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State board pledges $1 million to bail out rural Colorado district reeling from coal industry collapse

The Colowyo coal mine in Craig. (Helen H. Richardson, The Denver Post)
The Colowyo coal mine in Craig. (Helen H. Richardson, The Denver Post)

The State Board of Education gave a $1 million lifeline Thursday to a small northwestern Colorado school district facing a financial crisis because the nation’s largest coal producer failed to pay its property taxes.

The board voted 7-0 to essentially drain a reserve fund to help the 350-student South Routt School District.

Peabody Energy, which operates the Twentymile Mine west of Steamboat Springs, declared bankruptcy in April. In mid-June, the company missed a property tax payment. Its share of unpaid taxes is estimated to be just over $1 million, the school district says.

Like many rural Colorado school districts, South Routt is heavily dependent on the boom-and-bust energy industry. District officials say revenues from Peabody accounts for about 40 percent of the district’s tax base.

The district runs a preschool, elementary, middle and high school serving Stagecoach, Oak Creek, Phippsburg, Yampa and Topanas. About 40 percent of its students qualify for free or reduced-priced lunches, a measure of poverty.

Under state statute, the Department of Education’s contingency reserve funds are to help districts experiencing financial difficulties, including emergencies caused by nonpayment of property taxes.

“This is exactly why the fund was created,” said Jennifer Oakes, the department’s director of school finance. “Something of this magnitude, especially for a district the size of South Routt, would be devastating.”

The district will be expected to pay the state back if Peabody makes good on its tax bill, otherwise it will be considered a grant. The Department of Education will ask the legislature in January to replenish the reserve fund.

The state has granted 15 requests to tap the fund for financial emergencies since 2001-2002, Oakes said. At least three were to Denver Public Schools after floundering airlines failed to pay property taxes, she said. The largest, for $3 million in 2002-2003, stemmed from United Airlines filing for bankruptcy.

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