Budget Crisis

Colorado’s Education Funding in 2013 – Complicated and Undecided

Colorado’s edu­ca­tion bud­get is slight­ly bet­ter for 2013–2014 and the state may be able to increase the K-12 edu­ca­tion fund­ing slight­ly. How­ev­er, if law­mak­ers in Wash­ing­ton don’t reach an agree­ment on the “fis­cal cliff” by March 1, 2013, Col­orado could lose $8.2 mil­lion in fed­er­al edu­ca­tion funds.


In Jef­fer­son Coun­ty, we are for­tu­nate that Issues 3A&3B passed in Novem­ber 2012, but these are only a tem­po­rary fix to larg­er bud­get issues. Jef­f­co (like all school dis­tricts) still relies heav­i­ly on state fund­ing and the changes men­tioned above will affect Jef­f­co, even with 3A&3B.


Read fur­ther to learn the back­ground of Col­orado edu­ca­tion fund­ing and vis­it the Leg­isla­tive sec­tion to fol­low cur­rent edu­ca­tion bills in the Col­orado House and Sen­ate.


How did Colorado’s Education Funding Get So Complicated?

If you look at the graph below, you’ll see that edu­ca­tion fund­ing per pupil has decreased by $1800 over the last 25 years. TABPR, the Gal­lagher Amend­ment and Amend­ment 23 all changed the way that schools are financed. Some of these changes were inten­tion­al; some were unfore­seen side effects of the amend­ments (as in Gal­lagher).



What is the Gallagher Amendment?

For more infor­ma­tion, vis­it www.greateducation.org 

The Gal­lagher Amend­ment, passed in 1982, was designed to main­tain a con­stant ratio between the prop­er­ty tax rev­enue that comes from res­i­den­tial prop­er­ty and from busi­ness prop­er­ty.


The effect of Gal­lagher was to reduce the assess­ment rate (the per­cent of prop­er­ty val­ue that is sub­ject to tax­a­tion) when­ev­er res­i­den­tial prop­er­ty val­ues increased faster than busi­ness prop­er­ty val­ues. As a result of the Gal­lagher Amend­ment, the assess­ment rate for res­i­den­tial prop­er­ty has declined by about two-thirds since 1982 due to pop­u­la­tion growth and increas­es in res­i­den­tial real estate val­ues.


The net effect has been a marked decline in rev­enues col­lect­ed from prop­er­ty tax, which pri­or to Gal­lagher, pro­vid­ed the major­i­ty of school fund­ing.

What is TABOR?

Passed in 1992, TABOR is the “Tax­pay­er Bill of Rights,” which impos­es the strictest rev­enue and spend­ing lim­its in the nation. TABOR:

  • Pro­hibits any tax increase with­out a vote of the peo­ple;
  • Places strict lim­its on how much rev­enue the state can keep and spend;
  • Requires any rev­enue col­lect­ed in excess of TABOR’s rev­enue lim­its – at every lev­el of gov­ern­ment includ­ing school dis­tricts – to be refund­ed to the tax­pay­ers, unless the vot­ers decide to “de-Bruce” (i.e., allow the gov­ern­ment to retain the “excess”). This pro­vi­sion of TABOR was sus­pend­ed at the state lev­el for five years (2006–2011) as a result of the pas­sage of Ref­er­en­dum C.
How have Gallagher and TABOR combined to affect public schools?

Schools are fund­ed by a com­bi­na­tion of local (prop­er­ty) and state rev­enues. The Gal­lagher Amend­ment for­mu­la has lim­it­ed local rev­enues by cut­ting the res­i­den­tial assess­ment rate by two-thirds since its pas­sage in 1982.


From 1982 until 1992 dis­tricts could make up for the low­er assess­ment rate by increas­ing their mill rate (prop­er­ty tax rate). In addi­tion, the state had the flex­i­bil­i­ty to increase state spend­ing to make up for the amount that prop­er­ty tax­es used to cov­er.


But with the pas­sage of TABOR in 1992, a com­bi­na­tion of bud­get for­mu­las made it increas­ing­ly dif­fi­cult to fund schools. TABOR’s rev­enue lim­its auto­mat­i­cal­ly cut mill rates in dis­tricts across Col­orado, and at the same time, TABOR lim­it­ed the state’s abil­i­ty to prop up school fund­ing with state dol­lars.


Note that the com­bi­na­tion of Gal­lagher and TABOR has shift­ed the bur­den of school fund­ing from local prop­er­ty tax­es to the State Gen­er­al Fund. Thus, the State’s Gen­er­al Fund pro­vides more than 60% of school fund­ing where­as it used to be less than 40%. This explains the dra­mat­ic increase in the por­tion of the Gen­er­al Fund now spent on schools.

What is Amendment 23?

In 2000, the vot­ers passed Amend­ment 23 to reverse a decade of bud­get cuts expe­ri­enced by Col­orado school dis­tricts through­out the 1990s. Amend­ment 23 guar­an­tees min­i­mum annu­al per pupil fund­ing increas­es of “infla­tion +1 per­cent” through 2011, and “infla­tion” after that.


After nine years of Amend­ment 23, we are final­ly spend­ing about as much per child as we did in 1989, adjust­ed for infla­tion. Notably, Amend­ment 23 uses an infla­tion mea­sure that is much low­er than the actu­al cost increas­es that school dis­tricts encounter because of what they pur­chase: health care, ener­gy, trans­porta­tion, pen­sions, etc. As a result, dis­tricts’ actu­al pur­chas­ing pow­er is far below 1989 lev­els.


Over the years, Amend­ment 23 has been treat­ed as a ceil­ing for fund­ing – rather than as a floor as it was intend­ed to be. Now it appears that the leg­is­la­ture will rein­ter­pret parts of Amend­ment 23 in a way that allows them to low­er that floor/ceiling by up to a bil­lion dol­lars.