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School finance committee: Spend more on special ed, redefine ‘at-risk’

A teacher holds up hand sanitizer during a lesson on how to use it. Third grade students sit on the rug with their backs to the camera.

A larger rewrite of Colorado’s school funding formula could be coming later this year.

RJ Sangosti / The Denver Post

Colorado lawmakers will take up three bills this session recommended by a special committee charged with re-examining how Colorado funds its schools, including one to significantly increase special education funding. 

If passed by both chambers of the legislature and signed by the governor, the bills would:

  • change how Colorado identifies students from disadvantaged backgrounds.
  • increase funding for students with disabilities by more than 40%.
  • develop new investment guidelines for the state land fund, which generates money for public schools.

The Interim Committee on School Finance recommended all three bills with unanimous, bipartisan support Thursday after six months of meetings that saw sometimes significant disagreement over the best way forward. 

But a fourth proposal that would have sent more money to districts that struggle to raise money from local property taxes was withdrawn due to lack of support among committee members. 

Committee Chair Julie McCluskie, a Dillon Democrat, said supporters would keep working on the solution and that she was optimistic that one would be found. The most recent proposal would have created a state matching fund for districts whose voters agree to raise their own property taxes but don’t generate much money from those higher rates.

Colorado distributes money among school districts using a 1994 formula. School district officials, education advocates, and state policymakers broadly agree the 28-year-old formula needs an update and is inequitable. For example, it sends more money to wealthy districts with high cost of living than to districts serving a lot of students living in poverty. However, changing the formula has been politically challenging.

The special committee is supposed to come up with a new formula that shares money more fairly and that provides districts with more money for students who need more support to be successful. The bills recommended by the committee for this legislative session don’t address the larger issues with the formula, but committee members say they are important first steps or address problems outside the distribution formula.

Colorado already provides more per-student funding for at-risk students, currently defined as students who participate in the federal free lunch program or who are in the early stages of learning English. However, this way of counting students has broken down during the pandemic, as fewer families fill out the necessary forms. Even before then, advocates worried a lot of students were getting missed, and school districts hesitated to adopt universal lunch programs for fear of losing state funding.

The first bill recommended by the special committee would change how Colorado counts at-risk students by using socioeconomic factors, including eligibility for Medicaid, food stamps, and other government assistance, along with data from the U.S. Census about community poverty. 

On its own, the bill wouldn’t send more money to school districts serving those students, but policymakers see this change as a necessary step before the formula can be revised. The changes would take effect in the 2023-24 school year, with a task force to work out the details of the transition.

The second bill would spend more on special education students, starting next school year. This proposal would have the most immediate effect on school budgets.

Colorado allocates this money independent of the main funding formula, but the state has never met its obligations since the current system was established in 2006. The bill calls for increasing funding to $1,750, a 40% increase, for each student who receives special education services. 

Districts are also supposed to get $6,000 for each student with a more serious disability. The state has never come close to that amount, but the bill calls for funding of at least $5,088 next year and for funding to increase with inflation going forward. A fiscal analysis estimates the cost of both changes to be $93 million, a 44% increase over this school year’s $210 million state allocation.

Districts collectively spend an additional $700 million a year educating students with disabilities on top of what the state provides, with most of that money coming from their general operating budget. The special education bill would create a committee to look at how other states fund special education, what’s working and what isn’t about Colorado’s system, and how the state and districts should share costs. Those recommendations would be due by the end of the year.

The third bill would set up a group to make recommendations about how the state land board makes and invests money from state trust lands. State trust lands are supposed to generate money for public schools, but the lands aren’t earning as much money as they could with more flexible investment strategies, officials who manage the trust told the committee.

At the same, current rules endanger long-term sustainability of the trust. The bill aims to come up with new guidelines that will shore up the trust for future generations.

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