.
Even before the law was changed last year, the legislature had been shaving school funding in response to budget pressures. In 2009-10 total program funding was about $5.6 billion, not the $5.7 billion called for by the old interpretation of Amendment 23. Average per-pupil funding was $7,075.
School districts have responded to the tightening of state aid with a variety of tactics, including use of reserves, pay freezes, some layoffs and increased class sizes. Districts already are planning their 2011-12 budgets, and the announcement of Hickenlooper’s budget gives them a clearer target to shoot for.
Given that financial health and funding levels vary district to district, it’s difficult to say now what the effect will be on individual districts. As Colorado Education Association President Beverly Ingle noted, “CEA can’t predict yet the exact impact in each district but we can absolutely say that it will be profound.”
The final decision on the budget rests with legislature and won’t be made until sometime in April, after official quarterly revenue forecasts are released in late March. (Hickenlooper said Thursday he doesn’t expect those forecasts will differ much from the December forecast on which his budget plan is based.)
Some lawmakers politely pushed back at the idea of school cuts during the governor’s meeting with the JBC.
“There are things I question whether they are feasible or wise,” said Pat Steadman, D-Denver.
“This is a plan. We’re open to working with you,” Hickenlooper replied.
Hickenlooper had additional bad news in his formal letter to the JBC. “As we look ahead to FY 2012-13, it is likely additional budget reductions beyond those in this plan will be necessary.”
Higher ed snapshot
Former Gov. Bill Ritter’s higher education plan would have provided $555 million to state colleges and universities and required them to eat the loss of $89 million in federal stimulus funds.
State tax support is only about a quarter of higher ed revenue, with the rest supplied by tuition.
With state funding of $500 to $555 million, most colleges feel they can keep resident tuition increases to 9 percent for 2011-12, and Hickenlooper’s request for $519 million is in that ballpark.
A key part of Hickenlooper’s plan is maintaining the general fund reserve at 4 percent rather than the 2 percent sometimes used in times of economic stress. While some education advocates may push for a 2 percent reserve, Hickenlooper points out that would free up only about $100 million.
The governor also proposes to reduce the amount the state contributes to employee pensions (including for many workers in higher education but not for teachers) by 4.5 percent and increase employee payroll deductions by the same percentage.
In the Department of Education, the governor proposes to take $3.2 million from the Read-to-Achieve program and $1 million from the Colorado Counselor Corps, plus elimination of the School Leadership Academy board.
Many of the leaders who reacted to Hickenlooper’s budget plan highlighted the need for state fiscal reform, which will require voter approval because of the varied (and conflicting) revenue restrictions in the state constitution. Here’s a sampling:
“The public doesn’t show an appetite for new taxes.”
Beverly Ingle, Colorado Education Association
“The cuts will be painful and unpopular. … We have to start talking about a long-term solution.”
Brenda Smith, AFT-Colorado
“We recognize Colorado’s fiscal crisis, but we can’t balance our budget on the backs of educators and students and expect our state to stay competitive. Teachers are doing their part with fewer resources in larger classes, but at some point Coloradans will have to decide if education is really our priority.
Wade Buchanan, Bell Policy Center
“If we want to invest more in our children’s education and the public services that underpin our economy, we can decide to increase revenues. The stark the reality of today’s budget cuts can serve as the starting point for a conversation on a more balanced approach to addressing Colorado’s budget.”
Chris Watney, Colorado Children’s Campaign
“New revenue must be part of a broader conversation about how Colorado will move forward without making the kind of cuts that will harm not only the futures of our children, but of our state.”
Carol Hedges, Colorado Fiscal Policy Institute
“Our state Constitution, through the Taxpayer’s Bill of Rights, gives voters in Colorado the opportunity to say ‘no’ to these kinds of devastating choices. Now is the time for a more complete conversation. Now is the time for voters to stand up for their kids and their communities.”
House Speaker Frank McNulty, R-Highlands Ranch
“We appreciate the governor’s willingness to tackle the state budget in a way that begins to address the long-term structural issues and we look forward to working with him on specifics.”
Senate Minority Leader Mike Kopp, R-Littleton
“We applaud Gov. Hickenlooper for recognizing that reliance on one-time federal funds and other clever budgeting maneuvers has left the state budget in a desperate situation. We also congratulate the governor for acknowledging that economic growth through job creation is the only cure for our budget woes, not tax increases.”
Senate President Brandon Shaffer, D-Longmont
“The governor presented the Legislature a budget proposal on his vision for the state. It deserves thoughtful consideration as we make decisions on behalf of the people of Colorado.”