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SCHOOL FINANCE and STATE BUDGET

SEPTEMBER 2025

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WHO WE ARE

  • �Non-profit, non-partisan
  • �Supported by school district contributions
  • �School finance analysis for local and state policy makers since 1995
  • �Governed by a board comprised of national and state experts on school finance

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Our Mission: To compile, collect and distribute research-based, non-partisan information and data on topics related to school finance for state and local policymakers. CSFP also supports school districts by providing expertise, technical assistance and capacity building related to best practices in school finance.

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FEDERAL FUNDING

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Federal Funding For Consideration

  • Funding maybe impacted with changes to Medicaid and SNAP
  • These changes may impact your FRL count
  • With the layoff of Federal Employees, this may impact operations and timing.
  • Special Education teacher training dollars have been halted and uncertainty around HeadStart dollars
  • It will be important to stay diligent regarding what is proposed in the 26-27 Federal budget to determine whether these funds will continue in the future.
  • Implementation of a national voucher program to be determined at the state level

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STATE BUDGET

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September Economic Forecast

  • Slowing economic conditions
  • Legislature in January with a deficit of $300M for FY 25-26
    • Deficit at $800M for FY 26-27
    • School finance needs approx. $350M in FY 26-27
  • TABOR refund in FY 2025 but not predicted for FY 2026
  • National Tariffs – impact still being assessed
  • Inflation in March 1.9% in June 2.2%
    • Now 2.1%
    • National rate 2.9%

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Property Taxes

  • The forecast assumes current law, which assumes overall assessed valuation will be 5% or less of an increase – assumes assessment rate to remain at 7.15%. If the increase is higher than 5% then assessment rate drops to 6.95%.
  • This impacting local share and the state will need additional dollars to backfill loss to K-12. This is not reflected in this forecast and won’t be included until September or December.

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Your District’s Implication

Click HERE to find your district or scan →

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ADEQUACY STUDIES

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Three Approaches, Two Consultants

  • Colorado required that two separate vendors undertake separate studies
  • One vendor had to use input-based approaches (evidence-base and professional judgment approaches output-based and one vendor had to use an output-based approach (cost function)
  • Both studies were required to look at all of the same parameters

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Study Components

Input Study

  • Adequacy Studies
  • Review of Current Formula
  • Stakeholder Engagement (Survey)
  • Impacts of Wealth and Income
  • Special Education Study
  • Landscape Analysis
  • Cost of Living Adjustment Analysis

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Output Study

  • Adequacy Study
  • Review of Current Formula
  • Stakeholder Engagement (Town halls and survey)
  • Equity Study
  • Student Outcomes
  • Efficiency and Resource Use

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COMPARISON OF BOTH APPROACHES

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Adequacy Studies

  • Adequacy studies have been completed and have been presented to the state legislature and to the State Board of Education.
  • They highlight the fact that Colorado is at least $3.5B below the funding level for students to meet adequate and equitable funding.
  • They indicate using a wage index would address teacher pay as they found Colorado as the lowest teacher wages compared to like professions than any place in the country.

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Adequacy Studies cont’d

  • Education performance has been stagnant or decreasing for our students who need supports for Special Education, English Language Learners and At-Risk.
  • Both studies highlight the need to make adjustments for district size and cost of doing business.

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Individual district presentations here

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Common Themes

  • Colorado’s current funding is billions below what is needed to adequately serve students
  • Teacher compensation is below what is needed
  • Higher need districts/schools have lower performance and lower resources available
  • Neither study recommends specific adjustments for locale

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Adequacy Studies next steps

  • At the CSFP conference – educators discussed and listed their priorities for where the next dollars should go to get closer to adequate funding.
  • The top priorities:
    • The Base – every district has different needs – honors local control
    • Special Education – the costs are increasing

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How would additional dollars be used

  • At the CSFP conference – educators were asked to list what these additional dollars would be used for:
    • Improving student success through – programming, smaller class sizes, mental health, proactive programs for all students.
    • Teacher/Staff pay, recruitment and retention – improving the quality of educators

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September 2025

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SCHOOL FINANCE ACT 2025

HB25-1320

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HB25-1320

  • Implement at 15% versus 18%
  • 4-year averaging for implementation year
  • 3-year averaging 26-27 – if can implement 30%
  • 2-year averaging 27-28 – if can implement 45% and State Ed fund can stay above $2M otherwise some kind of “smoothing” will go into play.
  • Hold harmless to 24-25 funding for 25-26 and 26-27 school years.
  • No change to Locale Factor – will move 5 districts back to prior category

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Full bill text here.

Fiscal Note

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HB25-1320 cont.

  • Caps cost of living to 23%
  • At-risk factor .25 weight
  • Ell factor .25 weight
  • Special Ed .25 weight
  • Discussing funding to charter schools to be reflective of their students not the districts average.

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Find your district’s fact sheet HERE.

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Items to Consider with HB25-1320

  • Implications for districts with fluctuating and declining enrollment
    • Can districts operate?
  • Hold Harmless – to 2024-25 funding levels for first two years
  • School districts have no control of the dollars that are in the State Ed fund
  • Annual appropriation for Kids Matter Fund – about $14 million dollars (based on September 2025 Forecast)

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September 2025

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Items to Consider (cont’d)

  • NCES Locale Factor data – NCES has been dismantled
    • Should there be a different Colorado data locale factor designed?
    • Consider the sharp cliffs currently in the formula impacting districts financially.
  • BEST – assurances this is a temporary adjustment
  • Grants – $30M state reduction used toward school finance

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THANKS!

Any questions?

Tracie Rainey�t.rainey@cosfp.org�303-860-9136

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Stay connected

  • https://cosfp.org/
  • @COSFP
  • Colorado School Finance Project -Facebook

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