Petition Time

Try, try again: Latest attempt at Colorado school funding measure would raise $1.6 billion with income, corporate tax increases

Colorado voters could see a $1.6 billion tax increase for education on their November ballots.

Backers of a major school funding measure have been cleared to gather signatures by the Colorado Secretary of State’s Office. The measure – going by Great Schools, Thriving Communities – would increase the corporate tax rate and increase income taxes for people who earn more than $150,000 a year, as well as change how residential property is taxed for schools.

“Colorado schools are severely underfunded right now, and this initiative is a way we can ensure that every student has access to the supports they need for success,” said Susan Meek, a spokeswoman for Great Education Colorado, one of the groups supporting the measure.

Colorado’s Taxpayer’s Bill of Rights requires that voters approve any tax increase, and voters have twice before rejected statewide school funding measures, most recently in 2013.

To get on the ballot this time, supporters need 98,492 valid voter signatures. Amendment 71, approved in 2016, requires that those signatures be gathered in every state Senate district in the state, imposing – by design – a logistical and financial hurdle on all constitutional amendments. (A federal judge has suggested that requirement might violate the U.S. Constitution, and it’s not clear right now whether it will remain in effect.)

The tax measure calls for:

  • Raising the corporate income tax rate from 4.63 percent to 6 percent.
  • Raising the income tax rate from a flat 4.63 percent to between 5 percent and 8.25 percent for people earning more than $150,000. The highest tax rate would be paid by people earning $500,000 or more.
  • Setting the residential property assessment rate at 7 percent for schools. That’s lower than it is now but higher than it is predicted to be in 2019 because current law has the unintended effect of gradually reducing the residential assessment rate.
  • Setting the non-residential property assessment rate at 24 percent, less than the current 29 percent.

According to a fiscal analysis by the state, the average taxpayer earning more than $150,000 would pay an additional $519 a year, while those earning less would be unaffected. The average corporate taxpayer would pay an additional $11,085 a year. The change in property taxes would vary considerably around the state, but based on the average statewide school levy, many property owners would pay $28 more on each $100,000 of actual value in 2019 than they otherwise would. Commercial property owners will see a decrease, and total property tax revenue collected by school districts would go down statewide.

If approved, the taxes would generate an estimated $1.6 billion that would go into a new “Quality Public Education Fund.” The vision is that this money would be distributed to schools in accordance with a new school finance formula backed by nearly all of the state’s superintendents and under consideration in the legislature this year.

The new funding formula, which would increase per-pupil funding in accordance with student characteristics like being gifted and talented or learning English as a second language, only goes into effect if voters approve the tax measure. If that plays out, no school district would lose money on the deal, and some would see significant increases in funding.

If lawmakers don’t pass a new funding formula, but voters approve the tax measure, schools would still get more money. The ballot measure calls for an increase to the base amount of per-pupil funding, plus extra money for students with particular needs, money for public preschool, and money for full-day kindergarten.

Full funding for kindergarten has been an elusive Holy Grail for education advocates in Colorado.

“Our measure is addressing the needs of the kids head on,” said Donald Anderson, one of the backers of the tax increase. “You can see where we’re raising this money and you can see where it’s going, and it’s very transparent in a way that voters will be able to get behind.”

Anderson is a stay-at-home father of two children in the Poudre School District in Fort Collins who has been active on school issues.

The ballot measure also contains a provision that requires the state to keep spending what it already does. That is, lawmakers can’t lean on this new money source and divert existing education spending to other needs.

Luke Ragland of the conservative education reform group Ready Colorado supports the idea of weighted student funding contained in the proposed new finance formula, but he doesn’t think Colorado’s education system needs a huge infusion of cash – if voters even go along with the idea.

“I don’t understand why the presumption is that spending more money will make things better,” he said. “Spending money on the same things won’t produce different outcomes.”

The education spending measure could be sharing space on a crowded ballot with a governor’s race, a transportation measure, and more.

The most recent attempt to raise money for schools – Amendment 66 in 2013 – was rejected by 65 percent of voters. That measure affected all taxpayers by imposing a 5 percent income tax rate on those earning up to $75,000 and a 5.9 percent rate on those earning more. It also involved a change to the funding formula, but one that caused some districts to lose money.

Is this a good time to try again for an education tax increase? Backers of the idea say there’s only one way to find out.

“We have one of the best economies in the nation right now, and it’s the perfect time to be investing in our students,” Meek said.

More money

What Colorado’s booming economy might mean for the state education budget

More money is forecast to appear below the gold dome (Denver Post photo).

Gov. John Hickenlooper wants to put an extra $200 million into education next year and another $100 million in the 2019-20 fiscal year, but a lot of that money could go to offset hits to districts from anticipated reforms to the state’s pension program and reductions in local tax revenue.

The proposal comes in response to new economic forecasts released Monday that show Colorado having more money than previously expected.

Legislative economists predict that lawmakers will have a whopping $1.3 billion or 11.5 percent more to spend or save in 2018-19 than is budgeted in 2017-18. The forecast from the governor’s Office of State Planning and Budget predicts similar increases in revenue. After meeting the reserve requirement of 6.5 percent, Colorado will have an additional $492 million in reserve for this fiscal year, and even with a higher reserve of 8 percent proposed for next fiscal year, the state would have an additional $548.1 million in 2018-19. 

It’s normal for the forecasts to be slightly different because the economic analysts often use slightly different assumptions. In this case, the governor’s office predicts that the additional revenue will be more spread out over this fiscal year and the next one, while legislative economists think more of the money will be coming in next year. That difference means the legislative forecast shows the state potentially hitting the revenue limits imposed by the Taxpayer’s Bill of Rights, despite lawmakers making more room under the cap just last year, while the governor’s forecast does not.

These are the numbers that the Joint Budget Committee has been waiting for to finalize its recommendations for the 2018-19 budget year. Republicans and advocates for more transportation spending have already seized on the numbers to support a plan to ask voters to approve new debt to pay for road construction and dedicate up to $300 million a year to pay off that debt.

Of course, these forecasts are also inherently speculative – and legislative economists warned these forecasts contain even more uncertainty than usual.

State Rep. Millie Hamner, the Dillon Democrat who chairs the Joint Budget Committee, summed up the message as one of caution about dedicating too much of the new revenue to ongoing expenses. The more that gets committed, the harder it will be for the state to meet all of those commitments in future years.

Those who want to see Colorado spend more on K-12 education have pushed back on the Republican roads bill out of fear that the commitment could make it harder to send more money to schools in the future.

The governor’s budget director Henry Sobanet recommended treating much of this new money as “one-time” funds that should go to “one-time” uses. In a letter to the Joint Budget Committee, he laid out a plan.

In the case of roads spending, he’s recommending an extra $500 million for road construction in 2018-19, but only $150 million in 2019-20. And in the case of education, he’s recommending an additional $200 million in 2018-19 and an additional $100 million the following year.

However, this extra money might not show up in classrooms – or rather, it might show up in a lack of cuts rather than new money.

The governor’s budget request already called for a reduction in the budget stabilization factor of $100 million. That’s the amount by which Colorado underfunds K-12 education compared to the requirements of Amendment 23. In this budget year, it’s $822 million, after a mid-year adjustment. Some of the extra money could go toward reducing it even further.

However, Sobanet said he envisions most of it going to offset reductions in local property tax revenue that will be caused by a provision of the Colorado constitution that governs the ratio between residential and commercial property tax revenue.

It’s also possible that school districts could end up having to pay more toward some sort of agreement on changes to the Public Employees’ Retirement Association, or PERA. The final form of reforms to PERA is far from certain.

“Another downgrade in the residential assessment rate means more state share to keep total per pupil spending up,” Sobanet said. “We know that since the December announcement of property taxes and since we know PERA might be on the table for something, let’s set aside some resources and make sure we can handle this.”

Keep Out

What’s wrong with auditing all of Colorado’s education programs? Everything, lawmakers said.

Students at DSST: College View Middle School work on a reading assignment during an English Language Development class (Photo By Andy Cross / The Denver Post).

State Rep. Jon Becker pitched the idea as basic good governance. The state auditor’s office examines all sorts of state programs, but it never looks at education, the second largest expenditure in Colorado’s budget and a sector that touches the lives of hundreds of thousands of children. So let the auditor take a good, long look and report back to the legislature on which programs are working and which aren’t.

The State Board of Education hated this idea. So did Democrats. And Republicans. The House Education Committee voted 12-0 this week to reject Becker’s bill, which would have required a systematic review of all educational programs enacted by the legislature and in place for at least six years. Even an amendment that would have put the state board in the driver’s seat couldn’t save it.

As he made his case, Becker, a Republican from Fort Morgan in northeastern Colorado, was careful not to name any specific law he would like to see changed.

“I don’t want people to say, ‘Oh, he’s coming after my ox,’” he told the House Education Committee this week. “I know how this works. And that’s not the intent of this bill. It’s to look at all programs.”

But members of the committee weren’t buying it.

State Rep. Alec Garnett, a Denver Democrat, pressed school board members who testified in favor of the bill to name a law or program they were particularly excited to “shed some light on.” If there’s a law that’s a problem, he asked, wouldn’t it make more sense to drill down just on that law?

They tried to demur.

“I feel like you’re trying to get us to say, we really want you to go after 191 or we really want you to go after charter schools,” said Cathy Kipp, a school board member in the Poudre School District who also serves on the board of the Colorado Association of School Boards. “That’s not what this is about.”

Kipp said committee members seemed to be “scared that if their pet programs get looked at, they’ll be eliminated. Why be scared? Shouldn’t we want these programs to be looked at?”

But proponents’ own testimony seemed to suggest some potential targets, including Senate Bill 191, Colorado’s landmark teacher effectiveness law.

As Carrie Warren-Gully, president of the school boards association, argued for the benefits of an independent evaluation of education programs, she offered up an example: The schedules of administrators who have to evaluate dozens of teachers under the law are more complicated than “a flight plan at DIA,” and districts have to hire additional administrators just to manage evaluations, cutting into the resources available for students, she said.

The debate reflected ongoing tensions between the state and school districts over Colorado’s complex system for evaluating schools and teachers and holding them accountable for student achievement. The systematic review bill was supported by the Colorado Association of School Boards, the Colorado Association of School Executives, and the Colorado Rural Schools Alliance.

Lawmakers repeatedly told school officials that if they have problems with particular parts of existing legislation, they should come to them for help and will surely find allies.

Exasperated school officials responded by pointing to the past failure of legislation that would have tweaked aspects of evaluations or assessments — but the frustration was mutual.

“Just because people don’t agree with one specific approach doesn’t mean people aren’t willing to come to the table,” said committee chair Brittany Pettersen, a Lakewood Democrat.

There were other concerns, including the possibility that this type of expansive evaluation would prove expensive and create yet another bureaucracy.

“When have we ever grown government to shrink it?” asked state Rep. Paul Lundeen, a Monument Republican. “There’s a paradox here.”

And state Rep. James Wilson, a Salida Republican who is also a former teacher and school superintendent, questioned whether the auditor’s office has the expertise to review education programs. He also asked what standard would be applied to evaluate programs that are implemented differently in more than 170 school districts across the state.

“If it’s effective more often than not, will they keep it?” Wilson asked. “If it doesn’t work in a third of them, it’s gone?”

State Board of Education members had similar questions when they decided earlier this year that this bill was a bad idea. Many of Colorado’s education laws don’t have clear measures of success against which their performance can be evaluated.

The READ Act, for example, stresses the importance of every child learning to read well in early elementary school and outlines the steps that schools have to take to measure reading ability and provide interventions to help students who are falling behind their peers.

But how many children need to improve their reading and by how much for the READ Act to be deemed effective or efficient? That’s not outlined in the legislation.

Proponents of the bill said outside evaluators could identify best practices and spread them to other districts, but state board members said they already monitor all of these programs on an ongoing basis and already produce thousands of pages of reports on each of these programs that go to the legislature every year. In short, they say they’re on the case.

“The state board, I can assure you, are very devoted and intent to make sure that we follow, monitor, and watch the progress of any programs that go through our department and make sure they’re enacted in the best way possible within the schools,” board member Jane Goff said.