rolling the dice

The legislative habit of gambling on the future

One of the many peculiarities of Colorado’s complex state budgeting process is the legislature’s weakness for spending – or at least promising to spend – money before it’s even collected.

The latest example popped up just last week, when the House approved House Bill 14-1342, a measure that would provide extra funding for higher education construction projects – but only if the 2013-14 budget year ends with more surplus revenues than currently predicted.

K-12 education has benefited from such tactics in the past, and there has been some fear in districts that this year’s higher ed plan might disadvantage K-12.

The scheme probably means that the State Education Fund would receive a smaller infusion of cash than it might have otherwise. But in any event the higher ed finance plan won’t affect district funding in 2014-15, an issue that’s the focus of a separate – and bigger – debate.

“It’s based on ‘if’ there’s money left at the end of the year,” said Dillon Democratic Rep. Millie Hamner, chair of the House Education Committee.

So the K-12 lobby has decided not to pick a fight over HB 14-1342 and instead to remain focused on its main goal for 2014 – persuading lawmakers to make as large a dent as possible in the state’s $1 billion K-12 funding shortfall.

“Do we like this amendment? No!” Bruce Caughey, executive director of the Colorado Association of School Executives wrote in an email to members last week. He said the CASE legislative team recommended “that we do not get drawn into a battle with higher education, the governor and the Joint Budget Committee” and remain focused on reducing the shortfall, known at the statehouse as the “negative factor.” A group of superintendents is pushing for a reduction of as much as $275 million. A pending bill, House Bill 14-1292, proposes $100 million.

That doesn’t mean HB 14-1342 will get a free ride in the Senate. Denver Democratic Sen. Pat Steadman, vice-chair of the Joint Budget Committee, doesn’t like the idea of earmarking unknown future revenues. “I’m not the biggest fan,” Steadman said Tuesday morning before the bill was approved by the Senate Appropriations Committee. “I expect we’ll be talking more about the bill on the floor,”

Budget timeline
  • The legislature will vote by May 7 on a budget for the 2014-15 fiscal year, which starts July 1.
  • That budget is based on revenue estimates that were issued in late March.
  • Actual tax collections almost always differ from those estimates, especially when revenues are increasing.
  • So, backers of HB14-1342 are betting that when the state closes its 2013-14 books next fall there will be a bigger actual surplus than was predicted this spring, providing money for buildings.

Summary of HB 14-1342

Like virtually every other budget fight, the HB 14-1342 tussle has its roots in the 2008 recession, which sent state tax revenues into a tailspin. Among the many programs cut was construction on college campuses.

Revenues have been slowly recovering over the last two years, and lawmakers, lobbyists and executive branch bureaucrats hoped the 2014 legislative session would provide the opportunity to put some catch-up spending in the 2014-15 budget.

Even before the session started, Gov. John Hickenlooper proposed a $100 million increase in higher ed operating funds, a plan widely supported in the legislature. And college leaders and lobbyists also were looking forward to a boost in construction funding.

The Capital Development Committee, a joint House-Senate panel that reviews construction projects, produced a list that included some college projects. But the committee’s plans were derailed on March 20 when JBC members announced they would back an alternative project list supported by Gov. John Hickenlooper, which included only two higher education buildings, one at the Auraria Higher Education Center and one at the University of Colorado campus in Colorado Springs.

That’s when the higher education lobby and sympathetic legislators sprang into action and came up with the plan to spend possible future money on those campus buildings. The amendment was added to the bill last Thursday and given final approval in the House on Friday.

The amended bill protects two programs that the 2013 legislature had designated as recipients of sany urplus funds – the Colorado Water Conservation Board ($30 million) and the State Education Fund ($31.1 million).

In theory, that means the SEF would get less money than it would have under a 2013 law that allocated 75 percent of any surplus to the fund. (The SEF is a dedicated account that is used to supplement state General Fund spending on schools and for other K-12 spending.)

Even with the cap on the SEF transfer, Hamner called the bill “a fair compromise,” adding, “I have to look at the bigger view” of both K-12 and higher ed needs.

If there’s enough surplus to cover the water board and SEF transfers (plus $10.3 million to be kept in the General Fund), then any money above that would go to a ranked list of higher education construction projects. There’s a cap of $119.5 million on the campus spending. If the surplus revenue is more than about $190 million, the money above that goes to the SEF.

In past years lawmakers have used the future-revenues gambit to benefit the education fund, and those gambles have paid off. For instance, the SEF last fall received slightly more than $1 billion in 2012-13 surplus funds.

And K-12 advocates are trying to go back to that well. A House amendment to House Bill 14-1298, the annual School Finance Act, proposes diverting 75 percent of any 2014-15 surplus into the SEF.

Earmarking to-be-collected funds, whatever the purpose, bothers Steadman, one of the legislature’s budget experts. “It’s not the way to do it,” he said in an interview. Noting that the legislature meets every year, he notes, “We’ll be here next year to spend next year’s money.” Budgeting should be done “in real time,” he said.

He also said earmarking too much money ahead of time might limit the 2015 legislature’s ability to make annual mid-year budget adjustments.

The Senate is considering HB 14-1342 this week, along with the main 2014-15 budget, House Bill 14-1336. Steadman says he’ll have some proposed amendments for the higher ed construction bill, so the debate will continue.

Use the Education Bill Tracker for links to bill texts and other information.

Paying for school

Sweeping study proposes major changes to the way schools are funded in Michigan

Michigan needs to change the way it funds education so that schools get more money for students who need extra attention — such as those who live in poverty and those who don’t yet have a strong command of the English language.

That’s the top recommendation from a prominent group of educators, policymakers, and business leaders who have been studying Michigan’s school funding system for much of the past two years.

While many states use a complex formula that gives schools more money if they serve children facing extra challenges, Michigan has long used a system that distributes the same amount of money for virtually all students, regardless of their needs.

The state provides some extra funding for students with disabilities — but not nearly enough, according to a state study last year that found schools across Michigan are getting $700 million less a year than they need to serve those students.

The study released Wednesday recommends a major restructuring so that schools would be fully funded for special education programs and would get extra funds to provide resources to students who need extra help. With that money, schools could offer lower class sizes, add counselors and social workers, and give teachers more support, the report says.

The study was conducted by Augenblick, Palaich and Associates on behalf of the Michigan School Finance Research Collaborative.

The collaborative — including top business and education leaders across the state — came together in 2016 after an earlier “school adequacy study” was largely ignored by political leaders.

The earlier study, which was funded by the state legislature, recommended that the state significantly increase the amount of money it sends to schools per student.

The collaborative hopes this new more robust study, which clocks in at more than 300 data-packed pages, will have a greater impact.

Since this study used multiple methods to determine the right funding method for schools, it will be more difficult to ignore, the group hopes.

The study — paid for with $843,000 from major foundations and 18 county school districts — included interviews with hundreds of educators to determine how much money schools need to more effectively do their jobs.

The study examined geographic cost differences in different parts of the state, labor cost differences, and other factors.

Among other recommendations in the  report is that charter schools receive the same per-student funding as districts. Currently, the state’s funding system pays some districts more per student than others based largely on historic funding levels as opposed to current needs. Some districts — including most charter schools — are currently getting around $7,600 per child from the state while others get thousands of dollars more.

The study also recommends that schools get more money for student transportation.

It does not spell out how Michigan could come up with the extra money, instead outlining that conversation as a next step — and highlighting a potential pitfall that could arise.

“While outside of the scope of this current study, the study team feels it is important to highlight during the implementation of a new system that student and taxpayer equity will also need to be considered,” the study’s executive summary reads. “Ensuring that each district and charter has the ability to raise funds needed to meet all resource needs is critical to ensuring both an adequate and equitable school funding system.”

The findings were released Wednesday morning, with press conferences planned in Lansing, Grand Rapids, and in the Detroit area.

Read the full report here:

spending squeeze

Facing a state budget crunch, Gov. Cuomo proposes modest 3 percent education boost

Governor Andrew Cuomo delivers his executive budget address.

Facing budget pressure at home and from Washington, Gov. Andrew Cuomo proposed increasing school aid by 3 percent this year —  far less than what advocates and the state’s education policymakers had sought.

Cuomo put forward a $769 million increase in school aid during his executive budget address on Tuesday, less than half of the $1.6 billion sought by the state’s Board of Regents. In response, the state’s top education officials said they were “concerned,” and suggested that they would press lawmakers to negotiate for more education spending.

The governor’s modest increase in school funding comes amid a projected $4.4 billion state budget deficit, a federal tax overhaul expected to squeeze New York’s tax revenue, and the threat of further federal cuts.

Still, Cuomo, a Democrat who plans to run for reelection this fall and is considering a 2020 presidential bid, defended his spending plan as a boost for schools at a time of fiscal uncertainty.

“We have increased education more than any area in state government,” he said during his speech in Albany. “Period.”

He also floated a plan to have the state approve local districts’ budgets to ensure they are spending enough on high-poverty schools. And he set aside more money for prekindergarten, after-school programs, and “community schools” that provide social services to students and their families.

Now that Cuomo’s proposal is out he must negotiate a final budget for the 2019 fiscal year with lawmakers by April 1. While the Democratic-controlled assembly is likely to push for more school spending, the senate’s Republican leaders are calling for fiscal restraint and tax cuts.

What was the response?

Advocates and policymakers were alarmed by Cuomo’s proposed $769 million education bump — a 3 percent spending increase compared to last year’s 4.4 percent boost.

Last month, a coalition of statewide education organizations estimated that the state would need to increase spending by $1.5 billion just to maintain current education services. The group, which includes state teachers union and groups representing school boards and superintendents, called for a $2 billion increase.

In a statement Tuesday, Board of Regents Chancellor Betty Rosa and State Education Commissioner MaryEllen Elia noted that Cuomo’s proposal was less than half the amount they sought. They promised to work with lawmakers to ensure the final budget amount “will meet the needs of every student throughout our State.”

Anticipating such criticism, Cuomo noted in his speech that he has expanded education spending by nearly 35 percent since taking office. His proposal would bring total school aid to $26.4 billion — the largest portion of the state budget.

Still, that didn’t prevent pushback. A state assemblyman heckled Cuomo as the unveiled his education spending plan, suggesting it was not enough money.

“It’s never enough,” Cuomo shot back.

Will poorer schools get more funding?

Cuomo said he wants to fight “trickle-down education funding” and ensure that poor schools receive their fair share of cash.

To that end, Cuomo wants the state education department and his budget office to review local school district budget plans. The plan is aimed at larger school districts, including New York City, which Cuomo singled out in his speech.

“Right now we have no idea where the money is going,” Cuomo said on Tuesday. “We have a formula. We direct it to the poorer districts. But what did Buffalo do with it? What does New York City do with it?”

It’s unclear how the proposal would impact New York City, which already uses a funding formula designed to send more money to schools with needier students. But some education advocates were intrigued by Cuomo’s idea, which they said could be a way to expose and fight inequities in school funding across the state.

“Right now, school-level expenditure with consistent definitions is really a mystery,” said Ian Rosenblum, executive director of The Education Trust – New York. “It means that a lot of inequity can be swept under the rug.”

Cuomo officials also said that 73.1 percent of funding will be directed to high-needs districts in this year’s budget, which the state said was the highest share ever. Last year, they received 72 percent.

But advocates are more concerned with the state’s “foundation aid” formula, which funnels a greater share of funds to high-needs districts. The formula was created in response to a school funding lawsuit settled more than a decade ago; advocates say schools are still owed billions from the settlement.

Cuomo proposed boosting foundation aid this year by $338 million, a far cry from the $1.25 billion requested by the Board of Regents. Without more foundation aid, some advocates say Cuomo’s promise of greater funding equity rings hollow.

“Equity is you’re actually helping to lift up poor districts so that they can provide an equitable education,” said Billy Easton, executive director of the union-backed Alliance for Quality Education. “Not just that they’re receiving a larger share of a too-small pot.”

What does all of this mean for New York City schools?

New York City is not immune from Albany’s budget crunch.

The total increase proposed for the city — $247 million — falls about $150 million short of the mayor’s projections in November, according to the city’s Independent Budget Office.

It may also be difficult for the city to wrangle funding for big-ticket items. Mayor Bill de Blasio wants to expand his prekindergarten program to 3-year-old students, but he estimates that he will need $700 million from state and federal sources by 2021. (The governor proposed $15 million to expand pre-K seats across the state.)

How about charter schools?

Cuomo would boost spending for charter schools by 3 percent the same rate as for district schools. He also wants to provide more support for schools that rent private space, which is a major financial burden for some schools.

“Once again, Gov. Cuomo demonstrated his unwavering commitment to ensuring every student in our state has access to a great public education,” said James Merriman, CEO of the New York City Charter School Center.