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Colorado lawmakers want to craft a new school funding formula. Details TBD.

The Colorado State Capitol is seen from some distance, surrounded by other buildings, its dome glowing slightly.

There is broad agreement among Colorado lawmakers that the state’s school finance formula needs to change. But how?

Dan Lyon / Chalkbeat

Colorado lawmakers could make fundamental changes this year to how the state funds its schools, targeting more money to serve students in poverty, English learners, and gifted students. They also might better fund programs that help high school students earn college credit and industry credentials.

But many details still need to be worked out, and the proposal will have to overcome political hurdles that have doomed past efforts. 

On Tuesday, the members of a special committee on school finance unanimously backed a call for a new school funding formula.

Colorado’s current system gives far more consideration to district factors like size and how expensive it is to live there and far less consideration to how many students live in poverty or are learning English, with the effect that sometimes school districts serving better-off students get more money than those serving more students in need. Many education advocacy groups consider the status quo unacceptable.

The new formula, proposed by committee Chair Julie McCluskie, the incoming speaker of the Colorado House, would: 

  • Use a “student-centered” approach to address the needs of students in poverty, English learners, and gifted learners.
  • Address the needs of rural, remote, and small school districts.
  • Use a more targeted approach to support districts with high cost of living
  • Address issues related to declining enrollment.
  • Review charter school funding.
  • Consider programs that allow high school students to remain a fifth or sixth year as they earn college credits or workforce certificates.
  • Be phased in over time to avoid shocks to the system.

But nearly all the details still need to be worked out. McCluskie said lawmakers will be working with education groups and using a sophisticated modeling tool to examine the impact and trade-offs of giving more or less weight to various factors. 

The goal is to have a more specific proposal for the committee to vote on in January, one that can win the backing of five Democrats and five Republicans who can then make the case to the full legislature that it’s time for a big change. 

“We need to modernize an antiquated school finance system,” said McCluskie, a Dillon Democrat.

Senate Minority Leader Paul Lundeen, a Monument Republican who has long been active in school finance debates, said doing nothing is not an option.

“The pandemic showed parents, showed teachers, showed policymakers the weaknesses in our system, and the foundation of all of it is in how we spend our money,” he said.  

The school finance committee has been meeting in the legislative off-season for five years, and members came close to voting on a new formula three years ago. The proposal did not move forward in large part because Colorado doesn’t have an extra $1 billion to put into its K-12 schools. 

Without more funding, formula changes would have meant some districts got less so that others could get more. No school administrator in Colorado wanted to make do with less, even if most agree the current system is unfair.

“Should we rob from one group of districts and students to give it to another group of districts and students?” is how Bret Miles, executive director of the Colorado Association of School Executives, described the debate in a recent interview.

Colorado taxpayers have repeatedly voted down efforts to increase statewide education funding. The most recent effort didn’t even make it on the ballot

In the meantime, Colorado lawmakers have made a number of incremental changes to school funding. They added English learners to the weighted formula, guaranteeing districts would get more money as that student population grows. They changed how they counted students in poverty, moving away from unreliable free lunch applications. They increased funding for special education. And they required certain school districts to gradually raise local property taxes to levels that voters had previously agreed to.

McCluskie sees these steps as important precursors to a larger formula overhaul.

The call for a new formula comes as Democrats have expanded their majorities in both chambers and as lawmakers deeply involved in the school finance debate ascend to new leadership positions.

Will this year be different? McCluskie said Colorado schools are underfunded, period, and she doesn’t want any school district to get less. She promised to work closely with education interest groups to understand the impact of changes and to take a careful, phased approach so that no district is harmed.

The modeling tool isn’t available to the general public, but McCluskie said she’s working on ways to create a transparent process with public participation, including from parents.

State Sen. Rachel Zenzinger, an Arvada Democrat and incoming chair of the Joint Budget Committee, said there may be ways to find money that don’t depend on new taxes.

The recent changes to local tax policy, alongside rising property values, mean school districts are raising more money locally, easing pressure on the state portion of K-12 funding. High inflation coupled with declining enrollment means Colorado is spending more on fewer students. That opens up wiggle room to reallocate dollars. 

The state could also change how it counts enrollment, Zenzinger said. Districts that are losing students can use their five-year average enrollment to ease the budget blow. Moving from a five-year student average to a three-year average would reduce the amount the state spends for students who don’t exist anymore, for example. 

But some changes may not move forward, Zenzinger said, if the state can’t afford to do them without hurting some districts.

Lundeen said everyone in education needs to find the will to make big changes.

“You can’t tinker in a marginal way and get a fundamental change,” Lundeen said. 

Bureau Chief Erica Meltzer covers education policy and politics and oversees Chalkbeat Colorado’s education coverage. Contact Erica at emeltzer@chalkbeat.org.

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