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School Finance

Changes�������

September 2024

Colorado School Finance Project

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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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September 2024

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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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September 2024

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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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September 2024

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Adequacy Studies

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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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September 2024

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Adequacy Studies contd.

  • The input model will utilize educators in the field for professional judgment panels and evidence-based models.
  • The professional judgment panels will ask for individuals from districts various size districts in order build the resources needed to meet the expectations that the state requires.
  • These panels will include, teachers, administrators, specialists, superintendents, CFO’s and paraprofessionals.
  • These panels will meet virtually for 6 hours between Aug-Oct.

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September 2024

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Adequacy Studies – cont.

  • These panels will begin at the school level, that builds to the district level, and ultimately a statewide review panel. There are panels for Special Needs, remoteness, and all will include charters schools.
  • The end result will produce a base level of funding, adjustments for student and district characteristics.
  • There will also be an in-depth analysis of special education – which will hold panels representing different stakeholders.

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September 2024

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Output Adequacy study

  • The study will provide a base level of funding and adjustments for student and district characteristics.
  • It is a statistical model and therefore doesn’t utilize panels of educators in their analysis.
  • Reconciliation of the two studies will be important so that an explanation of the differences can be understood by the stakeholders. We are hopeful to provide this as part of this work.

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Questions?

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September 2024

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At-Risk�Changes

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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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September 2024

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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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September 2024

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Changes to Property Tax

(233 + 1001)�����

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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%
  • Beginning in the year 2025-26, residential assessment rate will increase to 7.15% with a goal of local revenue reflecting 60% of total program funding
    • Assessment rate cannot go above 7.15%

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Access full bill here.

September 2024

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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 mills
  • Residential property valuation reduced from 7.16% to 6.7%
  • Provision that if ballot initiatives are passed this November, then bill will pause

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September 2024

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Access full fiscal note HERE.

September 2024

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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.

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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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September 2024

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SB24-188�Public School Finance Act

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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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Access full fiscal note here.

September 2024

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SB24-228�TABOR Refund Mechanisms

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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.

September 2024

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Access full fiscal note

HERE.

September 2024

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September Economic Forecast

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

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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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September 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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