BVSD faces tightening budget due to declining enrollment, changes in school finance formula

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School districts across the country are facing declining enrollment, due to declining birth rates.

Read more: Public school enrollment falling nationwide, data shows

Here in the Boulder Valley School District the year-over-year drop, due in part to the lack of housing growth and an aging population, is beginning to have a pronounced impact on the funding available to the district. Additionally, changes to Colorado’s school funding formula, passed this legislative session and planned ballot questions, which are expected to decrease tax revenues, leading to tighter budgets for BVSD and its schools, beginning next school year.

Declining enrollment begins to impact BVSD
The prospect of declining enrollment is not new in BVSD. 

For the past few years, projections have shown that BVSD would likely see lower enrollments, a trend that will continue for the foreseeable future.

In fact, projections starting in 2022-23, indicate that the district is expected to decline by approximately 2,100 students over the next 5 years at an annual rate of decline of between 1.5% and 2%.

Understanding the significant impact this will have on the district, BVSD has been working to find ways to attract and retain as many students as we can.

Our Long Range Advisory Committee (LRAC) plays a crucial role, reviewing enrollment trends and other information, and then providing recommendations to district leadership. Recently they helped to create metrics to evaluate our school enrollment and a cycle of reporting , so that our community is kept aware of the school-level trends that we are seeing and actions the district is taking to meet challenges.

Read more: Declining Enrollment

They’ve also supported the district’s efforts to help educate parents regarding the outstanding education offered by BVSD and the specific educational programs available at our schools, including through the BVSD is the Place to be Showcase and BVSD School Finder.

What’s changed? We are starting to feel the financial pinch
You may not know, but the state’s current school funding formula uses a five year average when it comes to funded enrollment. As we navigated the pandemic, the averaging was helpful to many districts because it really softened the impact as we all experienced a significant drop in students. 

The problem is that we are continuing to experience declining enrollment.

In the upcoming budget year, the last pre-pandemic year will drop off the averaging. Worse yet, the average is still being dragged down by the pandemic years. So, instead of the 378 K-12 student enrollment decrease we are projecting for the 2024-25 school year, we will actually face a drop of funding equal to the loss of 674 students, or about $7.6M. This will take a big bite out of new revenue.

Additionally, the passage of Colorado’s new school funding formula (House BIll 24-1448), will shift the amount each school district receives, with the goal of driving dollars to rural and high poverty districts. While BVSD fully supports efforts to make funding more equitable, it will mean a decrease to funding available to BVSD classrooms. For instance, the new formula reduces and caps the state’s cost of living factor.

Senate Bill 233, passed at the end of the legislative session, aims to cut property taxes, without impacting PK-12 education. We, however, may not be so lucky if voters pass Ballot Initiative 50 in November, or other measures currently making their way through the ballot initiative process. They would significantly cut property taxes, threatening the ongoing funding of public school and other important public services, like fire and library districts, depend on. That would likely cause the return of a budget stabilization factor for public school funding in the future.

But my taxes went up significantly… isn’t BVSD benefiting from a windfall?
The simple answer is no.

In Colorado, school funding is counter-intuitive. As BVSD’s taxes go up, the amount we get from the state is actually decreasing. Just because property taxes increase locally, that does not mean that overall funding for schools in BVSD increases at a similar rate.

To maintain equity and fairness across school districts for students across the state, Colorado employs a state share component in its public school finance system. The state provides equalization funding to districts that have limited property tax resources. The state's contribution helps bridge the gap between districts with higher property values and those with less property wealth, allowing for funding of education state-wide regardless of each district's property tax base. 

The state share (equalization) is determined through the following formula:

State Equalization = School Finance Formula Funding - Local Property Tax 

For example, while local property taxes, here in BVSD, are projected to go up approximately $72M over a three year period, the additional funding we receive is expected to be half of that - $34M. 

Again, the new Colorado school finance formula (HB1448) won’t improve this situation. As we mentioned before, state dollars will be distributed without the same considerations for high costs of living, meaning BVSD would only receive around $600,000 in new money in the 2025-2026 School Year beyond the current funding formula. To put this in perspective, our overall School Finance Act funding is a little more than $307M. 

The bottom line
Ultimately, BVSD and other school districts have been long underfunded. BVSD’s declining enrollment is beginning to have a notable impact on the district’s funding and recent actions by the legislature and possible ballot measures could make this situation even worse.

When funding gets tighter, sometimes difficult choices need to be made. In BVSD, our focus is always driving resources to meet the needs of students, which is why we look to be strategic in the allocation of funding by looking at all levels of the organization.

This is a developing situation. We will continue to provide updates as additional information becomes available.