Mid-year changes to education funding prioritize students living in poverty
Last week, the Joint Budget Committee (JBC) approved an adjustment to school funding for the 2021-2022 school year that included a targeted $11.5 million investment in Colorado’s students living in poverty. This adjustments serves as a critical acknowledgement that our process for measuring student poverty is broken, and that our schools and districts serving students living in poverty require more resources to support them adequately.
Each year, the JBC adjusts the funding that school districts receive based on October student count numbers – part of what is called the “mid-year supplemental” process. For this school year, enrollment in Colorado public schools dropped by close to 30,000 students – the first year-over-year decrease in more than 30 years.
Even more concerning, the count of “at-risk” students, defined as students qualifying for free lunch and certain English learners, was 53,000 lower than what was projected by budget staff last spring, despite consensus that many more families are struggling financially as a result of the pandemic. The School Finance Act provides some additional funding for students eligible for free lunch through the “at-risk” factor, meaning that an increased number of at-risk students typically increases a district’s funding.
However, many qualifying families may not have applied for free lunch because students were attending school remotely (the application must be submitted in person), or because federal policy is not requiring the application to receive free lunch this year. As a result, families had less incentive to submit the application, depressing the count.
The impact varied considerably between districts. For FY 2020-21, most school districts saw a decline in funding below original projections because of lower enrollment. But in several districts serving high percentages of students eligible for free lunch, the decline in funding (in percentage terms) was significantly larger than the decline in student count, with changes in the at-risk count being the primary driver.
Because of the additional funding tied to the “at-risk” factor in our school funding formula, the lower count numbers could have meant serious consequences for our schools and districts that serve high percentages of students living in poverty. However, in recognition of the challenges that public schools face this year, the JBC acted to protect these schools from challenging mid-year cuts.
Specifically, the fix stipulates that a district’s funding will not decrease by more than the decrease in its funded student count. For example, in Sheridan School District, the funded student count decreased by 1.9 percent below the projection, but total funding would have decreased by 7.8 percent. The JBC’s approved solution lowers Sheridan’s funding cut to 1.9 percent only. Similarly, Commerce City and Westminster School Districts will only have their funding cut by 1.6 and 1.5 percent (the amount of the decrease in their funded student count), instead of by 5 percent (what would have been the decrease in funding).
In addition to the targeted investment for students living in poverty, the JBC appropriated the following:
- $40.9 million of General Fund to offset a decline in local revenues and hold the “budget stabilization factor” constant for schools;
- $4.5 million of General Fund to ensure that no district’s funding decrease is more than two percent below projected total funding for the year;
- $25 million of cash funds (no General Fund impact) for rural schools because of the passage of Proposition EE.
Our funding formula is outdated, inequitable and inflexible. This school year, a confluence of crises has exposed weaknesses in our system of public education and highlighted the urgent need to invest differently. Colorado’s primary proxy for poverty–free and reduced-price lunch– is an increasingly inaccurate measure. We appreciate members of the Joint Budget Committee for prioritizing a short-term fix for the lower count brought about by the pandemic that protects schools serving students whose families may be struggling financially.