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Colorado districts struggle to get a handle on fed cuts

Districts around the state fear they’ll lose more federal funds because of continuing budget squabbles in Washington, but it’s tricky to add up how much money is in jeopardy and who will get hurt the most.

What’s worrying schools is the system of automatic federal budget cuts called “sequestration.” Required by a 2011 law, the cuts went into effect last March and require across-the-board reductions in many (but not all) federal programs.

Whether to continue or cancel the automatic cuts has become part of the larger partisan fight in Washington over budget and debt issues, all of which creates uncertainty about how school districts should plan for cuts.

“It’s hard to know where districts are going to be with this,” said Tracie Rainey, executive director of the Colorado School Finance Project, a Denver research organization. “It doesn’t fit into a nice tidy box.”

But one superintendent, George Welsh of Center, thinks he has a pretty good idea of the box his 623-student district could be forced into.

Last school year his $7 million budget included about $2 million in federal funds. For the current year, given the loss of some federal funds and uncertainties about others, Welsh said, “I see us on a spectrum this year, the spectrum being we could receive $500,000 less than we expected, or we could receive $500,000 more.”

Center’s particular problem is a federal program called Secure Rural Schools and Community Self-Determination. Run by the U.S. Forest Service, the program provides funds to counties that include large amounts of federal forest land (which isn’t taxed) and have high poverty levels. Funding goes to counties, which share some of it with school districts.

The program owed the district $1 million in 2012-13 and Welsh said he’s yet to see the final $225,000 of that. The big question for this year is whether Congress even renews the program. The end of Secure Rural Schools could put Center’s budget $500,000 in the hole — though Welsh thinks he has enough reserves to cover that gap — while renewal could put the district $500,000 ahead.

Given the uncertainty, Welsh said he budgeted conservatively and, for example, cut three elementary staff positions.

“Our real struggle is with a log-jammed Congress,” he said.

In El Paso County, the 7,840 Fountain-Fort Carson district is wrestling with uncertainties about a different federal program known as Impact Aid, which is administered by the Department of Education. The program is intended to help support districts that include federal military property and that educate high numbers of military dependents. The city of Fountain lies just east of the massive Fort Carson Army base, and the district includes base land.

Joanne Vergunst, district assistant superintendent of business, said Fountain-Fort Carson is classified as “heavily impacted” and was due $23.7 million of impact aid last year. So far only 80 percent of that has been paid, although Vergunst expects to receive a bit more, “meaning that sequestration will have cost the district approximately $3.7 million.”

Payments also are expected to be slow in the coming year. “If sequestration continues through 2013-14, and the balance of funding is not received by the end of the school year, we will have tough decisions ahead in prioritizing 2014-15 expenditures and scheduling capital projects,” Vergunst said.

Because of its large amount of federal land, the district’s property value is low, and it relies on impact aid for construction. “The district has experienced continual growth and has built five new facilities over the past decade, most of which were funded with impact aid dollars,” she said. Fountain-Fort Carson has a total operating budget of about $66 million a year.

Elsewhere around the state

The situation in many other districts isn’t as dire.

For most schools, the biggest programs affected by sequestration are Title I, which provides funds for schools with high numbers of disadvantaged students, and IDEA, the program of federal support for special education students.

The U.S. Department of Education, assuming a 5 percent sequestration cut, estimated last February that Colorado’s Title I funding could drop $8.3 million to $139.4 million and that IDEA funding would drop $8.1 million to $146.1 million.

But estimates of sequestration’s impacts are tricky and ever changing. For instance, DOE last winter estimates Colorado would lose 700 Head Start places. Information released by another federal agency last month put the cuts at 500. And some estimates put sequestration cuts at as high as 10 percent.

A recent article in Education Week reported that sequestration’s impacts might be less severe than predicted months ago but remain hard to predict.

But districts are taking sequestration more seriously now. Most didn’t feel any effects during their 2012-13 budget years but expect that they will get hit in the 2013-14 year that just started. (Part of the confusion about sequestration stems from the fact that the federal government’s budget year runs from Oct. 1 to the following Sept. 30, while states and school districts are on a July 1 to June 30 budget calendar.)

The potential impacts of sequestration can vary widely by district because of different student populations. Districts with larger percentages of disadvantaged or special education students are more threatened than districts with fewer such students, for example.

Survey finds varying impacts

The finance project recently surveyed school districts about the potential effects of sequestration, and the responses varied widely. “It’s all over the board because districts receive different kinds of federal funds,” Rainey said.

Aurora estimated it could lose nearly $1.8 million in federal funds (about $1 million of that in Title I funds), while Boulder Valley estimated a $502,000 loss, and Adams 12-Five Star projected a cut of only $330,000.

Denver, with significantly more students that any of those districts, provided an exact estimate of lost funds — $2,782,559. The district reported it will handle cuts with reduced per-pupil grants to schools, shifting of some costs to other parts of budget and by use of funds saved from last year’s budget.

Jeffco administrators estimated a loss of $1.63 million, but their response called the potential impact “unknown … to what degree.”

Several districts reported they might have to eliminate positions if sequestration goes through.

The survey drew responses from 50 of Colorado’s 178 school districts and seven boards of cooperative educational services, which often are the primary providers of special education services in rural areas.

Looking at the big picture, sequestration might not seem to be a big problem. According to state Department of Education figures fro 2011-12, total school district revenue was $8.9 billion, with $734 million of that coming from Washington.

But the big picture doesn’t necessarily provide much comfort to people like George Welsh and Joanne Vergunst, who may be facing some tough local choices.

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