School Finance

Lawsuit claims school funding reduction mechanism unconstitutional

Updated 9 a.m. – A group of school districts and parents filed a lawsuit Friday arguing that the device used by the legislature to control annual K-12 spending, the so-called negative factor, is unconstitutional.

The suit, filed against the state in Denver District Court, argues that the negative factor violates Amendment 23, the constitutional provision that requires school funding to increase by inflation and enrollment growth every year.

The suit has been expected for some time and opens a new front in the policy war over the negative factor, a conflict that intensified during the 2014 legislative session. It’s estimated that use of the negative factor has cut about $1 billion a year from what school districts otherwise would have received for basic operating costs. (See text of suit here.)

The plaintiffs ask that the negative factor section be stricken from the state’s school funding law and that the legislature be barred from reinstating the factor in another form. The suit does not ask that lost funding be restored.

Lead lawyers in the case are Timothy Macdonald of Arnold and Porter and Kathleen Gebhardt of Children’s Voices, a Boulder public interest law firm. She was the lead lawyer in the long-running Lobato v. State school funding suit, which was thrown out by the Colorado Supreme Court in 2013. (Get full background on the Lobato case here.)

Kathleen Gebhardt / File photo
PHOTO: Scott Elliott
Kathleen Gebhardt / File photo

Gebhardt told Chalkbeat Colorado that the final decision to file was made on Tuesday, partly because recent state revenue forecasts (see story) indicate continued improvement in state finances.

“It’s a simple claim, just that the negative factor violates Amendment 23,” Gebhardt said, describing it as a very different case from the complex Lobato suit.

The plaintiffs in the new case include the Colorado Springs 11, Boulder Valley, Mancos, Holyoke and Plateau Valley school districts, along with the East Central Board of Cooperative Educational Services. Other plaintiffs are the Colorado Rural Schools Caucus and the Colorado PTA. Four sets of parents with children in the Kit Carson, Lewis-Palmer and Hanover districts also have signed on to the suit.

The lead plaintiffs are Lindi and Paul Dwyer, who have four daughters in the Kit Carson district, and the case takes their name, Dwyer v. State. Gov. John Hickenlooper and Education Commissioner Robert Hammond are the named defendants in the suit.

Lawyers from four Denver law firms have agreed to assist Gebhardt with the case without charge.

What Amendment 23 does

Passed by voters in 2000, A23’s backers intended for it to provide a predictable and growing source of funding for schools. The amendment’s goal was to restore per-pupil funding to 1988 levels over time. For the first 10 years after passage the amendment required that funding increase an additional 1 percent a year on top of the increases for inflation and enrollment.

State funding for schools comes in two chunks. The larger amount, base funding, provides an identical per-student amount to every district. The second chunk, called factor funding, gives districts varying additional per-student amounts based on district characteristics such as numbers of at-risk students, low enrollment and cost of living for staff.  Local property and vehicle tax revenues also contribute to what’s called total program funding for schools.

(A third, smaller pot of state support known as categorical funding provides money to districts for programs such as special education, gifted and talented and transportation. While A23 requires overall categorical funding to increase by inflation every year, the money is not distributed by the same formula that governs total program funding.)

The key fact is that up until the 2010-11 school year, the legislature applied the inflation-and-enrollment increase to both base and factor funding. (Because of the recession, in 2008-09 and 2009-10 the legislature cut school funding by other means.)

Behind the negative factor

School funding chart
Source: Colorado legislative staff. Click for larger view

With the economy still squeezing state revenues, in 2010 the legislature created the negative factor (originally called the stabilization factor) to control school spending as lawmakers continued to struggle with the overall state budget. It applied to the 2010-11 K-12 budget and has been in effect ever since.

The legal reasoning behind the negative factor is that A23 applies only to base funding, not to factor funding. And while the original A23 factors are intended to increase school funding, the negative factor gives lawmakers a tool for reducing it. This is the key issue under attack in the new lawsuit. The negative factor hasn’t been tested in court before. Its rationale is based on a 34-page 2003 memo issued by the Office of Legislative Legal Services at the request of then-Rep. Keith King, R-Colorado Springs. (Read memo here.)

“Amendment 23 precludes the General Assembly from purporting to grow the base but then slashing overall education funding by fundamentally revamping or jettisoning the [finance] formula as in effect in 2000,” the suit argues.

The policy debate

Negative factor impact
  • $5.9 billion K-12 funding in 2014-15 with
  • $6.8 billion without

A23 isn’t the only constitutional provision that applies to the state budget. Among other things, the constitution requires a balanced state budget every year, limits the amount of new revenue that can be spent even in years of high growth and restricts property taxes in a way that has reduced growth of local district revenues.

Because of those restrictions, policymakers who support the negative factor argue that it’s necessary to prevent K-12 spending from consuming larger and larger shares of the state’s general fund budget and squeezing out other state programs.

With state revenues improving, reduction of the negative factor was the top priority for education interest groups during the 2014 legislative session. Their proposals ranged as high as $275 million. In the end lawmakers agreed to a $110 million reduction.

The Hickenlooper administration and legislative budget experts resisted a larger buy down, arguing that a bigger amount would put too much pressure on the state budget in future years. That can happen because reducing the negative factor puts more money into K-12 base funding, which is subject to A23’s multiplier in the future.

Lawsuit backers met with key lawmakers near the end of the session, but legislators reportedly refused to be swayed by any possibility of a suit.

What happens next

As usually happens in these kinds of constitutional cases, the attorney general is expected to ask the district court to dismiss the suit. If that happens, the plaintiffs would appeal to the Colorado Court of Appeals.

Assuming the case stays alive in district court one way or another, both sides could file their written arguments by the end of the year – creating a pile of legal documents for the 2015 legislature to ponder as lawmakers consider the 2015-16 budget and how big a negative factor to include.

Interest groups already are gearing up to push for additional factor buy downs in 2015, and a live lawsuit will provide additional fuel and tension for the debate.

 

Colorado Votes 2018

Tax breaks for the rich and a ‘bargain with the devil’: Colorado candidates for governor spar over education

PHOTO: Denver Post
Democrat Jared Polis and Republican Walker Stapleton are competing to be Colorado's next governor.

Colorado’s Democratic candidate for governor is the founder of a charter school network, and the Republican candidate is a longtime supporter of charter schools and school choice. But their common support for charter schools belies strong differences in their education priorities.

Speaking to an audience of charter school leaders on Monday, both candidates highlighted where those policy disagreements might undermine their opponent’s stated support. U.S. Rep. Jared Polis, the Democrat, said the education policies supported by Colorado Treasurer Walker Stapleton, the Republican, would take money from public schools, including charters.

For his part, Stapleton made sure to mention that Polis is endorsed by the Colorado Education Association, the state’s largest teachers union, an alliance he called “a bargain with the devil.”

The two men spoke Monday to the Colorado League of Charter Schools’ Leadership Summit in the midst of a campaign that has been more dominated by health care and energy policy than education issues. This is in marked contrast to the Democratic primary, where candidates debated and attacked each other over degrees of support for or opposition to education reform policies.

Charter schools — publicly funded but independently run — have long enjoyed bipartisan support in Colorado as part of a broader education reform agenda. Charters have been praised for expanding options and raising achievement for students who are ill-served by traditional public schools and criticized for not serving all students and diverting money from other public schools. Teachers unions, a key Democratic constituency, have often opposed the expansion of charter schools, where teachers are generally not unionized.

The candidates discussed school funding, school choice, and Amendment 73, a corporate and income tax increase on the November ballot that would raise $1.6 billion for K-12 education.

Stapleton and Polis are competing to replace Gov. John Hickenlooper, a Democrat, who is barred by term limits from seeking re-election.

Here’s what we heard:

On Amendment 73

Polis said he does not have a position on the tax increase and that he’ll work to increase funding to public education regardless of the outcome on Amendment 73.

“It’s not exactly what I would do or how I would form it, but if the people decide to move forward with that, I would make sure those resources reach the classroom and that charter schools were treated fairly,” he said. “If the people don’t like that proposal, I’m ready to roll up my sleeves and work with Republicans and Democrats and the business community and the charter school community and teachers to end decades of underfunding and underinvestment in our public schools.”

Unlike other Democratic candidates for governor, Polis did not make rolling back portions of Colorado’s Taxpayer’s Bill of Rights to allow the state to keep money generated by existing taxes a key part of his platform. He said Monday that if elected, he would allocate significantly more money for K-12 education out of the general fund.

How much money will go to education versus other needs is a constant debate in the legislature, with Republicans arguing that roads and other infrastructure needs have lost out.

Stapleton said he is “adamantly opposed” to Amendment 73 in part because there is not enough accountability for how the money would be spent. He pointed to rising administrative costs in many school districts, costs that have outpaced growth in enrollment, as well as the share of districts’ personnel budgets that goes toward paying pension costs.

“If you don’t earmark money, money finds its way to places you never expected and maybe not in the most effective way for kids or into the classroom,” he said.

As treasurer, Stapleton advocated for changes to the pension system that put more of the responsibility for fixing unfunded liabilities on teachers and retirees. At the same time, many observers say pension costs are partially responsible for stagnation in teacher pay.

“I will do whatever I can through executive order to make it possible for everyone in this room to get line-item details on what’s being spent in any school district,” he said. “Until we get numbers and transparency, we won’t be able to get to the root of the problem.”

Colorado’s system of “local control” has granted school districts significant autonomy in everything from curriculum to salaries. Schools have to report how much they spend on administrative costs, but there is not consistency about what goes into that portion of the budget.

On expanding school choice

Colorado law allows students to enroll in any school that has room for them and can meet their needs, but some parts of the state have far fewer options than others. And transportation remains a barrier everywhere to students who want to attend schools outside their neighborhood or town.

Without offering a detailed proposal, Polis said he wants to work on solving the transportation problem for Colorado students.

“That’s going to be an important part of taking the charter school movement to the next level,” he said. “You can’t take the transportation side out if you truly want the market mechanism of choice to lift all boats and improve student performance and make sure every child has access to a world-class education.”

He also demonstrated his experience with the nitty-gritty of charter school management by promising to protect charters that provide half-day kindergarten from having to renegotiate their contracts if he’s successful in funding full-day kindergarten.

Stapleton said he would send more money to charter schools authorized by the state’s Charter School Institute. These schools received an increase in a 2017 bill that gave more money from local tax increases to district-authorized charter schools, but they depend on the legislature to allocate that money every year.

And he promised to create a new state-level authorizer for charter schools whose districts were not interested in working with them. In a brief interview after the forum, he said he isn’t sure yet what that would look like or how it would differ from the Charter School Institute. The idea is not mentioned on his website’s education page.

“I will be an advocate for another board or entity being able to authorize charter schools,” he said. “In some school districts where you have failing public schools, there is a bias amongst some people on the school board who are predisposed to not have more competition in public education. The people that end up being the losers are the people who can least afford it.”

On why the other would be bad for education

Polis said two of Stapleton’s key education proposals — a tax holiday for school supplies and education savings accounts that would let parents save money tax-free to pay for music lessons, academic tutoring, career and technical education, and preschool — wouldn’t change fundamental inequalities but would reduce the money available to fund K-12 education.

“The problem in our state is where does that money come from,” he said. “It comes from public schools. So you’re actually taking money out of public school finance to say we’re going to create a tax break for wealthy families to pay for tutors.”

Stapleton said Polis cannot be counted on to support charter schools because he has been endorsed by the state teachers union. This endorsement came after the primary, during with the Colorado Education Association endorsed one of Polis’s opponents and contributed to attack ads that questioned his support for public education.

“My opponent is fully endorsed by the CEA, and I am very concerned about the CEA’s plan for education versus … charters’ plans for education,” Stapleton said as his final unprompted comment to the crowd. “I think that it’s a bargain with the devil, and I am proud that I am not endorsed by the CEA.”

Read both candidates’ responses to Chalkbeat’s education policy questionnaire.

Amendment 73

Here’s how some districts would spend their share of a $1.6 billion tax hike for education

PHOTO: Katie Wood/The Denver Post
Teacher Mandy Rees talks to her middle school students at Bruce Randolph School on Wednesday, March 1, 2017.

If Colorado voters this November approve a $1.6 billion tax increase to benefit schools, several metro-area districts are pledging to spend part of their share to boost teacher pay.

Raising teacher salaries is an idea that’s gaining political popularity, fueled by teacher protests around the country and here in Colorado, where education funding is below the national average and several recent studies have found teachers are dramatically underpaid.

School boards in at least 70 of the state’s 178 school districts – including Denver, Aurora, Jeffco, Adams 14, Westminster, and Sheridan – have passed resolutions in support of the statewide tax increase, called Amendment 73. Some have also specified what their districts would spend the money on.

Amendment 73 would raise personal income taxes for residents making more than $150,000 per year. It would also raise the corporate income tax and make adjustments to property taxes. In separate ballot measures, districts across Colorado – including Aurora, Jeffco, and Westminster – are asking voters to raise local taxes to support education, as well.

In addition to teacher pay, all three large metro districts named expanding preschool as a priority if Amendment 73 passes. Aurora listed decreasing student-to-teacher ratios, while Denver listed reducing class sizes. Denver and Jeffco said they’d also spend more on mental health support for students.

Click the links below to read the resolutions in their entirety. We’ve also included bulleted summaries of the spending priorities in Denver, Jeffco, and Aurora.

A Denver teacher gave an evocative example to the school board Thursday of why the district should prioritize support for students’ mental health by hiring more psychologists and social workers, something it has already begun doing with money from local tax increases.

Here is what the teacher, Michelle Garrison, had to say.

There’s all kinds of facts and figures about the types of trauma students go through in their daily lives. … But when I really thought about how to tell this story, I wanted to share with you some things about how this manifests and looks in a school. … Here’s some things that have happened in the past three days.

Three different third-grade girls crying on three different days because one student with severe emotional needs keeps hitting them and pulling their hair.

Five first-graders crying because another student was sprinting around the room grabbing and crumpling everyone’s art project, ruining their work.

One seventh-grade boy who sleeps soundly, drool and all, every day this week and tells me he can’t sleep at night because he’s afraid someone is going to take his little sister.

Attending a meeting in which we were told to offer coloring sheets as our sole intervention for a boy who has been hitting students with blunt objects and jabbing at their throats.

Attending a trauma-informed practice (training) of which the thesis was, “Don’t yell at kids because they might have really messed-up things going on at home.” I’m not really sure what else to do about what they do, though.

The police have been called to our building three times.

Over 20 middle school students running in the halls, sprinting in and out of classrooms, running and sliding on the floor, blaring music over a Bluetooth speaker. It took 15 minutes and five adults to get them back into classrooms.

I could go on. This is half of what I wrote down. I think you get the point.

This is despite a school full of wonderful adults, wonderful administration, and really wonderful students. But this is the reality of what happens.

I was trained as an art teacher. I do not know what to do to help these students.

Click here to read Denver Public Schools’ resolution on Amendment 73. The $1.6 billion in revenue that the tax increase would generate would be divvied up between school districts, and Denver officials said they expect the district’s share will be $150 million each year.

The resolution says the district will prioritize spending the money on:

  • Increasing pay to attract and retain high-quality teachers and staff
  • Better supporting student mental health needs
  • “Targeted funding and strategies to better support student groups with higher needs, including efforts to reduce class sizes”
  • Expanding early childhood education opportunities

The resolution notes that the largest portion of the funds should be spent on teacher pay, though it doesn’t specify a dollar amount or percentage.

Click here to read Aurora Public Schools’ resolution. It says the district will prioritize:

  • Adding school-based instructional supports, reducing student-teacher ratios, and establishing a clear career ladder to recruit and retain high-quality teachers
  • Enhancing preschool by increasing access, expanding quality programming, and increasing compensation for preschool staff
  • Increasing compensation and benefits to maintain a competitive place in the market

Click here to read Jeffco Public Schools’ resolution. In addition to naming priorities, it specifies what percentage of the district’s share of the funding it would spend on each one.

  • 50 percent to attract and retain quality teachers and staff
  • 15 percent to lower class sizes and staffing shortages
  • 10 percent to add mental health support and counseling, and school security
  • 10 percent to expand early childhood education
  • 7.5 percent to expand career and technical options, as well as science, technology, engineering, and math options
  • 7.5 percent to buy classroom learning materials, technology, and supplies, and offset student fees

Click here to read Westminster’s resolution, here to read Adams 14’s resolution, and here to read Sheridan’s resolution.

Westminster and Adams 14 didn’t suggest how the funds should be used. Sheridan included some commitments, but they aren’t very specific. They include spending on strategies to close gaps in test scores between different groups of students, and maintaining “adequate district operational functions.”

The Colorado Association of School Boards is collecting district resolutions, and you can find more of them here.

Colorado voters have twice before rejected statewide tax increases for education. At both the school and municipal level, voters are much more receptive to local tax increases. The Colorado Association of School Boards, which supports Amendment 73, is urging its members around the state to be as specific as possible about how they’ll spend additional funds. An online guide encourages school boards to “engage stakeholders” and “hold public discussions.”

Opponents of the tax increase have criticized the lack of specificity in how new resources will be spent. They say that spending more money doesn’t guarantee students will do better in school.

But Lisa Weil, head of Great Education Colorado, a major backer of Amendment 73, said school districts had to decide on their own how to cut during the Great Recession, and they should get to decide now how to restore the money.

“In 10 and 20 and 30 years of cuts, the legislature has never said how to cut,” Weil said. “They’ve left that to local communities, and local communities have done what they can to keep cuts out of the classroom and keep serving kids. There is no better way to ensure accountability than to put these decisions in the hands of people who are accountable to voters. They know the community, and it’s where advocates have the most opportunity to make a difference.”

Chalkbeat staffers Yesenia Robles and Erica Meltzer contributed to this report.