The ‘new math’ that hurts schools: Colorado’s legislators employ a formula to circumvent Amendment 23

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Its name sounds vaguely mysterious, like something from science fiction.

But the “negative factor,” a formula affecting school finance in Colorado, is quite real, and is having a hugely detrimental impact on local schools, administrators say.

DOLORES HIGH SCHOOL

The Colorado Legislature’s use of a formula called “the negative factor” is leading districts such as Dolores District Re-4A to seek mill-levy overrides to counteract funding cuts. Photo by Wendy Mimiaga.

The negative factor is largely responsible for two mill-levy override measures on the ballot in the region this November. One, in Dolores School District Re- 4A, is seeking an extension of an existing 7-mill levy that is scheduled to sunset in 2016. If approved, the levy would then sunset in 2024.

The other, in Dolores County District Re-2J, is asking for an increase of 3 mills over the existing levy of 15. It will have a seven-year sunset, at the end of 2022.

The measures were put on the ballot even before the Colorado Supreme Court handed down a ruling on Sept. 21 that upheld the constitutionality of the negative factor. That decision only hammered home the need for new ways to finance K-12 education, local administrators say.

“This is an indicator of why so many districts, including ours, have had to go to voters and ask for a mill-levy override to help out,” said Scott Cooper, superintendent for District Re-4A, after the court’s decision.

“This is the new normal – the negative factor.”

Losses of millions

In 2000, Colorado voters – concerned about shriveling funds for education – passed Amendment 23, which mandated that, for 10 years, state spending on K-12 would increase by the rate of inflation plus 1 percentage point. After that, it was to continue going up to match the rate of inflation every year.

However, when the recession hit in 2008, the state legislature was left scrambling for ways to balance the budget, and the solons started eyeing education.

All school districts in Colorado get the same amount of “base funding” for each student enrolled. Then a formula is applied to the base funding that includes factors such as the district’s size, the local cost of living, transportation costs, and how many at-risk (low-income) students it has – all potentially increasing its funding.

But legislators decided that since Amendment 23 discusses only the [[base]] per-pupil funding, nothing would stop them from applying a “negative factor” to that base funding to actually decrease the total monies districts would receive.

Since then, school administrators have watched in stunned dismay as, year after year, the legislature slashes their budgets. In the 2014-15 fiscal year, the negative factor enabled the state to cut about 13 percent from almost every district’s calculated budget, the Denver Post reports. This year alone, according to the Associated Press reported, a legislative analysis found that the negative factor cut $894 million from overall state education spending.

In Dolores Re-4A, the negative factor has resulted in a total loss of approximately $4.73 million over the past seven years, according to Cooper – about $764,000 of that in fiscal year 2015-16 alone.

“That’s a lot of revenue we could have used for a lot of good things,” Cooper said.

According to the Colorado School Finance Project, during the four school years from 2011 through 2015, the amount of real lost revenue the negative factor has produced was:

  • $3.37 million in the Dolores district,
  • $2.1 million in Mancos,
  • $11.8 million in Montezuma-Cortez District Re-1, and
  • $1.67 million in Dolores County District Re-2J.

No. 43

Even after adjusting for cost-of-living differences, the state of Colorado spends considerably less per pupil than the national average, and has for some time. According to the National Center for Education Statistics, in 2001, Colorado spent $714 less per pupil than the national average. In 2012, the most recent year for which statistics were available, Colorado’s per-pupil funding was $2,715 less than the national average.

For 2012, Colorado ranked 43rd among states in per-pupil spending adjusted for regional cost differences, according to the group Great Education Colorado.

Over the years, supporters of education have tried many tactics to pump more funding into the starved system, but all have failed.

  • In November 2011, Proposition 103, to slightly raise the state sales and use tax and the state income-tax rate for five years to generate $3 billion for public schools and higher education, went to the voters. They said no.
  • A number of students and parents filed a lawsuit, Lobato vs. State of Colorado, claiming the state’s school-funding system violates a constitutional provision requiring that the schools be fundamentally uniform in the education they offer. In 2013, the state Supreme Court ruled against the plaintiffs.
  • In November 2013, voters had the chance to add nearly $1 billion of new money to the K-12 system by approving changes to the state income-tax rates. They rejected the idea resoundingly.

Then came another lawsuit, Dwyer vs. the State of Colorado, filed by a group of school districts and parents challenging the negative factor. It, too, was rejected by the state Supreme Court, although the justices were deeply divided, upholding the legislature’s budget convolutions 4-3.

“By its plain language, Amendment 23 only requires increases to statewide base per pupil funding, not to total per pupil funding,” the ruling stated.

However, in a dissent, Justice Monica Marquez wrote that the negative factor undermines the intent of Amendment 23.

“Voters surely did not intend the annual increases to statewide base per pupil funding to be pointless,” she wrote.

‘Confused and disappointed’

But that is what they are; as things stand, the legislature can adjust the negative factor to make school funding almost anything it pleases.

“I’m so confused and disappointed by the ruling,” said Alex Carter, superintendent of Cortez District Re-1. “It’s disappointing that no matter what we presented to the Supreme Court, we’re not funding education constitutionally. I don’t know how they can argue that we’re following Amendment 23, which was voted in by the people of Colorado saying how we want education to be funded.

“What it does is it makes it even more important that the population of Colorado do a gut check and decide what the priorities of the state are.”

Lawmakers have restored some of the funding cut during the recession, but education advocates argue that more needs to be done to close the funding gap.

Except for a little federal money for specific purposes, school districts are funded by the state and by local property- tax revenues. Many people assume that, if home and business values rise in a district, so will monies for the school. But that is not so.

Even if total assessed valuation goes up in a district, it doesn’t automatically help the school budget, because the state just cuts its funding to that district accordingly. And even though the economy is now rebounding, the lower budgets have become the new standard under TABOR and can only increase by a set percent per year.

Glazed eyes

In Dolores County District Re 2J, which in some ways exemplifies the hardships faced by small rural districts, the negative factor has cut funding about $400,000 per year, for a total of $2.3 million so far, according to Hankins. If it passes, the mill-levy increase sought by the district will raise about $350,000 per year until it sunsets.

“By then, maybe the state will have decided to do something with public education or TABOR,” Hankins said.

He believes the problem is not primarily the negative factor, but TABOR, along with Colorado’s entire system of school funding. Unfortunately, he said, it’s difficult to explain the situation to the public.

“The issue is so complex, and when you try to explain school finance to people their eyes just glaze over,” Hankins said. “It takes a school-board member five or six years to really grasp what is going on.

“Our funding is based on [enrollment as of] Oct. 10, but we develop a budget that has to be passed June 1, so we don’t really even know what our revenues are. If we lose 10 kids from what we project, that’s $100,000 that you have to find somewhere in your budget that year. The whole process is just crazy.”

Hankins said over the years the Dolores County district has made cut after cut to keep up with the legislature’s financial demands.

“We tried to stay away from the classroom, but you can’t, when 70 to 80 percent of your budget is in people,” he said.

The district cut three administrative positions to two, reduced secretarial positions from three to two, cut back on maintenance, supplies, transportation, food services, and elective classes, and also combined classes in middle school and high school.

“Many of our high-school teachers now teach both middle-school and high-school classes,” Hankins said. “There’s not a piece of our budget that has not been cut.”

His teachers have not received a cost-of-living increase in seven years, he said. “More is expected of teachers, with accountability [requirements], but we’re paying them less and less.

“Our base pay right now is $27,500 – for somebody coming out of four years of college. I’m still on the same salary six years later – I don’t think it’s fair for me to ask for a raise if I can’t give the rest of the staff a raise.

“Our goal has been to trim 15 to 20 percent of our budget and maintain services.”

But that’s a real challenge when the district has two mandatory costs that it must accommodate – PERA, the employees’ retirement funding, and healthcare costs.

PERA has gone up about 20 percent over the last four or five years, Hankins said, and the cost of health insurance has increased 20 percent in the last three years.

Hankins said administrators have been talking about the mill-levy override for three years but had hoped something would happen to change school finance statewide.

“I think most districts are coming to the realization that’s not going to happen. One person I talked to said, ‘Now I’m scared the legislature has no fear, they have free rein, they can do whatever they want to.’

“Just throwing money at something is never the answer,” Hankins said, “but at some point there is a tipping point without enough money.”

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