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Welcome to the BVSD Legislative Update, which will be provided throughout the 2017 session of the Colorado General Assembly. 

Monday, April 3, 2017

Negative factor would grow in 2017-18 budget plan

The K-12 negative factor would creep up to $50 million to $881 million under the 2017-18 budget plan that received preliminary Senate approval this week.

Schools will receive more total funding next year than they do in the current school year, because the state constitution requires base funding to increase in line with enrollment growth and inflation.

The current plan calls for Total Program Funding of $6.559 billion in 2017-18, up from $6.372 billion in the current school year. Unofficial estimates put the increase in average per-pupil funding at under $200.

But, as every district administrator knows, rising school costs aren't fully covered by increases in base funding. Making the negative factor larger will force hard financial decisions in many districts. And because of the complexity of school finance formulas, increasing the negative factor hits some districts harder than others.

A negative factor of $881 million would be the third highest since the budget-cutting device was first used for the 2009-10 school year. The negative factor topped $1 billion in both 2012-13 and 2013-14 and was about $880 million in 2014-15.

The negative factor basically represents the difference between what the legislature feels it can afford in a given year and the amount that would be generated by use of the full Amendment 23 funding formula.

Because base school support can't be reduced, the negative factor cuts into the money available to tailor individual district funding to account for staff cost of living, district size and percentages of at-risk students. 

That means the negative factor tends to flatten funding differences between districts, regardless of their individual needs and circumstances. Some districts already are uncomfortably close to base funding.

(Technically, the negative factor isn't written into the budget measure, Senate Bill 17-254. The $881 million is a placeholder needed to ensure the budget package is balanced. The actual 2017-18 negative factor will be triggered by the annual school finance act, a bill that hasn't yet been introduced.)

Lawmakers have known for months that balancing the 2017-18 would be tough and that the negative factor almost certainly would rise from this year's level of $831 million.

Budget proposals by Gov. John Hickenlooper suggested a negative factor of $876 million. The governor's plan included two revenue-raising measures for K-12, an increase in marijuana tax rates and diversion of some funds currently used for senior citizen property tax reductions.

The Joint Budget Committee didn't take those two suggestions. 

The size of the negative factor will be challenged during legislative debate on the budget. Senate Democrats pushed this week pushed budget-bill amendments that would have shifted funds to other parts of the budget for such educational purposes as reducing the negative factor and boosting state support for full-day kindergarten. Those were defeated.

The budget essentially is a zero-sum document. So if lawmakers want to change the size of the negative factor, they'll have cut money elsewhere in the budget to compensate, or find new revenue sources like additional transfers from various special funds. 

And there's one additional question hanging over school funding.

The local contribution to total school operating costs is expected to be lower than originally projected. That's because mechanisms mandated by the state constitution's Gallagher Amendment are expected to suppress overall property tax collections. 

The problem is that the exact amount of local revenue won't be known until April 15, when final figures will be released by state property tax administrators. Current estimates put the Gallagher impact at about $150 million, and that's been factored into the budget plan.

The state is required to backfill school costs not covered by local revenues. So lawmakers may have to scramble late in the session to re-adjust next year's school funding if the actual Gallagher impact is bigger than projected, perhaps with further changes in the negative factor.

Each year, the BVSD Board of Education sets BVSD's legislative priorities for the session. The Superintendent's office directs the lobbying work of BVSD's legislative consulting firm, Policy Matters, LLC. BVSD also works with other PK-12 policy organizations such as the Colorado Association of School Boards (CASB), the Colorado Association of School Executives (CASE), the Colorado Education Association (CEA), and Great Education Colorado, a nonpartisan organization advocating for the benefit of Colorado's more than 800,000 public school students. Addressing Colorado's chronic shortfall in school funding is always on BVSD's legislative agenda along with other issues that could impact classrooms. If you are not yet on the email list and would like to be, please email BVSD Communications at communications@bvsd.org with your email address and you will be added to the distribution list.