Amendment 73-What it means for our schools, and for taxpayers

It is a crowded ballot for Coloradans this November, but only one Amendment directly changes how our public schools are funded and addresses years of funding shortfalls.  Amendment 73, if passed next month by Colorado voters, seeks to provide “better and more equitable funding of public schools.”

How would school funding improve?

Amendment 73 seeks to raise $1.6 billion, which would finance the following increases to school funding:

  • Increases base funding for all students.  Currently the base funding for each student is $6769, and this initiative would increase the base to $7,300 to bring funding closer to the national average.
  • Increases “at-risk” funding to include students qualifying for reduced price lunch.  Currently this supplemental funding only applies to free lunch students.
  • Significantly increases the amount of funds passing from the state to local districts for: Special Education, English Language Learners, and Gifted & Talented students.
  • Provides funding for full-day kindergarten and increases revenue going to early childhood education funding.

Each school district would determine how the funds are best utilized to support the students in their communities.

How will these extra funds be raised?

The $1.6 billion increase to school funding would be financed through three changes to current tax rates:

•Amendment 73 would increase the state tax rate on “C” Corporations.   Currently, out of the 44 states that levy taxes on corporations, Colorado’s rate of 4.63% is the third lowest.  If the rate increases to 6% under this initiative, it will be the 9th lowest of these 44 states.

•Amendment 73 would implement a graduated income tax rate in Colorado.  The income tax rate stays at its current level of 4.63% for income up to $150,000.  Any filers with taxable income above this threshold will pay more with each level of income, as shown in the chart below.  92% of filers will have no impact on their individual income taxes.
Amendment 73 would also change the assessment rates levied by school districts through property taxes, which accounts for about half of our property tax bills.  In order to provide sustainable support for schools, the measure would set residential assessment rates at 7% and lower non-residential (businesses, oil and gas, etc.) assessment rates from 29% to 24%.  These rates would be frozen and could not drop further, thus stabilizing the local share of property taxes that school districts rely on for a percentage of their budget.  One reason why Colorado has fallen so far behind the national average in per pupil funding is the continual drop in the residential property tax assessment rate, from 21% in the 1980s to 7.2% today.  If Amendment 73 does not pass, this rate is projected to fall again to 6.1%, thus putting additional pressure on the state’s General Fund to backfill the difference.  Currently Colorado’s funding per pupil is $2800 below the national average.  To read more, see our previous post  “Why Are Schools Always Asking for More Money?

 

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GSV Community Meeting

Where does the money for our public schools come from?
How does the Colorado State Budget impact school funding?
Who determines how much money our public schools receive?
What is a mill levy override? What is a bond?
Why has Colorado’s investment in public education changed over the years?
What are Gallagher, TABOR and Amendment 23 and how do they impact school funding?
What is Amendment 73?

Get answers to these questions, be part of the conversation, and learn how you make the difference. Join us for a presentation by Grassroots St. Vrain, an independent, non-profit organization committed to sharing the facts so that you can make informed decisions that affect education in our community.

Please join us!

Thursday, September 27, 2018
6:00 – 7:30 pm
Carbon Valley Regional Library
7 Park Avenue, Firestone

OR

Wednesday, October 10, 2018
7:00 – 8:30 pm
Longmont Public Library
409 Fourth Avenue, Longmont

Posted in 2018 Amendment 73, School Finance

Amendment 73 Resolutions

On September 12, the St. Vrain Valley School District Board of Education passed a resolution in support of Amendment 73, a measure that would increase Colorado’s investment in public education statewide.

On the same night, Grassroots St. Vrain also presented a resolution at the Board of Education meeting.

 



Are you wondering how Amendment 73 will impact you or your business? Use this calculator from the Colorado School Finance Project for an estimate.

Amendment 73 will increase Colorado’s investment in PreK-12 public education by implementing a graduated income tax that will impact households earning more than $150,000 of taxable income annually.

Amendment 73 also reduces the assessment rate on non-residential property from 29% to 24% and sets the assessment rate on residential property to 7% for property taxes levied by school districts only. In both cases these rates will remain constant to stabilize the local contribution to public education.

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GSV celebrates 10 years!

Welcome back to a new school year!  GSV is celebrating ten years of sharing facts on news and issues that impact school funding in the St. Vrain Valley School District. We look forward to continuing our mission, and invite you to read about the new school funding initiative on our ballot in November.


School funding has been a hot topic for many years, thanks to two recessions and resulting cuts to funding, as well as conflicts in constitutional amendments that negatively impact Colorado’s budget. The result: Colorado does not fund its schools as it did decades ago.  We have fallen behind the national average, and our per pupil funding is among the lowest in the nation. Some school districts have been able to pass local Mill Levy Overrides to supplement their funding, but many have not. This results in great inequities across our school districts, despite our constitution calling for “a thorough and uniform system of free public schools throughout the state.”


A statewide solution has been in the works for two years, including an unprecedented effort by volunteers. 130,000 valid signatures were collected across every Senate district in the state to put Initiative 93 on the ballot. Last week the Secretary of State announced this measure, now officially called Amendment 73, will be on every voter’s ballot in November.

 


Amendment 73 moves Colorado closer to the national average in per pupil funding and restores funding cut by the Budget Stabilization Factor.  It is supported by almost every superintendent and school board in the state, as well as numerous state organizations. The measure would:

  • increase base funding for all students
  • support full day Kindergarten statewide
  • increase funding for preschool and students with particular needs, such as special education, gifted and talented, at-risk and English language learners.

School districts would have discretion about how to spend the increased funding according to the needs of their district, including attracting and retaining quality teachers, safety, and counseling.

The extra funding would be financed by a tax increase on Colorado’s highest earners and corporations, with 92% of taxpayers being unaffected.  Additionally, the measure provides tax relief to farmers, ranchers and small businesses by reducing taxes on non-residential properties.

We invite you to learn more about Amendment 73 and request a presentation for your organization or group today.


Schools did receive good news from the Capitol in May.  For the past several years, Colorado’s Budget Stabilization Factor, or amount school funding has fallen behind the rate of inflation, has hovered above $800 million annually.  Thanks to this year’s state revenue being higher than expected, legislators were able to pay down the B. S. factor, bringing it to $650 million.  However, it is unlikely that we will have enough budget boon years to chip away at this debt to schools—and an economic recession will certainly add to it. If Amendment 73 passes, this shortfall would be eliminated.

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2018 Colorado Legislative Session

Colorado is in unfamiliar territory this year.  State revenues are projected to be higher than expected, due to economic growth and the recently enacted federal tax legislation.   Now, our legislators must decide where to allocate the extra funds.  The big question is:  How will this extra money be spent?

There’s no shortage of opinions at the Capitol.  Some would like to restore the funding that has been cut from schools in the last decade.  Others want any extra dollars to address transportation needs and roads.  Governor Hickenlooper wants to address how rural communities continue to be hurt by falling property tax assessment rates.

A brief reminder of what’s been happening with school funding over the last few decades:  due to conflicting constitutional amendments and the Legislature’s creation of the Budget Stabilization Factor, school funding has been squeezed.  In the 1980s Colorado funded its schools at or above the national average.  Today, we spend over $2,000 less per student than the national average, as reported by Great Education Colorado:

fallingline2016

 

In fact, according to the National Center for Education Statistics, only nine states spend less than Colorado.  Education Week’s 2017 report card gives Colorado a D score, or 40th in the nation in the school finance category.

That’s why Grassroots St Vrain will be watching any bills that are introduced in the Legislature that concern school funding.  Here’s a quick summary of what is under consideration so far.

  • HB18-1232New School Funding Distribution Formula.  This bill creates a new public school funding distribution formula to replace the outdated formula which has not been changed since 1994. It was created with the input of the majority of Colorado’s school superintendents.  The new distribution formula would go into effect IF voters pass a ballot measure that increases state revenue.  Bill indefinitely postponed.
  • SB18-004Funding for Full-day Kindergarten.  Under existing law, Colorado pays for half time kindergarten.  This bill would fund kindergarten fully if voters pass an accompanying ballot measure to keep revenues over the revenue cap for this purpose. Bill indefinitely postponed.
  • SB 18-083Tax Credits for Non-public Education.  Allows any taxpayer to claim a credit when the taxpayer enrolls a qualified child in a private school, or the taxpayer provides a scholarship to a qualified child for enrollment in a private school.  It would also allow any taxpayer who uses home-based education for a qualified child to claim an income tax credit. Bill indefinitely postponed.
  • HB18-1171School Finance Mid-year Adjustment to Funding.  With the number of students lower than expected, and local property tax collections being higher than expected, the “state’s share” of school funding will be less than initially budgeted.  This bill proposes to use this money from the General Fund to reduce the Budget Stabilization Factor by $96 mllion.  Governor signed.
  • HB18-1379 – Public School Finance.  Increases per pupil funding by the rate of inflation, or $222 per student, for a total of $6769 in statewide base per pupil funding.  Also reduces the Budget Stabilization Factor by $150 million.  Governor signed.
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A Proposed Solution for CO’s School Funding Issues

In our last post, “Why Are Schools Always Asking for More Money?“, we highlighted the reasons why school funding in Colorado has fallen behind most other states.  Today we are sharing a possible solution proposed by a statewide grassroots effort, called Initiative #93, “Great Schools, Thriving Communities“.

This initiative seeks to provide “better and more equitable funding of public schools.”  Petitioning is underway to place the initiative on the ballot this fall, so that voters can decide whether to increase school funding across the state. Here is what Initiative 93 would do:

It creates a Quality Public Education Fund financed through a graduated income tax rate for taxpayers, and higher taxes on “C” Corporations.   Currently, out of the 44 states that levy taxes on corporations, Colorado’s rate of 4.63% is the third lowest.  If the rate increases to 6% under this initiative, it will still be the 9th lowest of 44 states.

The majority of the revenue raised would be through higher taxes on taxpayer incomes above $150,000, calculated through a graduated tax rate.  92% of filers will have no impact on their individual income taxes.
Initiative 93 would also change the assessment rates levied by school districts through property taxes. First it seeks to provide sustainable support for schools by stabilizing property taxes, which would lower residential assessment rates from 7.2% to 7%, and lower non-residential (businesses, oil and gas, etc.) from 29% to 24%.  These rates would be frozen and could not drop further, thus stabilizing the local share of property taxes that school districts rely on for a percentage of their budget.

What is the increased funding to schools for?

The proposed tax changes are estimated to raise $1.6 billion, which would finance the following increases to school funding:

  • Increases base funding for all students.  Currently the base funding for each student is $6546, and this initiative would increase the base to $7,300 to bring funding closer to the national average.
  • Increases “at-risk” funding to include students qualifying for reduced price lunch.  Currently this supplemental funding only applies to free lunch students.
  • Significantly increases the amount of funds passing from the state to local districts for: Special Education, English Language Learners, and Gifted & Talented students.
  • Provides funding for full-day kindergarten and increases revenue going to early childhood education funding.

Each school district would determine how the funds are best utilized to support the students in their communities.

Initiative 93 is in the citizen-led petitioning phase required to be on the 2018 November ballot.  Let us know if you would like to sign a petition, carry your own petition for friends and neighbors to sign, or have more questions.

SaveSave

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“Why Are Schools Always Asking for More Money?”

Almost every November, there is an education funding initiative on the ballot in Colorado.  Some are statewide initiatives, and many more are local school districts’ attempts to increase funding locally through property taxes, called mill levy overrides.

So why are they always asking?

  • Colorado, although it is one of the wealthier states in the country with a booming economy, does not fund its public schools as much as most other states.  In fact, the National Center for Education Statistics states that only nine states spend less per student than we do.  
  • Education Week gives Colorado a “D” score, ranking us 40th in the nation for school finance. 
  • Since Colorado passed the Gallagher Amendment in 1982, our residential property tax assessment rates have dropped ten times, from 21% to 7.2% of market value.  These reductions bring in less property tax revenue, which used to fund around 55% of our schools’ budgets. Today, local property taxes only cover about 36%.  That causes a bigger strain on our state budget, which is limited in growth by another constitutional amendment, called TABOR.
  • When the state budget was hit during the recession and cuts had to be made, the Colorado legislature introduced the Budget Stabilization Factor, formerly known as the Negative Factor.  This balancing tool cut funding to schools by hundreds of millions of dollars, starting in 2010. Even though we are now out of the recession, the “B.S. Factor” remains….to the tune of $822 million dollars less in funding than what schools would otherwise have.  And that’s just for this year. This reduction in funding has been in place for eight years now.

We know that Colorado funds its schools over $2,000 less per pupil than the United States average.  In response, many school districts have passed mill levy overrides (MLOs) in order to prevent cuts, retain teachers, and maintain educational programs, including the St. Vrain Valley School District.  But many Colorado districts are unable to pass an MLO. Another surprising fact: over 40% of Colorado’s school districts are now on a four day school week.

How can we solve this issue, and ensure that all of Colorado students have excellent educational opportunities, despite their zip code?  One group is working towards a solution that may be on our statewide ballot this fall, and it is the best proposed solution that Grassroots St. Vrain has seen to date.  It’s called Great Schools Thriving Communities, and we will be sharing more information about it in our next post.

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Gallagher Amendment requires property tax reduction

Earlier this year we shared the news that Colorado’s residential property tax assessment rate was going to drop.  This sounds like good news for homeowners, but it may come at a cost to our schools and state budget.

Since 2003 the assessment rate on residential property has remained at 7.96% of a home’s market value. In 2017, the assessment rate falls to 7.2%. So if your home is worth $100,000, then you will be taxed on $7200 (the assessed value), which is then multiplied by the mills in your area to determine the taxes due.

The reason for the cut is the Gallagher Amendment.  Back in 1982, Coloradoans were concerned about rising property taxes due to the increasing value of homes.  The Gallagher Amendment was passed to lock in the ratio at that time of residential to non residential property tax collections:  45% of total statewide assessed values must come from residential properties, with the remaining 55% coming from commercial, industrial, and oil and gas properties.  The non residential property assessment rate has remained unchanged at 29%.  In 1983, the residential assessment rate was 21%.  Over the years residential properties have increased in value much faster than commercial properties, and since the residential percentage of total assessments must stay at 45%…..the assessment rate has now been cut ten times.

assessment-rate-graph

These rates cannot go back up in changing economic environments without voter approval, as legislated by TABOR, the Taxpayer Bill of Rights.  Historically, once a tax rate has been lowered, it stays there.

The driver behind the decrease is the urban corridor, where property values have increased at a much faster rate than the rest of the state. In these districts the lower assessment rate will be offset by rising home values, but in rural districts without as much appreciation in home values, the lowered rate will result in lower tax collections and will squeeze school budgets. Unfortunately this outcome widens the funding divide between school districts based on their location in the state.

Our tangled constitutional structure further complicates matters.  By law, the state government must backfill the difference between the total funding determined by the school finance formula and what local taxes provide.  So if residential property tax collections go down, the state must come up with the extra funding to meet the school finance formula requirements.

To learn more about the tangle between Gallagher and TABOR, check out this video from the Colorado Fiscal Institute.

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Funding Charter Schools: New Rules

Charter schools, like all public schools in Colorado, are funded by the School Finance Act based on their October student count.   Up until now, our state did not require that school districts share any proceeds of additional local tax initiatives, or mill levy overrides, with their charter schools.  Practices vary across the state, but currently eleven school districts equitably share voter approved revenue with their charter schools, according to the Colorado League of Charter Schools, and some do not share their MLO proceeds at all.

The St. Vrain Valley School District is already sharing proceeds from both of its mill levy overrides (MLOs) with charter schools based on charter school enrollment in the years the MLOs were passed by voters.  New legislation passed at the Capitol on this issue, House Bill 1375, requires that all school districts equitably share this revenue.  School districts can either:

  • adopt a plan for distributing the revenue to the schools of the school district for the benefit of the students enrolled in the school district; or
  • distribute 95% of the per pupil amount of the revenue to the innovation schools and charter schools of the school district (per pupil distribution).

The St. Vrain Valley School District must make this determination and post the decision on its website by July 2018.  This change takes effect beginning with the 2019-2020 school year.  What does this mean for charter schools in the St. Vrain Valley School District?   It depends on the school.   As student population at each charter school grows or shrinks, that school may receive more or less funding from the MLO based on its enrollment each year…instead of the percentage of the SVVSD student population at the time the MLO was passed, as is the practice now.

Posted in 2012 Mill Levy Override, School Finance

What Is The Negative Factor? (aka the Budget Stabilization Factor)

As legislators work on the state budget, a term we always hear when they are determining school funding is the “Negative Factor.”  It is a provision in state law that reduces the amount of total program funding and state aid provided to K-12 school districts.  It acts as a balancing tool for the Legislature, while still abiding by the state requirement of increasing funding by inflation each year.   To explain, let’s review the state per pupil funding formula:

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

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, that rule does not apply to the “factors”.  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….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 SVVSD totals $167.3 million.  The blue and green bars represent actual funding, while the red bars show what schools would have received before the Negative Factor was applied.

avg-ppf-and-negative-factor-01

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