School Finance Reform

Much about Colorado kids, families and communities has changed since the early 1990s. One thing that has remained unchanged in that time? Colorado’s system for funding its schools. The formula remains largely unchanged since 1994, meaning investments are not strategically targeted to meet the diverse and changing needs of Colorado’s students or the workforce they will enter. That leaves many districts and schools struggling to keep up the pace with what our kids need today, leading to perpetual inequities across the state.

The Children’s Campaign has been a leader in efforts to modernize our school finance system since 2012, when we convened a broad-interest group called the School Finance Partnership that came to universal consensus on a framework for significantly improving the sufficiency, transparency, accountability, and equity of our education financing system.

children reading books in a class

Time for a Change

The opportunity to overhaul how Colorado funds schools presents a once-in-a-generation opportunity to reimagine the potential of our education system. In our current system, many children enter school unprepared to succeed, and achievement gaps widen as they progress through school, resulting in poor academic performance, grade repetition, expensive remedial services, and high rates of school dropout.  This is because, in part, Colorado continues to finance public education with a highly inequitable revenue system and a funding formula with no demonstrable link to the costs of delivering a rigorous education. How many more of our students would reach their full potential if we collected and allocated dollars in fundamentally different ways to support them? Colorado must prioritize developing a modernized, equitable and adequate K-12 revenue system and distribution formula that targets investments to meet the needs of all students and accounts for the unique challenges posed by geography and poverty, among other factors.

Fixing Colorado’s Unfair and Unsustainable K-12 Revenue System

Our preK-12 funding system and state budget are structurally broken and unsustainable without fixes to our methods for acquiring revenue, and the stakes are high for Colorado kids. Colorado must prioritize developing an equitable public revenue system that:

  • Reverses the reliance on state (over local) revenue for education,
  • Reduces property taxpayer inequality, and
  • Accounts for and equalizes differences in property wealth.

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The Children’s Campaign has been educating policy makers and the public about potential solutions for several years. To learn more about the structural problems underlying Colorado’s K-12 revenue system and how they came to be, check out our KidsFlash articles explaining TABOR and Gallagher, property tax inequity, and mill levy overrides and bonds. You can also keep up with legislative progress on those recommendations by reading Capitol Updates.

 

Recent Policy Successes

School Finance Act with Mill Levy Equity Framework: HB20-1418 (Becker/Todd) sets funding levels for public schools and resets the way the state calculates a school district’s property tax rate, creating a structure to reduce taxpayer inequality between districts.

Repeal Gallagher Amendment: SCR20-001 (Tate & Hansen/Esgar & Soper) refers a question to voters in November to repeal a constitutional amendment that forces permanent property tax cuts to residences. Repealing the amendment is expected to increase property tax revenue for local governments and reduce the state aid requirement for school funding.

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Make Investments that Make a Difference

On the other side of the school funding equation – how we actually allocate our tax dollars through our funding formula – Colorado must also make updates to be more relevant to today. At the outset, it is critical to recognize that funding and other resources are necessary but not sufficient for providing high-quality educational opportunities. School funding is associated with children’s access to important learning resources, such as improved class sizes, student-to-teacher ratios and teacher pay. In recent years, the public debate has shifted from does money matter to where money matters. A growing body of research shows the clear link between targeted investments based on student needs and improved outcomes.

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For low-income students especially, adequate school funding is a game changer. Poverty has extensive and damaging impacts on a student’s ability to learn—but adequate investments can help mitigate these effects. States and districts that invest more in schools tend to see stronger academic performance among students in poverty. The achievement gap in Colorado between low-income students and their higher income peers is

significant across subject areas, and low-income students make up a large portion (41 percent) of the student population.

This means we must create a more student-centric distribution formula that prioritizes the services students need to be successful by strategically investing in expanded access to high-quality preschool and increased supports for students living in poverty, learning English, or requiring special education services, among other changes. Modernizing our school funding system also requires structural changes: making the formula more transparent and understandable, updating the student count system, and ensuring funding fairness regardless of public school type.

The legislature made significant progress in recent years in buying down the “budget stabilization factor,” an annual funding cut to schools that has been in place since the last great recession. One-time investments have also been made in rural schools, students with severe special needs, and the Mill Levy Equalization Fund to improve funding equality for schools authorized by the Charter School institute. Unfortunately, much of this incremental progress was wiped out by budget cuts that were necessary as a result of the COVID-19 pandemic.

 

Recent Policy Successes

Full-day kindergarten: HB19-1262 (Wilson & McLachlan/Bridges & Fields) provides funding for full-day kindergarten for any Colorado family that chooses it.

Access to school lunches: HB19-1171 (Michaelson Jenet/Fields & Priola) and SB18-013 (Fields & Gardner/Michaelson Jenet) eliminated the lunch co-pay for middle and high school students eligible for reduced-price lunch. With these changes, Colorado no longer charges reduced-price lunch copays in public schools, removing barriers to nutritious meals for thousands of students and their families.

Advanced Coursework for High School Students: HB18-1193 (Wilson & McLachlan/Scott & Zenzinger) extended the Advanced Placement Incentives Pilot Program for three years to increase access to rigorous coursework for rural students. HB-1396 (Buckner/Moreno & Priola) also passed, providing funds to reduce the AP exam fee for students in low-income families.

Charter School Funding Equity: HB 17-1375 (Pettersen & Sias/Williams & Hill) required school districts to either create a plan outlining how they will spend local tax revenues equitably or to share 95 percent of tax revenues with all schools in the district, regardless of school governance type.

Behavioral Health Support for Students: SB 17-068 (Todd/Singer) expanded eligibility for the School Behavioral Health Professionals and Counselor Corps grant programs to include elementary schools. In 2017 there was also an increase of $9.7 million for CDE to expand access to school-based behavioral health professionals.

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