Published Online: October 22, 2013
Published in Print: October 23, 2013, as Colorado Tax Boosting K-12 Up to Voters

Colorado School-Spending Overhaul Hinges on Tax Vote

Mike McQueen, a high school librarian from Jefferson County, Colo., speaks at a rally in favor of a tax-hike referendum that would pour some $950 million into public schools.
—Nathan Armes for Education Week

Colorado's vote next month on whether to increase state spending on schools—and radically change how that money is spent—may serve as a test case for how a school funding formula being retooled on the basis of tax increases and appeals to equity will fare in an uncertain economic climate.

The state "has to subject this sausage-making process to the voting public," said Dan Thatcher, an education policy specialist with the National Conference of State Legislatures.

Amendment 66, a proposed change to the Colorado Constitution that would institute a $950 million increase in income taxes, would raise the state's per-student spending on public schools, but also fundamentally alter how the state money is spent. With its emphasis on low-income, special education, and English-language-learner students, the plan resembles a "weighted" funding system approved in California this year.

Montez Woodruff, 3, a student at Educare Denver at Clayton Early Learning, plays on the northeast Denver campus, which supports infant, toddler, and preschool education. An amendment on next month's state ballot raising taxes for education would pave the way for a major investment in early-childhood education.
—Nathan Armes for Education Week

Altogether, the plan would cost the average Colorado household just $133 more a year in taxes, proponents of Amendment 66 say.

"This is a model for the rest of the country, if Colorado can pull it off," said state Sen. Mike Johnston, a Democrat representing Denver, who wrote the school finance legislation.

But in a state with a Taxpayers Bill of Rights, or TABOR—a law that essentially requires voters to approve statewide tax increases—Amendment 66's success is no sure thing, especially in an off-year election.

Opponents stress that there's no legal requirement that much of the additional money be spent on needy students in classrooms. They also say the plan would create "winners and losers" among districts, at the same time that it would deny real educational choice, since the new state funds wouldn't truly follow students to schools and courses they want.

"This is going to be a big drag on the economy, but it also has no way that it's going to guarantee better student results," said opponent Laura Boggs, a school board member in Jefferson County, the state's second-largest district, with 84,000 students.

Nuts and Bolts

If approved by voters, Amendment 66 would codify into law Senate Bill 213, written by Sen. Johnston and signed by Gov. John Hickenlooper, a Democrat, earlier this year. The amendment would create a progressive income-tax scale in the state (the state currently uses a 4.6 percent flat rate), with a new top marginal rate of 5.9 percent on annual income over $75,000, and a 5 percent tax on income under that amount.

Revising the Formula

Amendment 66 in Colorado would generate $950 million for public schools through an income-tax increase, but directly or indirectly affects about $1.6 billion in K-12 spending.

Under TABOR, the tax changes can't become law without voters' say-so, even with the governor's signature.

The fiscal impact of the measure would stretch far beyond the $950 million tax increase, since Sen. Johnston's bill also reconfigures the way the state's funding formula works. Altogether, the plan would affect $1.7 billion in state K-12 spending. Under the new formula, which would go into effect for the 2015-16 school year, the state's per-pupil spending would rise to $5,140, from $4,270.

The new formula would guarantee full-day kindergarten statewide and pay for 25,500 new prekindergarten slots for 3- and 4-year-olds.

The Colorado School Finance Project, a Denver-based group that researches and distributes K-12 funding information, reported that $492 million would be designated for "at risk" students, including children qualifying for subsidized meals at school. And $170 million would be directed to English-language learners.

In part, funding would be apportioned based on how "concentrated" at-risk and ELL students are by district. In a system similar to California's new K-12 funding formula, districts' additional money from the state would vary from 20 percent to 40 percent of base per-pupil funding, depending on how a district's share of such students compares with the statewide average.

For Eagle County, in the Rocky Mountains two hours west of Denver, the amendment's success would mean $4.3 million in additional revenue. Although that wouldn't match the $30 million in district budget cuts over the last three years, Jason Glass, the superintendent of the Eagle County schools and a former state schools chiefs in Iowa, said it would give significant aid to the 40 percent of the district's 6,500 students who are English-learners.

It would mean, for example, additional English-as-a-second-language teachers and more dual-language programs.

"Without Amendment 66, we're not going to be able to recapture the revenue that was lost," said Mr. Glass, who supports the amendment but can't campaign for it because of his position. "It clarifies and resolves some of the issues."

The proposal also would allow the public to track detailed spending by individual schools, which supporters say would strengthen transparency and accountability.

Debating the Impact

The new formula would allow the state to achieve funding adequacy and more equity, supporters say, while improving Colorado's relatively low level of K-12 financial support compared with those of other states. They also argue that it would allow Colorado to pay for the state's recent policy changes, such as Senate Bill 191, a law that changes how teachers and principals are evaluated, and which goes into effect for the current school year.

Supporters of Amendment 66 review campaign materials at a rally in Wheat Ridge, one of the Denver suburbs considered crucial to the plan's success.
—Nathan Armes for Education Week

"It's based really deeply on what we've learned in different parts of the state, and different parts of the country," Sen. Johnston said.

But some say there's a glaring gap in the plan between what's intended and what's required.

Although pro-amendment TV ads have claimed the plan means more money for classrooms, there's no legal language in the proposal that directly ties much of the additional revenue to classroom services.

That flaw weakens the entire amendment, said former state Sen. Bob Hagedorn, a Democrat who opposes the plan and submitted a legal challenge to the signature-gathering process that put the amendment on the ballot. (A court dismissed the challenge last week.)

The plan would require principals to submit budgets to superintendents for review and comment detailing how the additional targeted aid for needy students would be used. But that won't satisfy critics like Mr. Hagedorn, who dismissed what he called "grandiose" claims from Amendment 66 supporters: "You can't guarantee the classroom reforms. That's the bottom line."

Ultimately, support for or opposition to the amendment may hinge on whether constituents trust their local school boards and principals to direct the resources the way the plan intends.

"You trust them with your child for six hours a day," said Mary Shopnitz, a Jefferson County resident and retired teacher who supports Amendment 66. "Most of them, I would trust to make child-based decisions."

Extortion or Equity?

Not everyone trusts that the plan is fair, however. On Oct. 1, the school board in Douglas County, south of Denver, unanimously passed a resolution opposing Amendment 66. Board members for the district stressed that county residents would have to pay up to $100 million in new state taxes to obtain $50 million in new K-12 revenues.

The math works out to an average tax hike of $522 annually for Douglas County households, nearly quadruple the average figure cited by amendment supporters. The discrepancy shows that amendment supporters are using "misleading statistics," said Kevin Larsen, the vice president of the Douglas County school board.

Mr. Larsen said that under Amendment 66, jurisdictions like his would therefore be "extorted by the state" to provide more money to districts like Denver and Aurora (a Denver suburb) without a guarantee that it would be spent wisely.

"I find that puzzling at best, and at worst, honestly, it's very political and disingenuous," Mr. Larsen said.

Former state Sen. bob Hagerdorn, a Democrat, opposes the amendment and warns that there's no guarantee the money raised by the tax will find its way into the classroom.
—Ed Andrieski/AP-File

A study of Amendment 66 by the Independence Institute, a free-market think tank in Denver, said that Boulder, Jefferson, and Douglas counties (relatively wealthy areas of the state) would pay 32.2 percent of the new taxes raised through the amendment, but receive only 17.7 of new public schools revenue.

If a $950 million tax increase were applied to the current formula, Ms. Boggs of the Jefferson County school board noted, rather than to Sen. Johnston's plan, those and other districts would fare much better.

Even net winners under the new formula might be cautious.

Last year, the Bayfield school district persuaded voters to pass both a bond measure and a property-tax increase. Although Amendment 66 would bring $760,000 in net additional annual revenue to Bayfield, school board members there were reluctant to say their constituents should approve a third tax increase for schools in a year, said Troy Zabel, superintendent of the 1,400-student district.

"Politically, the board felt that it was not the message they wanted to send," he said. (The board is neutral on the amendment.)

Another provision, if enacted, would require 43 percent of the state's general revenues to be spent on K-12, a shift that critics like Mr. Hagedorn and Ms. Boggs say would unfairly tie lawmakers' hands.

Supporters counter that, in general, some areas of the state receive more government support than others, and that after years of budgetary turmoil, schools deserve more certainty from lawmakers. (The state boosted its K-12 spending from fiscal 2013 to fiscal 2014 by about $170 per pupil, up to about $6,650, although that figure combines state and local funding.)

Kelly Johnson, a Jefferson County education activist who has pushed for local tax increases for schools and supports Amendment 66, acknowledged that her community would be a net "loser" when comparing new tax bills to new school revenue. Her counterargument is that she wants all students in the state to do well, and not "put my head in the sand and say, my kids are going to be OK."

"I wouldn't invest the same amount in a private school and feel as good about it," she said.

Political Uncertainty

The political outlook for Amendment 66 is unclear. On the one hand, Colorado Commits to Kids reported roughly $5 million in contributions and $2 million in expenditures on TV ads and other items as of Sept. 30, an amount that appears to dwarf spending from opponents.

Related Blog

Gov. Hickenlooper supports the measure, and the former chief of staff for Lt. Gov. Joe Garcia, Andrew Freedman, left that post to take over as campaign director of Colorado Commits to Kids. Lt. Gov. Garcia, in turn, spoke at a pro-amendment rally on Oct. 12 in Jefferson County, considered by many a crucial "swing" district for the amendment.

But in September, Magellan Strategies, a Republican polling firm, reported that only 38 percent of 600 likely voters in Colorado supported the measure.

Two years ago, Proposition 103, which would have raised the state's income and sales taxes to increase revenue for public schools, was defeated by a 26-percentage-point margin. But the Colorado School Finance Project says that of 16 proposed local property-tax increases to boost schools' operating budgets last year, all but one were approved by voters.

Although he supports the amendment, Mr. Glass, the Eagle County superintendent, said both sides have been misinforming voters, with supporters downplaying the size of the tax hike, and opponents misidentifying how the money will be spent.

Ultimately, he said, voters will have to decide how they view public schools.

"Is education a commodity, or is it a public good?" Mr. Glass said.

Vol. 33, Issue 09, Pages 1,16-17

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