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Published in Print: November 8, 2013, as Colorado Tax-Hike Defeat Scrambles School Finance Picture

Colorado Tax-Hike Defeat Scrambles School Finance Picture

Democratic state Sen. Mike Johnston, center, author of the tax proposal, watches the returns at an election gathering with his wife Courtney, left, and Denver Mayor Michael Hancock, right.
Democratic state Sen. Mike Johnston, center, author of the tax proposal, watches the returns at an election gathering with his wife Courtney, left, and Denver Mayor Michael Hancock, right.
—Ed Andrieski/AP

Complex measure shot down by a wary electorate

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The defeat of a proposed $950 million tax increase that would have fundamentally overhauled public school funding in Colorado casts doubt on the prospect of future K-12 finance changes in that state.

The decisive failure of Amendment 66, with 65 percent of voters casting ballots against it, also illustrates the difficulty for advocates in selling a complex change in school funding that uses a tax increase as the means of focusing more money on at-risk students.

And the Nov. 5 vote represents a major policy and political defeat for Democratic state Sen. Mike Johnston, the author of the bill that would have been enacted had the constitutional amendment passed. The 2013 legislation, Senate Bill 213, was signed by Gov. John Hickenlooper, also a Democrat, but voters had to approve the tax increase for the bill to become law.

Michael Griffith, a school finance analyst with the Denver-based Education Commission of the States, said that when such proposals are placed before the public, "people want a direct answer as to what they'll get for the money."

Colorado voters did, however, approve taxes on newly legalized marijuana in that state. The proceeds will in part pay for school construction.

The $10.2 million campaign to win funding of Amendment 66, which would have concentrated more money on districts with high proportions of low-income and English-language-learner students and allowed the public to track how the dollars were spent, had high-powered support. The Colorado Education Association backed the measure, and significant contributions came late in the campaign from two wealthy out-of-state supporters: philanthropist Melinda Gates and New York City Mayor Michael R. Bloomberg (through Bloomberg Philanthropies).

Big Money, Poor Results

The pro-Amendment 66 campaign argued that for an average tax increase to Colorado households of $133 a year (a figure opponents disputed), the additional funding would reverse years of budget woes for Colorado schools, reduce class sizes, and bring back arts and physical education programs that were cut during the recent economic downturn.

Proponents of SB 213 and Amendment 66 also pledged that the public could track how tax dollars were used in Colorado schools down to the local level. In all, they said, the plan would make the state a national model for K-12 funding.

After the amendment's defeat, the CEA said the lack of new tax revenue would have broad, damaging effects on new teacher evaluations, rural districts, and support for English-learners, while the state continued to spend $2,000 less per student than the national average of $10,600.

A union spokesman, Mike Wetzel, said he felt anti-government sentiment had seeped in from the national level and hurt Amendment 66's chances as a result of the federal government shutdown in October.

"I think that just created a bad taste in people's mouths about government in general," he said.

He also cited factors such as a secession movement in northern Colorado—where 11 counties held votes on seceding from Colorado and forming a 51st state—and September flooding as hurting the proposal's chances.

Sen. Johnston said in a Nov. 6 interview that he would reassess the best way to implement the key policies in SB 213 in a way and at a price that might be acceptable to voters. He said that despite the general appetite for the school improvement ideas in his plan, such as statewide full-day kindergarten, it was "not possible" to pay for them without a new, stable revenue stream.

And the CEA's Mr. Wetzel cautioned against the state’s creation of any more "unfunded mandates" through further K-12 policy changes without more money.

Amendment 66 would have replaced the state's 4.6 percent flat tax on incomes with a progressive tax, including a new 5.7 percent tax on income over $75,000—a proposed change in policy that triggered sharp objections from those who contended the tax hike would damage a shaky state economy.

Formula Called Problematic

Opponents maintained that the proposal would not guarantee that new revenue would reach needy students in poor classrooms. Critics also said the new funding scheme would not reward or punish districts based on student performance.

A 2011 ballot initiative to temporarily increase the state's income and sales taxes and provide about $3 billion for schools, Proposition 103, also failed, gaining not quite 37 percent of the vote. Mr. Griffith of the ECS said the 2011 initiative did not have the same kind of campaign support and had received less attention.

Kelly Maher, the executive director of Compass Colorado, a free-market group that ran a campaign, Coloradans for Real Education Reform, opposing the amendment, also said that the use of family income and English proficiency as proxies for students in need in Sen. Johnston’s bill was outdated.

"Now, we have data points on every single student. And just because you're poor doesn't mean you're academically at risk," Ms. Maher said. "And just because you don't have command of the English language doesn't mean you're academically at risk."

There is also uncertainty about whether the CEA—which has about 40,000 members, including teachers—will challenge the state's new teacher-evaluation system in light of Amendment 66's failure. That evaluation system was created through another bill authored by Sen. Johnston, SB 191, that was passed in 2010.

One argument CEA used in support of Amendment 66 is that it would help pay for the new system, which is going into effect this school year. The system will require that half of a teacher’s evaluation be based on student academic growth, and it will grant tenure only to teachers who demonstrate a sufficient level of "effectiveness" for three straight years.

But earlier this year, the union, an affiliate of the National Education Association, struck a deal with the state board of education to extend the window in which it could file a lawsuit against the law. The deadline is now February 2014.

The CEA spokesman, Mr. Wetzel, said that the legal situation was, as of now, confined to the Denver public schools' handling of the evaluation system, and that in fact the union didn't see a connection between a possible lawsuit and the fate of Amendment 66.

A Broader Coalition

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Both Sen. Johnston and Gov. Hickenlooper said the day after the proposal's defeat that they were determined to continue their push for the key policies contained in SB 213 and Amendment 66.

Although Mr. Johnston said he wouldn't seek a new tax increase next year for the policy aims in his bill, he said the legislation would become law through the approval of any new revenue source and funding stream up until 2017. After that, the legislation would automatically be taken off the table.

Ms. Maher of Compass Colorado said that in a highly polarized political climate, the lack of support from any Republican legislators for Sen. Johnston's proposal shows that its supporters need to build a broader coalition behind any bill to overhaul K-12 finance.

But Mr. Johnston said his policies are clearly popular, given that the day after the election, state House Republicans announced they would introduce bills with some of the elements of SB 213, such as a new system for more accurately counting student enrollments, but without a tax increase.

"They haven't addressed investment," he said of such GOP plans.

Vol. 33, Issue 12, Pages 17,20-21

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