Colorado K-12 Funding Glenn Gustafson, Colorado Springs D-11 Deputy Superintendent/Chief Finance Officer July 27, 2017

Role of the Board of Education Financial Accountability (budget, audit, debt, and elections) Personnel Hiring Salary Schedule/Compensation Systems Establishes Graduation Requirements Adoption of Curriculum

178 School Districts 21 Medium Districts (5,000 to 25,000 pupils) State of Colorado 178 School Districts 21 Medium Districts (5,000 to 25,000 pupils)

State of Colorado FY 17-18 Budget See PDF Document of 2017 leg session

Basic School Finance Total Program Funding Total Program Calculation Per-Pupil Revenue x Pupil Count Total Program Components Property Taxes Specific Ownership Taxes State Equalization Refer to Chart in the book.

Per-Pupil Revenue (FY 17-18) Basic School Finance Per-Pupil Revenue (FY 17-18) Base Funding $6,546.20 Cost of Living Factor 1.205 District Size Factor 1.0297 Personnel Cost Factor 90.50% Non-personnel Costs 9.50% Subtotal $7,990.90 At Risk Factor 550.10 Negative Factor -955.19 PPR $7,581.85 Keep referring to spreadsheet in book.

English Language Proficiency Act (ELPA) Basic School Finance Categorical Funding English Language Proficiency Act (ELPA) Gifted & Talented Small Attendance Centers Special Education (ECEA) Transportation Vocational Education

Basic School Finance Mill Levy Overrides Maximum MLO – 25% Charter School Allocations (Revised 17-1375) Allowable for Capital or Operating

What the General Fund Pays For FY 2015-16 State Share What the General Fund Pays For FY 2015-16 FY 2015-16 General Fund Operating Budget $9.6 billion

TABOR/Gallagher Article X, Section 20 of the Colorado Constitution FY92/93 Base Year Limits Government Growth to Inflation Plus Growth Spending and Revenue Limits Reserving Technique – Ties to Audit TABOR Emergency Reserve = three percent Ratchet Down Effect! Gallagher Amendment - 55%/45% Ratio Assessed Property - Doesn’t Affect Per-Pupil Revenue - Limits Bond and Mill Levy Override Revenues

TABOR Who is NOT De-bruced? 4 School Districts State of Colorado! Colorado Springs D-11 Harrison D-2 Cherry Creek Steamboat Springs State of Colorado! State has $4M to $5M room under revenue cap

Relative State and Local Shares of School Finance, 1983 to FY 2015-16 Note: Prior to 1993, K-12 funding was done on a calendar year basis.

Residential Assessment Ratio School Finance Residential Assessment Ratio Prior to 1983 – 30% 1983-1986 – 21% 1987 – 18% 1988 – 16% 1989-1990 – 15% 1991-1992 – 14.34% 1993-1994 - 12.86% 1995-1996 – 10.36% 1997-2000- 9.74% 2001-2002 – 9.15% 2003-2016 – 7.96% 2017 - 7.2%

Dramatic increases in health costs and in Medicare will squeeze K-12 and other programs 9

What the General Fund Pays For FY 2016-17 State Share What the General Fund Pays For FY 2016-17 FY 2015-16 General Fund Operating Budget $9.6 billion

Colorado State Budget Caseload Growth & the General Fund Budget Sources: Colorado Department of Education, U.S. Census Bureau, & Bureau of Labor Statistics, and JBC Staff.

Medicaid Eligibility Growth 10

Per-Pupil Spending Comparison 10

Per-Pupil Spending Comparison 10

State of Colorado

School Finance Scenarios Going Forward State Share School Finance Scenarios Going Forward Local Share Total Program Funding Projections LCS December 2015 Revenue Forecast JBC Staff Recommendation $40.8M one-time increase in negative factor Eliminate negative factor Current law: constant $830.7M negative factor Statewide Base Per Pupil Funding Current funding level

What About Pot? Difference between Medical and Recreational K-12 Funding set at $40M for Capital Const Capital Constr through BEST grant Best Grant Criteria includes local property wealth D-11 unlikely to see ANY MJ funding

Local Tax Collections State Rank Tax Alaska 1 $206.46 Table 1 Combined State and Local Tax Collections Per $1,000 Income, FY 2008-09 Source: U.S. Census Bureau. State Rank Tax Alaska 1 $206.46 U.S. Avg. (all states) N/A $102.10 Colorado 45 $86.82 South Dakota 50 $79.32

Tax Comparisons to Other States Combined State and Local Taxes in Colo and Neighboring States Per $1,000 Income, FY 2008-09

Colorado Negative Factor History -- 2016-17: $830M -- 2015-16: $830M – 2014-15: $880M – 2013-14: $1.004B – 2012-13: $1.001B – 2011-12: $774M – 2010-11: $381M What does this mean for school districts? State leaders warn of increasing negative factor

Challenges K-12 Initiatives (SB 163/191/212, Early Literacy, testing requirements & standards) Competitiveness of Salary and Benefits Declining Physical Plants and Grounds Aging Vehicle Fleet Technology Obsolescence Increasing PERA Pension Requirement Healthcare Costs and Affordable Healthcare Act Declining Reserves and Matching Grant Obligations Reporting Requirements and Automated Data Exchange Won’t solve this problem in one year Mike to chime in on rural changes Reporting Requirements: Financial Reporting State Reporting and ADE Health Care Reporting

Amendment 23 Language Shall there be an amendment to the Colorado Constitution concerning increased funding for preschool through twelfth-grade public education, and, in connection therewith, requiring the statewide base per pupil funding for public education and funding for specifically defined categorical programs to grow annually by at least the rate of inflation plus one percentage point for fiscal years 2001-02 through 2010-11 and annually by at least the rate of inflation for fiscal years thereafter; Refer to Chart in the book.

Hitting the Base! Colorado K-12 Funding Year Inflation Assumption Funding Above the Base FY 16/17 to FY 24/25 Year Inflation Assumption K-12 Base Funding Inflationary Increase K-12 Negative Factor Cushion State Increase in Negative Factor (non K-12) Cumulative Increase in Negative Factor (non K-12) Combined State Budget Cushion # of Districts at the Base FY 16-17   $6,367.90 N/A $896,845,104 $0 FY 17-18 2.50% $6,527.10 $159.20 $595,098,671 $165,000,000 $430,098,671 FY 18-19 $6,690.27 $163.18 $619,851,633 $454,851,633 FY 19-20 $6,857.53 $167.26 $311,418,269 $146,418,269 3 FY 20-21 $7,028.97 $171.44 $329,025,044 $164,025,044 1 FY 21-22 $7,204.69 $175.72 $128,935,362 45 FY 22-23 $7,384.81 $180.12 $87,631,745 54 FY 23-24 $7,569.43 $184.62 $62,142,494 72 FY 24-25 $7,758.67 $189.24 $55,903,117 82

Glenn Gustafson glenn.gustafson@d11.org 719-650-1960 Questions? Glenn Gustafson glenn.gustafson@d11.org 719-650-1960