How Governor’s Negative Factor Increase Hurts School Funding

Each year, on November 1, the Governor of Colorado releases a budget proposal for the following fiscal year which starts on July 1. This proposed budget is considered by the Joint Budget Committee and may become part of the final budget approved by the state legislature in May.

In a nutshell, the Governor’s budget shows the total state budget will increase by 3.3% in 2017-18.  The report states:

  1. Revenue is dampened by a “marked slowdown in overall state tax revenue growth.”
  2. Just like last year, “the State’s revenue cap will prevent expected revenue in the General Fund from being available to meet the needs of the State.”
  3. Projected new expenses exceed projected new revenue by $500.1 million.
New Revenue Projected new General Fund Revenue $426.0 M
New Expense Projected Taxpayer’s Bill of Rights (TABOR) rebates $195.0 M
New Expense Repaying the current year’s reserve $180.8 M
New Expense Statutory transfers to transportation and buildings $164.0 M
New Expense New Medicaid costs $142.8 M
NET: Gap between new revenue and new expenses $500.1 M

Governor Hickenlooper has proposed several balancing actions, one of which is increasing the Negative Factor (the amount funding for K-12 schools has fallen below inflation since 2009) by $45 million.

What does increasing the Negative Factor mean for schools?  You may recall the state per pupil funding formula:  

Each district receives “base” per pupil funding (the same for every student in Colorado), “factors”, or adjustments for differences between school districts for things like district size, number of at-risk students, and cost of living/personnel costs, are added to the base.

The state is required by law to increase the base per pupil spending by inflation plus growth each year.  

 

 

While the state must grow the “base” each year by inflation plus growth, the Negative Factor reduces the “factors” funding.  

Although overall K-12 funding will increase over last year, the Negative Factor prevents this funding from keeping pace with inflation.

 

 

 

According to the Colorado Fiscal Institute, “our schools are currently receiving $831 million below inflation increases since 2009. The Governor suggests adding an additional $45 million to the current shortfall increasing the Negative Factor to $876 million for the FY 2017-18 school year. If per-student support for schools had kept pace with inflation since 2009, schools would be getting $1,007 more per student in 2017-18.”  

The graph below shows how far per pupil funding has fallen below inflation since the introduction of the Negative Factor in 2009. The cumulative impact of the Negative Factor to SVVD totals $167.3 million.

avg-ppf-and-negative-factor-01

It is too early to tell exactly how this will play out in the Legislature for 2017-18. Grassroots St. Vrain will watch the developments in the state budget and the Negative Factor, and will be meeting with legislators before they begin the new session in January.   You can find additional information about how the state budget, or “long bill”, is prepared and approved on the Colorado Fiscal Institute website.

If you would like to play legislator and try your hand at balancing Colorado’s budget, check out this budget simulator.

About Grassroots St. Vrain

GSV is an independent, non profit organization whose vision is a St. Vrain Valley community that is informed about education funding in Colorado and empowered to take action for the benefit of our schools.
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