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Public-school funding is eating away at the state budget. But an effort to fix that might flop next week

click to enlarge Governor Bill Ritters mill levy freeze plan was proposed - three years ago, but it failed quickly.
  • Governor Bill Ritters mill levy freeze plan was proposed three years ago, but it failed quickly.

Few could argue with Bill Ritter's ambitions when it comes to public education. In his inaugural State of the State speech, Colorado's new governor detailed his aim to cut the high-school dropout rate in half, fund early-childhood education and train students to become tech-savvy workers.

But a new piece of legislation billed as the linchpin to Ritter's 10-year education improvement plan could be killed before it reaches the House Education Committee next week.

The initiative would alleviate the state's burdensome commitment to public education by making localities pay more into their schools. It also would shovel extra state dollars to school districts with the lowest per-pupil funding, three of which (Cheyenne Mountain D-12, Widefield D-3 and Falcon D-49) are in El Paso County.

It also could mean political suicide for the Democrats who promote it; Republican legislators are dubbing it nothing less than a tax increase.

The so-called Colorado Children's Amendment would overhaul 15 years of education funding policy, handing fiscal responsibility (and some say control) back to localities.

Twenty years ago, Colorado's local districts kicked in 57 percent of total school funding, while the state contributed the rest. Today that equation has flipped, and Colorado schools eat away at state dollars in order to fill out their state-determined budgets.

"The Legislature is mad at us," says Glenn Gustafson, District 11's chief financial officer, who is working to promote the amendment. "They call us the fat pigs at the trough."

TABOR at the core

Today, the state of Colorado contributes just under 40 percent of its total general fund budget, or about $2.6 billion, to K-12 education. That percentage will likely continue rising in coming years, and the state is expected to keep cutting into social-service programs and higher education to fund its elementary, middle and high schools.

"We have very clearly identified a state budgeting crisis that is four years away from exploding," says Ritter's spokesperson, Evan Dreyer. "The longer that we wait to fix it, the worse that it gets."

The impending crisis can be traced to 1992, when Colorado voters approved the Taxpayer Bill of Rights, or TABOR. That constitutional amendment limits the amount of tax revenue the state can keep.

When it comes to local money and school districts, TABOR set into motion a complicated and ever-changing math problem. Property taxes, which comprise local funding of school districts, are calculated by multiplying the assessed value of a home or business property by a cents-on-the dollar measuring tool called a mill levy (which is set by the district). So in most places, as property values increase, property taxes and thus local school funding will increase, too.

In Colorado, however, TABOR restricts how much property taxes can increase in a given year. In order to stay within slow-changing TABOR limits, then, even as property values have soared, and school districts have grown, those districts have had to reduce their mill levy rates.

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Eleven years ago in Cheyenne Mountain D-12, accumulated homes and businesses were worth $179.5 million, and the mill levy rate was at 54.5 (that is, 5.45 cents per dollar of assessed value went to property taxes). But last year, homes and businesses were worth nearly twice as much (around $320.3 million); to stay within TABOR limits, the district reduced its mill levy to 50.4.

The Colorado Children's Amendment would freeze mill levies around the state. So while property values rise, property-tax revenues would increase, allowing school districts to collect more money locally. The state would kick in fewer dollars, assuaging the "fat pigs at the trough" concern by letting more of the state's cash flow to other programs.

The tax-increase specter

In the first year of the mill-levy freeze, localities would automatically shore up between $57 million and $70 million for public schools. Most Colorado school districts, but not all, are eligible to stabilize their levies. Three districts that haven't already opted out of certain TABOR restrictions, including the Springs' D-11 and D-2, can't freeze their levies.

If the amendment passes, Ritter has promised to allocate freed-up state dollars to districts with the lowest per-pupil funding. Three districts in El Paso County fit this "floor district" description. Cheyenne Mountain currently gets $5,966 per student per year, Falcon gets $5,981 and Widefield is at $5,942. If the governor's proposal passes, these districts stand to make an additional $160,000, $230,000 and $500,000 each year, respectively.

"This would allow us to do more with salaries, classroom materials and curriculum," says James Drew, Widefield D-3 spokesperson, adding that the district's superintendent lobbied for the amendment at the state Capitol.

"With growth, we are opening a new school next year, and there are some needs there," says Laine Gibson, Falcon D-49's chief financial officer. "The cost of everything keeps going up."

Yet while the Colorado Children's Amendment could prove a boon to the state budget and some public schools, many say that it amounts to a tax increase a violation of TABOR law.

"If [Ritter] wants to do it, in light of what has been done with C and D, he needs to go to a vote of the people," says Rep. Keith King, R-Colorado Springs.

King helped to acquire a legal opinion regarding the mill-levy freeze when it came before the Legislature, only to flop, in 2004. While many state lawmakers took the opinion to say the mill-levy freeze is permitted under TABOR, King and party affiliates say otherwise.

Early this week, all but one Republican legislator signed a letter to Ritter, urging him to back off the plan.

"The proposal is unfair to our taxpayers as well as to our schools and to Colorado's children," it reads. "It arbitrarily picks winners and losers to garner legislative support and would not address the underlying problems in our system."

The School Finance Act will likely appear in the House Education Committee next week, though by that point the mill-levy freeze amendment might be slashed due to partisan bickering.

But the funding imbalance won't go away.

"It is bad tax policy," says Gustafson, "and they have to do something to fix it."

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