Dust settles on the money fight

Something for almost everyone in legislative funding decisions

When Colorado lawmakers boast about what they did for education funding in the 2014 session, they aren’t just blowing political hot air.

The 2014-15 school finance package, plus spending included in other bills, comes to just over $479 million for K-12 education. (Throw in the $100 million in higher education funding growth and you’re talking about real money.)

And the big fight over whether to add money to basic school funding or funnel it to special programs ended with about 73 percent of the cash going to district operations.

That debate was unusually tense at times during the legislature’s five-month run, but Gov. John Hickenlooper, key lawmakers, superintendents and lobbyists were all smiles at a recent signing ceremony for two key finance bills (see story).

“We did unprecedented work in funding education,” Senate Majority Leader Rollie Heath, D-Boulder, told reporters during an end-of-session briefing.

But the good feelings may not last for long.

Even though legislative action trimmed the $1 billion-plus K-12 budget shortfall, that gap still stands at $894.3 million. Created by a legislative budget-cutting device called the “negative factor,” the shortfall is the difference between what schools actually receive for basic operating costs (known as Total Program Funding) and what they would have been allocated without the negative factor.

Because of that remaining shortfall, education interest groups will continue to press for further reductions in the negative factor. “We have much ground to make up in school funding,” said Kerrie Dallman, president of the Colorado Education Association, after the session adjourned. “We made some good progress this year, but we are nowhere close to making a proper investment in our public schools,”

“The negative factor will continue to be an issue. It’s going to take a number of years to repay,” said Jane Urschel, deputy executive director of the Colorado Association of School Boards.

Gov. John Hickenlooper signs K-12 funding bills with students.
PHOTO: Kayleigh Skinner
Gov. John Hickenlooper signs K-12 funding bills with students.

Political leaders are crossing their figures that the fight won’t be as rough in 2015. “I hope next year won’t be as contentious,” said Dillon Democratic Rep. Millie Hamner, chair of the House Education Committee and a key player to the Student Success Act and the School Finance Act.

“I think it will be a continuing discussion,” said Hickenlooper. “I don’t think it will be a battle every year.”

Whether those hopes are realized remains to be seen, given that a variety of fiscal constraints and demands on the legislature could make it harder to trim the negative factor in the future. One of those is the fact that 2014-15 Total Program Funding increase become part of the K-12 budget base, which has to increase by enrollment and inflation every year.

“It’s going to be a harder fight for a smaller increase every year,” predicts Senate President Morgan Carroll, D-Aurora. “We’re going to hit a natural ceiling.”

Denver Democratic Sen. Mike Johnston agreed, saying, “We’re a year or two away from hitting the structural wall” that will make it tough to trim the negative factor.

Outgoing House Speaker Mark Ferrandino, D-Denver, originally resisted cuts in the negative factor but was on board with the final deal. “I think we ended up in a good place,” he said. “I feel comfortable. I’m very comfortable that we are sustainable over the next two years.”

Inside the big ed spending bills

K12_201415_SpendingChart

In their push to reduce the negative factor, district lobbyists worked hard to defeat bills that earmarked spending on specific education programs. They weren’t totally successful, but Urschel said, “I think we did very well on ‘no new mandates.’”

In contrast to many of the prior six sessions, the 2014 legislature didn’t create any big, brand-new education programs. Much of the targeted funding that was approved this year will go to existing programs that lawmakers and interest groups felt needed more money.

Here’s rundown of that spending, organized thematically with information about who gets the money or who benefits. You can get more detailed information about the bills that authorized the spending in this special Spending Bill Tracker.

Total Program Funding

Basic school support will be $5.93 billion next year, up from $5.52 billion in 2013-14. (The state share is rising $365.2 million, while local district revenues will go up about $40 million.) Next year’s funding will average $7,020, up from $6,652, according to the Department of Education.

Use Chalkbeat Colorado’s interactive database to see your district’s 2014-15 funding, and how much it will change from this year.

Special groups of students

The biggest chunk of targeted additional spending, about $63.5 million, goes to three groups of special students — at-risk preschool and kindergarten students, English language learners and primary-grade students who are behind in reading.

Funding for these programs generally is given to districts on a per-pupil basis for students who meet the criteria for various programs.

Preschool & kindergarten – $17 million in additional funding was allocated to what’s called the Early Childhood At-risk Enhancement program. That allows school districts to use the funding for either preschool or kindergarten slots for children who meet the at-risk definition of the Colorado Preschool Program. The new money adds 5,000 slots, which will mean an estimated 28,360 students will be served. (House Bill 14-1298 – School Finance Act)

English language learners – The legislature updated state law on services for such students and added $27 million in per-pupil funding. A key change in the law makes students eligible for extra funding for up to five years instead of the two years that has been the limit. ELL programs this year received $15.2 million in “categorical funding,” a $268.8 million pot of targeting spending that’s required by Amendment 23. ELL categorical funding rises to $16.7 million next year, in addition to the $27 million. Under one of the many school funding compromises made this session, the $27 million was not added to categorical funding because doing so would have locked that money into the base and given future legislatures no ability to cut the money in bad budget years. (HB 14-1298)

Struggling readers – Districts will receive an additional $18 million, again distributed per the numbers of eligible students, for early literacy interventions mandated by the 2012 READ Act, which requires individual plans and attention for lagging readers in grades K-3. The law was one of the few reform measures in recent years that was reasonably well funded from the start. But the number of students needing help was larger than expected, so the $18 million is in addition to the $15.4 million previously budgeted. (House Bill 14-1292 – Student Success Act)

Who lost out

Both Republican and Democratic lawmakers pushed to increase funding for full-day kindergarten for all students, but those efforts ultimately stalled. (For kindergarten students, the state currently pays districts 58 percent of funding for other students. If districts want to offer full-day kindergarten they have to pay for it themselves – or charge parents. Kindergarten attendance is not compulsory in Colorado.)

There was debate this session about devoting additional funding to at-risk students in general. Some districts argued that extra money for at-risk preschoolers and for English-language learners doesn’t help districts with poor students who don’t fall into those categories. But no one found an affordable compromise on the issue.

Additional funding for special education students really wasn’t on the table this session. Budget increases for such programs was approved in recent sessions.

Other student support

A few bills targeting smaller groups of students managed to survive the 2014 session.

Gifted & talented – A proposal to require screening of all students and hiring of qualified coordinators in all districts was whittled down to $1.9 million and stripped of most of its mandates. The funding is on top of $9.6 million in existing money. (House Bill 14-1102)

Advanced Placement classes – This legislation was relentlessly whittled down as it moved through the process and ended up with $261,561 to provide incentives for rural districts to provide AP classes. The grants are capped at 475 students. (House Bill 14-1118)

Counselors – The Colorado Counselor Corps, which provides additional counselors at schools with at-risk students, got an additional $3 million on top of $5 million in current funding. This bill was one of several that took a haircut. (Senate Bill 14-150)

And still more spending bills

A long list of other measures, and provisions in omnibus spending bills, provided cash for a wide variety of administrative costs, studies, training, school safety and other programs.

At-risk student support

Minority teachers – Lawmakers found $50,000 for the Department of Education to do a study of recruitment and retention of minority teachers. (House Bill 14-1175)

Opportunity gaps – This is a mandate that would provide $144,216 to create a database to track enrollment of different groups of students in core courses, also correlated to test scores. The idea is to uncover tracking of minority students. (House Bill 14-1376)

Turnaround leaders – A program to train leaders for low-performing schools received $2 million in funding. (Senate Bill 14-214)

Charter school facilities

Charter schools, which usually don’t have access to bond issue and other revenues that districts enjoy, often struggle with construction, lease and maintenance costs. Charters will get up to $11.5 million in per-pupil based facilities reimbursements, on top of the current $7 million. Another $6.5 million was added to a fund that backs charter construction loans. (HB 14-1292)

Health & Safety

School meals – Students in grades 3-5 who are eligible for reduced-price meals will get free meals under a bill that primarily will tap federal funds. (House Bill 14-1156). The Breakfast After the Bell program will get an additional $14.3 million in federal funds. (House Bill 14-1336 – Main state budget)

Medical emergencies – High school students will be able to get training in CPR under a $250,000 new grant program. (House Bill 14-1276)

Walking to school – The Safe Routes to School program, which provides education about safe walking and biking to school, will get $700,000 in state funds, partly to cover loss of federal money that the Department of Education has received in the past. (House Bill 14-1301)

Threat reporting – The non-profit Safe2Tell program is being brought into the Department of Law and funded with $318,246 in state money. The program provides a way for young people to anonymously report threats (including suicide), bullying and other dangers. (Senate Bill 14-002)

Marijuana – A bill that details how the state will use marijuana tax revenues includes $2.5 million for a grant program that schools can tap for school nurse training and marijuana education. (Senate Bill 14-215)

Testing

The legislature stepped away from making any changes to the state testing system but did come up with $142,750 to fund work related to a task force study of assessments. (House Bill 14-1202) There’s also $3.8 million in additional funds earmarked for CDE testing costs, and $826,046 more for Spanish language tests. (HB 14-1336)

Administrative Costs & Another Study

What’s included

  • While much of the 2014 debate swirled around use of the state General Fund and the State Education Fund, this story lists bills that tapped other sources of revenue, including federal funds, to give a broader of education funding increases. (Spending for the Building Excellent Schools Today construction program, which receives revenues from state-owned lands, isn’t included.)

Financial transparency – The final big fight over the Student Success Act was about whether to fund a state website that users could search for information about K-12 spending, down to the individual school level. CDE received $3 million to hire a contractor to build such a site, which doesn’t have to launch before July 1, 2017. (HB 14-1292)

Online schools – Among the many studies is one on how to oversee multi-district online schools. A task force will be created to do that, at a cost of $47,659. (House Bill 14-1382)

Small districts – Colorado’s boards of cooperative educational services will get an additional $2 million in state funding, the idea being to give BOCES more resources so that they can help smaller districts with implementation of various new state educational requirements. (HB 14-1298)

CDE increases – The department got several pots of additional money to run various programs, including teacher of the year ($24,800), early childhood administration ($63,607), creation of early childhood student identifiers ($298,000), information technology improvements ($3 million), English language learner programs ($311,682) and college and career readiness programs ($170,845). (HB 14-1298 and HB 14-1336)

CDE also gets a little bit off the top of several bills for administration. For example, state law allows the department to retain up to 3 percent of Counselor Corps funding for its costs – primarily staff – of running the program.

money matters

Why Gov. Hickenlooper wants to give some Colorado charter schools $5.5 million

Students at The New America School in Thornton during an English class. (Photo by Nic Garcia)

If Mike Epke, principal of the New America School in Thornton, had a larger budget, he would like to spend it on technical training and intervention programs for his students.

He would buy more grade-level and age appropriate books for the empty shelves in his school’s library, and provide his teachers with a modest raise. If he could really make the dollars stretch, he’d hire additional teacher aides to help students learning with disabilities.

“These are students who have not had all the opportunities other students have had,” the charter school principal said, describing his 400 high school students who are mostly Hispanic and come from low-income homes.

A $5.5 million budget request from Gov. John Hickenlooper, a Democrat, could help Epke make some of those dreams a reality.

The seven-figure ask is part of Hickenlooper’s proposed budget that he sent to lawmakers earlier this month. The money would go to state-approved charter schools in an effort to close a funding gap lawmakers tried to eliminate in a landmark funding bill passed in the waning days of the 2017 state legislative session.

Funding charter schools, which receive tax dollars but operate independently of the traditional school district system, is a contentious issue in many states. Charter schools in Colorado have enjoyed bipartisan support, but the 2017 debate over how to fund them hit on thorny issues, especially the state’s constitutional guarantee of local control of schools.

The legislation that ultimately passed, which had broad bipartisan support but faced fierce opposition from some Democrats, requires school districts by 2020 to equitably share voter-approved local tax increases — known as mill levy overrides — with the charter schools they approved.

The bill also created a system for lawmakers to send more money to charter schools, like New America in Thornton, that are governed by the state, rather than a local school district.

Unlike district-approved charter schools, which were always eligible to receive a portion of local tax increases, state-approved charter schools haven’t had access to that revenue.

Terry Croy Lewis, executive director of the Charter School Institute, or CSI, the state organization that approves charter schools, said it is critical lawmakers complete the work they started in 2017 by boosting funding to her schools.

“It’s a significant amount of money,” she said. “To not have that equity for our schools, it’s extremely concerning.”

CSI authorizes 41 different charters schools that enrolled nearly 17,000 students last school year. That’s comparable to both the Brighton and Thompson school districts, according to state data.

Hickenlooper’s request would be a small step toward closing the $18 million gap between state-approved charter schools and what district-run charter schools are projected to receive starting in 2020, CSI officials said.

“Gov. Hickenlooper believes that working to make school funding as fair as possible is important,” Jacque Montgomery, Hickenlooper’s spokeswoman, said in a statement. “This is the next step in making sure that is true for more children.”

If lawmakers approve Hickenlooper’s request, the New Legacy charter school in Aurora would receive about $580 more per student in the 2018-19 school year.

Jennifer Douglas, the school’s principal, said she would put that money toward teacher salaries and training — especially in the school’s early education center.

“As a small school, serving students with complex needs, it is challenging and we need to tap into every dollar we can,” she said.

The three-year old school in Aurora serves both teen mothers and their toddlers. Before the school opened, Douglas sent in her charter application to both the Aurora school board and CSI. Both approved her charter application, but because at the time her school would receive greater access to federal dollars through CSI, Douglas asked to be governed by the state.

Douglas said that her preferred solution to close the funding gap would be to see local tax increases follow students, regardless of school type or governance model. Until that day, she said, lawmakers must “ensure that schools have the resources they need to take care of the students in our state and give them the education they deserve.”

For Hickenlooper’s request to become a reality, it must first be approved by the legislature’s budget committee and then by both chambers. In a hyper-partisan election year, nothing is a guarantee, but it appears Hickenlooper’s proposal won’t face the same fight that the 2017 charter school funding bill encountered.

State Rep. Jovan Melton, an Aurora Democrat who helped lead the charge against the charter school funding bill, said he was likely going to support Hickenlooper’s proposal.

“You almost have to do it to be in alignment with the law,” Melton said. “I don’t think with a good conscience I could vote against it. I’m probably going to hold my nose and vote yes.”

Payment dispute

Fired testing company seeks $25.3 million for work on TNReady’s bumpy rollout

PHOTO: TN.gov

Tennessee officials won’t talk about the state’s ongoing dispute with the testing company it fired last year, but the company’s president is.

Henry Scherich

Henry Scherich says Tennessee owes Measurement Inc. $25.3 million for services associated with TNReady, the state’s new standardized test for its public schools. That’s nearly a quarter of the company’s five-year, $108 million contract with the state, which Tennessee officials canceled after technical problems roiled the test’s 2016 rollout.

So far, the state has paid the Durham, North Carolina-based company about $545,000 for its services, representing about 2 percent of the total bill, according to a claim recently obtained by Chalkbeat.

Measurement Inc. filed the claim with the state in February in an effort to get the rest of the money that it says it’s owed. Since then, lawyers for both sides have been in discussions, and the company filed a lawsuit in June with the Tennessee Claims Commission. The commission has directed the State Department of Education to respond to the complaint by Nov. 30.

“We’re moving forward,” Scherich told Chalkbeat when asked about the status of the talks. “… We’re simply asking to be paid for the services we provided.”

Education Commissioner Candice McQueen declined last week to discuss the dispute, which she called “an ongoing pending lawsuit.” A spokesman for the attorney general’s office also declined to comment on Monday.

Scherich said he and other company officials have not been called to Nashville for hearings or depositions.

“Our lawyers and the state’s lawyers are still skirmishing each other,” he said. “…They argue about lots of things. It’s kind of like we’re establishing the ground rules for how this process is going to proceed.”

PHOTO: Grace Tatter
Education Commissioner Candice McQueen announced the firing of Measurement Inc. and the suspensions of most testing in April 2016.

Tennessee’s dramatic testing failure started on Feb. 8, 2016, when students logged on during the first morning of testing and were unable to load TNReady off the new online platform developed by Measurement Inc. The fallout culminated several months later when McQueen fired the company and canceled testing altogether for grades 3-8. In between were months of delays after McQueen instructed districts to revert to paper-and-pencil materials that would be provided by Measurement Inc. under the terms of their contract. Many of those materials never arrived.

The company’s claim suggests that the state was hasty in its decision to cancel online testing and therefore shares blame for a year of incomplete testing.

The Tennessee Department of Education “unilaterally and unjustifiably ordered the cancellation of all statewide electronic testing that occurred on February 8, 2016, following a transitory slowdown of network services that morning,” the claim says.

(In an exclusive interview with Chalkbeat the day before his company was fired, Scherich said Measurement Inc.’s online platform did not have enough servers for the 48,000 students who logged on that first day — a problem that he said could have been fixed eventually.)

The claim also charges that McQueen’s subsequent order to substitute paper test materials was “unnecessary and irresponsible” and impossible to meet because of the logistical challenge of printing and distributing them statewide in a matter of weeks.

In her letter terminating the state’s contracts with Measurement Inc., McQueen describes daily problems with the company’s online platform in the months leading up to the botched launch. “This was not just a testing day hiccup; the online platform failed to function on day one of testing,” she wrote.

McQueen said those experiences contributed to her department’s conclusion that Measurement Inc. was unable to provide a reliable, consistent online platform and left her with no option but to order paper and pencil tests. She also cited the company’s failure to meet its own paper test delivery deadlines for her ultimate decision to terminate the contracts and suspend testing.

The last sentence of the four-page termination letter says the state would “work with (Measurement Inc.) to determine reconciliation for appropriate compensation due, if any, for services and deliverables that have been completed as of the termination date after liquidated damages have been assessed.”

In addition to its invoices for work under the contract, Scherich said his company is owed another $400,000 for delivering test-related materials to the state after its contract was ended.

“We didn’t want to be a company that stood in the way of the programs of the state of Tennessee, so we provided all the information they requested,” Scherich said. “We were told we would be paid, we provided the information, and then we’ve not been paid.”

Founded in 1980, Measurement Inc. had been doing testing-related work for Tennessee for more than a decade before being awarded the 2014 TNReady contract, its biggest job ever. The company had a fast deadline — only a year — to create the state’s test for grades 3-11 math and English language arts after a vote months earlier by the legislature prompted Tennessee to pull out of PARCC, a consortium of other states with a shared Common Core-aligned assessment.

Scherich said the loss of the TNReady contract was “a major hit” for his company, but that Measurement Inc. has paid every employee and subcontractor who worked on the project. “We have had to go into debt to keep ourselves viable while we wait for this situation with Tennessee to be resolved,” he said, adding that the company continues to do work in about 20 other states.

To pursue its claim, Measurement Inc. has hired the Tennessee law firm of Lewis, Thomason, King, Krieg & Waldrop, which has offices in Nashville and Knoxville.

“I’m sure we’ll work out something amicable with the state over time,” he said. “I’m an optimistic person. But I think our lawyers and their lawyers will have to have a lot of negotiations.”

Below are Measurement Inc.’s claim against the state, and the state’s letter terminating its contracts with the company.

Editor’s note: This story has been updated with details about the claim’s status.