It looks like that a relative handful of Colorado school districts will ask their voters for tax increases this year, a sharp contrast with the crowded ballots of 2014.
About a dozen of the state’s 178 districts are considering tax proposals for the Nov. 3 election, according to results from a preliminary survey by the Colorado School Finance Project, a research organization. (See current list at bottom of this article.)
The only larger district on the list is Brighton 27J, the state’s 16th biggest district with about 17,100 students. In the 2014 election voters rejected a proposed $148 million bond issue by Brighton, which has been one of the state’s fast growing districts.
“I don’t think we’re going to see any big districts” going to the voters, said Tracie Rainey, executive director of CSFP.
The project’s list is preliminary, both because some districts haven’t yet responded to the group’s survey and because school boards still have about a month to decide if they want to propose bond issues or property tax overrides for operating expenses. Districts have a Sept. 4 deadline to submit final ballot language to county clerks.
Rainey doubts that any large-enrollment districts will take the plunge because “for a big district to decide it takes some time. … You’re talking a year out to set everything in motion.” Large districts typically use special panels to decide on potential uses for bond and override revenue and on independent committees to gauge possible voter support and to run campaigns.
Denver and Cherry Creek reportedly are considering tax elections in 2016. “I would think that next year you’re going to see bigger districts and more Front Range districts” going to the voters, Rainey said.
The fact that 2015 is an election year for school boards may be a factor in the apparent low number of tax elections.
Bond & Mill
- Bond measures are voter-approved increases in property taxes for facilities needs. Districts sell bonds to raise the cash to pay for construction, then use the additional tax revenues to pay the bonds off.
- Mill levy overrides are voter-approved hikes in a district’s general property tax rate that a district generally uses for operating expenses or special needs like technology purchases. (A mill is equal to one-tenth of a cent and is used as a mathematical device to calculate taxes.)
“You have board elections this fall,” said Jane Urschel, deputy executive director of the Colorado Association of Schools Boards. “For some districts they want to keep it [the ballot] as uncomplicated as possible.” She also said some district leaders may not want to push tax increases until after new boards are seated.
Rainey agrees. “I know they all are really focusing on board elections.” She added that bond and override proposals on ballots sometimes draws anti-tax voters, and “having anti-tax sentiment isn’t exactly helpful” in board races.
Urschel noted another reason why some districts may be hesitant. “There are so many of them who feel they can’t pass anything.”
Rep. Millie Hamner agreed, saying, “I think districts are afraid because it’s hard to ask your voters for more money.” The Dillon Democrat is incoming chair of the legislative Joint Budget Committee and an expert on school finance.
And Rainey also noted that the number of bond proposals may be down because the state’s Building Excellent Schools Today construction grant program has reached its cap on large grants. With BEST making fewer grants, fewer districts are asking voters to approve local matching bond funds.
Recent years have been busy for tax elections
In 2014 about two-dozen Colorado school districts sought some $1.5 billion in property tax increases for construction projects and operating funds. About half were rejected. Boulder voters approved a record $576.4 million bond issues, but nine proposed increases in five Adams County districts were defeated.
The year before voters also passed only about half of measures proposed in about two-dozen districts. The 2013 election was overshadowed by Amendment 66, the proposed $1 billion income tax increase to provide more school funding. It was defeated overwhelmingly.
The 2012 election saw voters in 29 districts approve 34 bond issues and operating revenue increases – plus one sales tax hike – worth just over $1 billion.
The state’s 10 largest districts have a mixed record on bond and override elections. In the last decade those districts have had 45 ballot measures, of which 25 passed and 20 were defeated.
The Aurora, Boulder, Cherry Creek, Denver and Poudre districts passed all their proposals, while Adams 12-Five Star, Douglas County and Jefferson County had more mixed success.
The combined bond debt of all state districts was $7.2 billion in 2013-14.
Are local taxes an untapped resource?
Bond issues are a straightforward piece of school funding. A district decides on needed construction and renovation projects and asks voters to approve a property tax increase to pay for them. If voters say yes, the district sells bonds, uses the proceeds to pay the contractors and then uses the annual revenue from the tax hike to repay bondholders over several years.
Tax overrides pose more nuanced policy issues, ones that drawing increasing attention from some policymakers.
The first is equity. It’s sometimes easier for large districts to win voter approval for overrides. And in large districts with substantial property values, a small increase in the property tax rate yields significant revenue.
Smaller, poorer districts often face voter resistance and have lower property values, so an increase in the tax rate doesn’t produce much revenue.
Because of Colorado’s unique constitutional limits on government revenue and spending, paying the bills for education is a never-ending challenge for educators and policymakers. Learn more in this backgrounder, which includes links to our archive of funding stories.
State budget issues in recent years have squeezed the amount of extra support the state can provide to those poorer, smaller districts, heightening concerns about equity. Revenue from tax overrides isn’t included in the state K-12 funding formula, so large districts with overrides can supplement their budgets. Districts without override revenue have to survive on what the state formula gives them.
The second issue is untapped capacity. State law sets a cap on override revenue. That aggregate limit for districts that currently have overrides is about $1.6 billion.
But those districts currently raise only about $826 million a year from overrides.
Hamner sees that untapped money as one way to ease district budget problems. “At a time when the state budget is definitely strapped I’m really encouraging g districts to rally at the local level. …. I think people are more inclined to support local increases than statewide increases.”
She said she’s sometimes “frustrated” by district leaders who complain about tight state funding but won’t consider asking voters for local increases. “That’s where I would at least start, to remind districts that they have that option. …. I definitely would encourage them to go for the local ask.”
Hamner acknowledges the wide differences in districts’ capacity to raise local revenues. She said the legislature needs to look at the issue, but she hasn’t developed any specific proposals yet.
Urschel hopes that districts will think more seriously about overrides after they realize that state budget pressures may get worse and after this November’s board elections. “That’s when districts take stock of the financial picture and see if they need mill levy elections.”