School Finance

Changes�������

October 2024

Colorado School Finance Project

Who is CSFP?

• 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

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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Changes are Here

What will influence these changes:

• Adequacy Studies completed in January 2025
• At-Risk to be changed in 2024-25 legislature
• Legislative makeup in 2025
• State budget pressures

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October 2024

What is the policy for change?

• Has policy been clearly defined in the areas focused on change?
• Can policy be clearly outlined with objectives?
• Do the changes reflect the policy?
• Does the formula reflect the policy?
• If they require a hold harmless or carve out for certain districts, then the formula is wrong.
• A new formula shouldn’t require a hold harmless.

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October 2024

Adequacy Studies

Adequacy Studies

• Two different studies being completed.
• One study by the APA team (Alan Odden and Larry Picus, Afton and Tracie Rainey, Molly Homburger)
• Input approach
• AIR – Output approach
• Both approaches will analyze the current funding formula, and the potential changes outlined in 1448.
• Both approaches will be doing surveys that will reach a broad audience.

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October 2024

Professional Judgement

• Have completed panels
• 13 panels including school, special needs, district, remote, CFO, and statewide
• Working with CDE to finalize the prices that will be applied to identified resources
• PJ costing will be complete by early next week

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October 2024

Evidence Based

• Created a Colorado specific EB model based on my recent research
• Full model will be available as part of the study
• Held last panel on Friday of last week
• Five total panels
• Will apply prices to EB resources when finalized

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October 2024

Special Education

• Special education study met with a large number of special education directors from both BOCES and school districts
• Examining current funding structures and costs
• Will make a recommendation on best funding approach for Colorado along with examination of impacts of implementing best practices

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October 2024

Landscape Analysis

• Examining expenditures, spending patterns, and performance for districts and schools
• Looking at this by size, wealth, location
• Working to identify patterns in resource need across the state
• Work will be compared to the input study results

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October 2024

Community Survey

• Have over 1,400 response with strong representation around the state
• Responses from nearly 130 districts
• Family/Community Member responses are the highest percentage of responses
• Results will help provide context on what resources are working well/needed in Colorado schools

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October 2024

Impact of Wealth and Income

• Building further on the landscape analysis, the study team is examining the impacts of wealth and income on the resources available to students
• This includes examining the differences in resources available to districts when looking at the differences in both property wealth and personal income

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October 2024

COL/Costs of Doing Business

• Examining the approaches states use to adjust for difference in resource costs between districts
• This includes looking at the differences in:
• Cost of goods
• Cost of services
• Costs of personnel
• Costs to personnel

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October 2024

Final Recommendations

• Final report will include detail on all of the analyses
• APA will provide a single recommendation for a base cost, student weights, and district adjustments.
• Recommendations will also be given on what a formula could/should look like and possible phase-in guidance

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October 2024

Phasing in Results

• Many adequacy studies have provided guidance on how results could be phased in
• Phase ins allow a state to grow revenues over time, ensure that the staffing resources would be available linked to higher revenues, and to link growth in funding to targeted changes in practice.

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October 2024

Maryland Phase In

• Maryland’s Blueprint increased base funding and adjustments for students with special needs.
• Base funding increases were tied to changes in school and district practice and funding will increase as the changes are implemented
• Student characteristic weights were implemented right away and the actual weights will decline as base figure increases
• Total resources for special needs students stay the same

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October 2024

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Phase in Options

• Other states have built the structure with fixed weights during implementation with all funding increasing as the base funding is increased.

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Questions?

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October 2024

At-Risk�Changes

At-Risk Interchange

▰ Student-level census block information needed to implement the new at-risk measure as described in HB22-1202.

▰ As provided for under SB24-188, data needed for the implementation of this measure will be collected beginning with the 2024-25 school year.

▰ In the 2025-26 school year, the new at-risk measure will be fully implemented and included in the Total Program funding calculation as described in the Public-School Finance Act

▰ The At-Risk Interchange closes on November 8th, 2024

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October 2024

New At-Risk Measure 2025

▰ The new at-risk measure will take into consideration the following:

╺ Percentage of students certified as eligible for free lunch based on receipt of public benefits (SNAP, TANF, Food Distribution Program on Indian Reservation) or categorical eligibility (foster, homeless, migrant, runaway or Head Start)

╺ Supplemented by the direct certification of students participating in Medicaid or Children’s Basic Health Plan

╺ A neighborhood socioeconomic status index that weighs students’ needs on 5+ socioeconomic status neighborhood factors, linked to each student’s census block group.

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October 2024

Changes to Property Tax

(233 + 1001)�����

Property Tax Bill - SB24-233

• Property tax bill based on work from Commission on Property Tax that has been meeting since December 2023
• The bill recognizes local governments differently from public schools
• For school districts for 2023-24 assessment year, the current assessment rate remains in place at 6.7%

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Access full bill here.

October 2024

Property Tax Bill cont’d

• Reduces the valuation of non-residential property stairsteps down from 29% to 25% by January 2027
• State will need to backfill loss of K12 funding $352M in 2024-25
• $74M in 2025-26
• $113M in 2026-27
• No reimbursement for override or bond mill

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October 2024

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Access full fiscal note HERE.

HB24b-1001

▰ Changes assessment rate in 2025 to 7.05% if growth is less than 5% - if greater than 5% then assessment rate drops to 6.95%.

▰ The state will have to back K-12 with additional dollars the estimate is $5K 2023-24, $83K 2024-25, $100K 2025-26.

▰ A new cap was established for K-12 on the amount of growth over the 2 year assessment cycle which is 12% maximum.

▰ An example of how it works: (new slide)

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Access full bill here.

October 2024

HB24b-1001 cont’d.

▰ How does the Cap work?

▰ If growth is 6% in one year and year 2 is 6% then get to capture the full 12%.

▰ If growth is 12% in one year and 2nd year is 5% you can't capture any more than 12%.

▰ If growth is 4% in year one and 10% in year 2 you can only capture 8% to remain at 12% total.

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October 2024

SB24-188�Public School Finance Act

Public School Finance Bill – SB24-188

• Paid off the Budget Stabilization Factor
• Created a Rural Factor for districts 6,500 and less with a guaranteed of $100K minimum per district
• At-risk – districts determine the better of the funding from the last 2 years.
• CDE has been tasked to implement new at-risk measure for 2025-2026 school year

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October 2024

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Access full fiscal note here.

SB24-228�TABOR Refund Mechanisms

TABOR Refund Mechanisms– SB24-228

• Legislation only takes effect when there is TABOR surplus
• Temporary income tax reduction from 4.4% to 4.25%
• Given our projected refunds is over $1.5B
• Income tax reduction adjusts based on TABOR refund amounts
• Temporary sales tax reduction is activated if TABOR surplus is over $1.5B
• This reduction is 0.13%

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Access full bill here.

October 2024

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Access full fiscal note

HERE.

September Economic Forecast

Forecast Updates

• Economy slowing and inflation dropping to 1.9%, lower than the national rate.
• March 3.5%, June 2.6%.
• Concerns that the state education fund will have about $1.1 billion in the current year and by 2027 will be down below the minimum requirement.
• Without having enrollment and local share data they won’t have good information for K-12 funding until December.
• Legislative Council staff doesn’t believe that currently the fiscal triggers in HB24-1448 have been met.

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October 2024

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A new legislature and PERA litigation?�����

On the horizon

• A new legislature in January.
• Will they have the same priorities as the prior legislature on 1448?
• How will the adequacy studies play into decisions?
• How will PERA potential lawsuit impact legislature and K-12?
• Thoughts?

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October 2024

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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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