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Hick signs school finance reform bill

Gov. John Hickenlooper this morning signed the proposed overhaul of the state’s school funding system, but it’s still unclear which billion-dollar proposal voters will face to fund the ambitious plan. That may not be decided until the end of May.

Hickenlooper said the bill “really positions Colorado to be the national leader in school reform and school effectiveness.”

Sen. Mike Johnston, D-Denver and primary author of the bill, called it “a tremendous step forward” and said the measure shows it’s possible to combine education reform with additional funding.

Rep. Millie Hamner, D-Dillon, reminded the crowd gathered at the Capitol ceremony that “the biggest challenge ahead of us will be convincing all of the people of Colorado to share this vision” and approve the tax increase necessary to pay for it.

SB 13-213 would increase funding for kindergarten and preschool, provide significantly more money for districts with the highest concentrations of at-risk students and English language learners, devote more money to special education and make extra payments to districts for the cost of implementing reform mandates.

(Get more details on the bill in this EdNews summary and in this legislative staff analysis.)

The new system won’t go into effect unless voters approve an income-tax increase to pay for its costs, which range from $899 million in the first year for basic school funding to $1.12 billion to pay for all the bill’s elements, according to a legislative staff estimate.

If voters approve a tax increase in November the new funding formula wouldn’t kick in until the 2015-16 school year. If voters say no this year, the bill would remain on the shelf but “alive” for five years, allowing backers to go to the voters later if they choose.

Lots of tax plans to choose from

Backers of a proposed tax increase, led by the civic group Colorado Forum, filed 16 variations of a tax increase on the March 22 deadline. The idea was to keep a number of options alive so that supporters could later choose one to submit to voters, based on the wishes of various interest groups in Colorado Forum’s coalition and on perceptions and polling about voter preferences. (The SB 13-213 price tag was set at about $1 billion because previous public opinion sampling indicated that was the upper limit of what a majority of voters might support.)

“We’re very close” to selecting the ballot measure, Gail Klapper, director of Colorado Forum, told EdNews on Monday. Klapper said she hopes a decision will be made by the end of the month. Once that choice is made, backers will have until Aug. 5 to gather the 86,105 signatures necessary to put the measure on the Nov. 5 ballot.

“A modified flat tax is what we’re most likely to get to,” she said of the likely choice.

What Klapper means by that is a proposal that would include a two-step tax increase, with a .37 percent hike for individual taxpayers who earn $75,000 or less a year and a 1.27 percent increase for those earning more. Currently all taxpayers pay 4.63 percent of their federal taxable income to the state. The additional revenue derived from the .37 and 1.27 percent increases would be earmarked for additional K-12 spending.

The two-step tax hike would raise $950.1 million a year in revenue, according to estimates by legislative staff economists.

Up to now Hickenlooper has kept a fairly low public profile on the ballot measure. “I will certainly campaign for it when we decide what it is,” he said. But he declined to say whether he’s favoring any particular version. “I have several preferences, but I’ll keep those to myself.”

Most people involved in the effort believe a successful campaign will require high-visibility leadership from a figure like Hickenlooper. “The only [successful] path I see right now is the governor supporting and actively campaigning,” said one observer.

The Colorado Forum proposals come in four flavors: The two-step increase, a truly flat increase of .72 percent and two sets of five-tier increases.The two-step tax would raise the least amount of revenue. The across-the-board .72 percent increases would raise an estimated $927.7 million, while the variations of five-step increases would raise $1.07 billion and $1.16 billion.

There’s been a lively debate about the tax structure among segments of the business and education communities. Some business interests have argued for the flat .72 percent increase while other groups wanted to differentiate rates so that lower-income taxpayers wouldn’t see as large an increase.

Choice of the two-step plan is seen as a likely compromise, according to several sources.

In addition to the four different tax increases, the Colorado Forum proposals also include four variations of tax policy changes. Those include:

  • A combination proposal that includes repeal of the current constitutional requirement for automatic increases in base school funding (Amendment 23) and replacing it with a provision earmarking about 43 percent of annual state general fund spending for schools. The combination plan also changes the Gallagher Amendment, which governs local property taxes, to set a floor on the valuation of residential property for the assessment of school taxes.
  • A version that includes just the Amendment 23 changes.
  • A version that includes only the Gallagher changes.
  • No change in either constitutional provision.

Various interest groups have different opinions about the need to change Amendment 23 and Gallagher, so those issues have been part of the behind-the-scenes debates about which ballot measure to go with.

Klapper indicated Monday that the final version might well include the Amendment 23 change but that “we’re really wrestling with the Gallagher piece.”

Her goal, she said, is to choose a version “that every constituency finds something in it to love.”

Campaign could be costly

Once a measure makes the ballot, proponents will have to persuade voters to raise their taxes. Klapper joked that it will take “astronomical amounts” of money to fund a successful campaign.

Another observer, Chris Watney of the Colorado Children’s Campaign, estimated a campaign cost of $7 to $10 million.

Asked if a June start for petition gathering was risky, Klapper said, “The experts tell me that’s enough time.”

Colorado Forum is already getting some expert advice, from Mike Melanson of OnSight Public Affairs. He’s a Democratic strategist who has managed campaigns for Hickenlooper and Sen. Mark Udall.

One potential complication for the campaign is the fact that voters also will face a $70 million proposal to set excise and sales taxes on recreational marijuana. Asked about the possible interplay of the two measures in voters’ minds, Klapper said, “That’s what we’re trying to figure out.”

Signing key step in long journey

The signing of SB 13-213 was the culmination of an effort that started in 2011, when a group called the Colorado School Finance Partnership began studying the state’s funding system. Many of the themes in its final report are echoed in the bill.

The partnership is a coalition of civic, business and education groups originally convened by the Colorado Children’s Campaign.The west foyer of the Capitol was filled with leaders of education groups, partnership members, some business leaders, lobbyists, a smattering of superintendents and legislators for the signing ceremony.

Both Hickenlooper and Johnston took care to mention lots of people by name and thank them for their work on the issue.

Conspicuously absent were any Republican officials. The bill gained no GOP votes in either the House or Senate, where Republicans hewed to the party’s anti-tax orthodoxy.

On Tuesday, while Democratic legislative staffers were tweeting every nuance of the event, @CoSenGOP tweeted, “SB 213 is a billion dollar tax increase disguised as school reform.”

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