Legislators learn ABC’s of new school finance act

The Colorado Statesman

The new school finance act, Senate Bill 13-213, survived its first committee hearing last week, but it took three days to do it.

The Senate Education Committee, after 15 hours of hearings stretched over three days, sent SB 213 to the full Senate for debate. Bill sponsor Sen. Michael Johnston, D-Denver, told The Colorado Statesman he expects the Senate to take up the bill next week, after they finish work on the 2013-14 state budget and a Good Friday recess.

As introduced, the bill creates a new school finance act, with funding conditional upon voter approval this November. The education committee completed its work on SB 213 on March 21, one day before the deadline for filing ballot initiatives for the November election. By the close of business on March 22, supporters had filed 27 ballot petitions to implement the funding side of SB 213, although 24 came from just two groups.

As introduced, SB 213 substantially changes the formula for financing public education.

Preschool and kindergarten: all kindergarten students who meet the eligibility requirements would be funded for all day school; pre-school students would be funded as half-day pupils.

Enrollment funding: enrollment would be calculated on an average daily membership (ADM) rather than based on attendance on one day each year. An amendment in the education committee postponed implementation of that new calculation until the 2015-16 school year.

At-risk definitions: under SB 213, an at-risk student is defined as one who is eligible for free or reduced-priced lunches under federal law; an English-language learning (ELL) student is one who is enrolled in English language proficiency programs, with a maximum of five years. A student can be counted under both criteria, although Johnston noted in his testimony that such “double-dipping” would apply to about 27 percent of Colorado K-12 students.

The bill also seeks to eliminate minimum per pupil funding and makes substantial changes to how funding is calculated using mill levies from the local districts. That includes taking into account the district’s real property assessed valuations, median family incomes, and at–risk student percentages.

Review of return on investment: Beginning in January 2016, the Colorado Department of Education must prepare a report that analyzes the increases in academic growth and achievement in districts that have received an increased financial investment from the school finance act. The report, according to the bill, must include cost studies that identify funding deficits and the amounts needed to correct those deficits. Those studies would be repeated every four years.

The bill also envisions a more transparent public finance reporting system, to add reporting of expenditures, including salary and benefits, at each school. The department of education is then required to create a website that will translate that data into a format that can be understood by the “layperson.”

Finally, SB 213 eliminates the general fund appropriations for certain categoricals, such as English language proficiency programs and services for expelled and at-risk students, since those programs will be funded through the broader school finance formula. Those dollars would then go to gifted and talented students.

Close to six dozen witnesses signed up to testify for or against SB 213 during its first hearing on March 19. Those witnesses represented school boards and districts of all sizes and locales, education advocacy groups and business representatives, and students from the state’s public schools.

The school finance act “has served us for a long time,” Johnston said, explaining that when it was first passed in 1994, there was no common usage of email, the Internet or cell phones. Johnston said he hoped that SB 213 would re-establish a balance between state and local financing of K-12 education, a structure that has gone out of balance in the last 30 years. At the time the last school finance act was passed, he said, 70 percent of the funding for schools came from local districts and 30 percent from the state. For 2013-14, that balance will be almost totally reversed.

Bill co-sponsor Sen. Rollie Health, D-Boulder, told the education committee that the current system isn’t working. “We’re trying to expand the pie,” Heath said, so that every school district or child will benefit from the bill. “Is this bill going to take care of everything we need to do for education in this state? The obvious answer is no,” he said. But he and Johnston look at SB 213 as the first leg, “knowing full well we have to continue this conversation. But [SB 213] is a monumental step forward in equity and fairness.”

That view wasn’t always shared by the school district and education leaders who filled to overflowing the old Supreme Court chambers during the March 19 hearing.

Don Begier, acting chief education officer for the Falcon School District near Colorado Springs, said his district would suffer disproportionately under SB 213. He stated that 20 percent of the dollars available under SB 213 would go to one district: Denver Public Schools; and that the new formula, including its “double-dipping” for at-risk and ELL students “will set us back.”

Similar concerns were raised by charter school representatives. Christianna Fogler, chief administrative officer for the Rocky Mountain Classical Academy in Falcon, said the formula will penalize districts with growing schools. Her school stands to lose $1 million in funding under SB 213, she claimed.

Scott Murphy, superintendent of Littleton Public Schools, was part of the team that drafted both the 1988 and 1994 school finance acts. He asked the committee to slow down in order to spend more time on the issue. Murphy said he fully supports additional funding for those most in need, but that SB 213 does not increase the base. It also hasn’t been analyzed to determine if it is accurate for special needs students, one of the complaints lodged against the state in the Lobato case, and he admitted, a flaw in the 1994 act. “I’m afraid this will do the same,” Murphy said. The bill also does not acknowledge the nearly $1 billion in funding stripped from school finance in the last few years, yet the ballot initiative may seek $1 billion, which would only replace what was lost.

“The gap in funding is a source of disagreement among districts… which has grown substantially with this bill,” Murphy said. One district could get $1,000 more per student from the state under the formula in the bill while another will need to seek voter approval for a mill levy increase to get the same amount. “I admire the bold approach but the current proposal needs more work,” Murphy said, suggesting the bill should include a cost of living factor that was part of the previous school finance act.

Johnston noted that he had an amendment, which was adopted by the committee the next day to would “hold harmless” school districts so that they would not need mill levy increases.

Supporters, including Chris Watney of the Colorado Children’s Campaign, applauded the bill’s effort to fully fund all-day kindergarten half-day pre-school, and to separately fund ELL students, rather than lumping their funding in with at-risk students. “Teachers know it takes more to help them catch up to peers,” Watney said. “Our population is growing, and the most vulnerable population is growing the most. I hope it won’t take 20 years to address finance formula again,” she said.

CEO Kelly Brough of the Metro Denver Chamber of Commerce represented the Colorado Competitiveness Council, which she said supports SB 213. For them, it’s a workforce issue.

“In five years, we have to increase college grads by 20 percent to meet our needs and drive our economy; we have to double the number of students who graduate high school and go to college, and get certificates, two-year or four-year degrees,” Brough said. She spoke in support of the ADM enrollment model, one that she acknowledged is a significant change and difficult to do in a recession. But “it’s critical that funding follows students. Districts have proven they will keep kids in class if they lose funding next time they miss a class,” she said. “We think the competitive model works, even in our education system,” and she also lauded the transparency and accountability in SB 213. “It’s good for parents, teachers, kids and businesses to know.”

The education committee concluded the hearing at 11:30 p.m. and spent another six hours debating more than two dozen amendments to SB 213 on March 20 and March 21. Initially, committee chair Sen. Evie Hudak, D-Arvada, announced the committee had to conclude its work on the amendments and vote on the bill by March 20 so the bill could go to the Senate floor before the end of the week. But that drew howls about the rush to action from committee Republicans, including Sen. Mark Scheffel, R-Parker. “This is a deliberative body… as far-reaching as this legislation is, I would urge this committee… to take a breath,” Scheffel pleaded. “We have a ways to go and to do it right… lots of people are affected by this.”

A second dust-up occurred at the end of the March 20 hearing between Hudak and Sen. Owen Hill, R-Colorado Springs, when Hudak suggested Hill flip a coin to decide his vote on one of the amendments. When the committee resumed the next day, Hudak apologized for being flippant and Hill accepted her apology, but joked he had brought a coin just in case.

In the end, the committee passed a number of amendments to SB 213; the committee report amending the bill is 18 pages in length. The committee voted along party lines, with five Democrats in favor and the four Republicans against, to send SB 213 to the Senate floor.

This week, Johnston addressed one of the concerns about SB 213, that it fails to set a base per-pupil funding level that is determined by cost analysis. This complaint surfaced when the bill was introduced, and came from plaintiffs and other supporters of the Lobato case currently under review by the Colorado Supreme Court.

“I think we’re making great progress,” Johnston told The Statesman, noting that senators will have had 10 full days to read the bill and its amendments by the time it hits the Senate floor. “I’ve spent a lot of time with senators of both parties, to answer questions. We’ve got good momentum, and problems are being solved.”

As to the issues raised by district representatives from across the state, Johnston said the hard part is that there are “178 interest groups and districts, and they’re all different. There isn’t one solution to fix everything,” although he designed the formula to handle that kind of complexity.

“The challenge with an idea this big is that when you push on one side of the balloon, it bulges out somewhere else. You can’t just remove [or add something] to the formula and not have an impact. What people have to understand is the interconnectedness of the formula.”

“It’s why people [take an overhaul of school finance] on only about once a generation.”

Johnston says he isn’t done tinkering with SB 213, and he expects other senators will bring more amendments when the bill gets to the floor.

As to the Lobato base funding issue, Johnston said the problem is to figure out how much base funding does a student need, and what results are achieved with that funding, whether it’s $8,000 per student or $9,000. “We have an obligation to taxpayers to err on the conservative side,” Johnston explained. “What are the returns on that investment, and what more would we need to generate better results.” He pointed out that the cost analysis contained in SB 213 will show what the state and its students are getting for the investments, analysis that will track results over time.

Finally, while a referred measure for a tax increase is not contained within SB 213, its success is conditional upon voter approval of a separate ballot initiative.

As of March 22, four different groups had filed 27 ballot measures to deal with the new school finance act.

Bruce Broderius, former president of the Weld County District 6 School Board in the Greeley-Evans area, is listed as the prime proponent of eight of those initiatives. Broderius told The Statesman that he and Denver resident Kate Pettersen filed their initiatives because they could no longer wait for either the governor or Great Education Colorado to begin that process. He noted that his district lost $32 million in the past few years due to the budget cuts, and it ranks among the bottom 10 in school district funding.

Another 16 measures were filed by representatives of the Colorado Forum’s Fiscal Planning Project. According to a release from the Forum, the proposals “explore a range of funding options, including an increased rate to [the state’s] current flat tax as well as different versions of a moderately tiered graduated tax.”

All of the above initiatives, two others, are scheduled for review and consent hearings on April 5 with the Legislative Council staff.