The big debate surrounding a proposed $950 million tax increase for education is whether the money will actually make a difference in Colorado classrooms.
The Gazette followed the paper trail to show voters where their tax dollars would land under Amendment 66 and its companion legislation, SB213.
SB213, passed by the Legislature this year on condition of a tax increase to fund it, rewrites the state's education finance equation, redistributing money among school districts using a new formula.
It will only take effect if voters approve Amendment 66 on Nov. 5.
Amendment 66 increases Colorado income tax from the current 4.63 percent to 5 percent. It also creates a second tax bracket - something previously prohibited under state law - where income over $75,000 will be taxed at 5.9 percent.
Estimates from the Colorado Legislative Council say the tax increase will generate $950 million in 2014-15 and $1 billion in 2015-16.
Where will that money go?
Former state Sen. Bob Hagedorn, a Democrat and staunch advocate for school choice through voucher and charter school programs, is a member of the Coloradans for Real Education Reform, urging voters to say no to Amendment 66.
"The reforms that are being promised are not guaranteed," Hagedorn said. "The only thing that there is to guarantee education reforms is the language that is in our Constitution . and neither (Senate Bill) 213 nor Article 9 of the state Constitution says that there is going to be more teachers' aides in the classrooms or a rollback of student fees which have just been skyrocketing."
Proponents of the amendment - Colorado Commits to Kids - can create a long list of not only how the $950 million would be spent, but how it would help implement new education reforms under SB213 while also redistributing existing funds for much-needed purposes.
"Amendment 66 gives Colorado the opportunity, for a small investment, to deliver a public education system that is a national model for outcomes and accountability," said Curtis Hubbard, spokesman for the campaign. "From a big picture perspective, we'll be able to have smaller class sizes, more one-on-one attention for all students, restoration of programs like art and gym and music, and tools in place to ensure that the money is focused on the classroom."
Follow the money
So who is telling the truth?
Well, everybody - mostly.
It boils down to whether voters trust local school districts to make good decisions with the windfall of cash that would flow to most of them under Amendment 66.
The money starts in the pockets of taxpayers and arrives at the state when federal and state income taxes come due by April 15.
The tax increment - the difference between what would be raised at the 4.63 percent tax rate and what would be raised at the 5 percent and 5.9 percent rates - would go directly into a newly created fund, the State Educational Achievement Fund, where it would be kept separate from other state dollars to prohibit raiding of the revenue for non-educational purposes.
Here's where it gets tricky.
Most of that money would then be plugged into the new school finance formula and spit out to districts as a lump-sum dollar amount alongside ordinary education funding from the state's existing Education Fund.
If the new tax had been in place for the 2013-14 fiscal year $6.42 billion in state funding would have gone to schools through the new finance formula.
In actuality, during the 2013-14 fiscal year schools received $5.5 billion through the existing finance formula.
The new money - roughly $920 million - would be hard to track because so much would change all at once under SB213.
As proposed, school districts would get:
- $529 million for low-income students, those who qualify for free and reduced-price lunches, compared to $302 million in 2012-13;
- $173 million for students learning English as a second language, which will be funneled directly to those schools where the students are enrolled;
- $10 million paid to state-authorized charter schools to equalize their funding to local school district funding levels where voters have approved higher property taxes;
- $37 million to hold districts harmless that would have lost funding under the new formula;
- $374 million (or $441 per student) to help implement new state-mandated teacher evaluation systems, Common Core standards and the Read Act requiring students to be reading by third grade; and
- $117 million to establish a minimum per-pupil funding level at every district in the state.
But the truth is that money isn't guaranteed to go to any of those purposes.
Even money billed as being for all-day kindergarten doesn't have to be spent for that purpose.
Local school districts can make decisions about where to spend the additional money based on the simple policy of "supplement don't supplant."
Depending on who you ask, that is local control at its finest or it is the equivalent to throwing money away.
For example, current kindergartners don't count as full students, because most attend half-day classes. School districts receive half of the per-pupil funding for kindergartners.
That would change under SB213 and estimates from Colorado Commits to Kids say that increasing those students to a full student count will bring $164.4 million to school districts.
However, that money is part of the lump-sum total program payment a school would receive. Whether a district implements full-day kindergarten would be up to the budget makers and the school board.
If school districts don't spend the money in classrooms or on proposed educational reforms or earmarked services, where could it go?
There are two big fears: administration expenses such as high-priced education consultants and the ever-growing cost of teachers' retirement pensions.
With federal one-time dollars that flowed into school districts, consultants were often the order of the day, primarily because districts are reticent to spend one-time dollars on recurring expenses such as hiring teachers, expanding kindergarten and pre-school offerings or extending school days.
But with a dedicated revenue stream - $1 billion in new taxes - schools wouldn't be forced to make that decision, although they could.
It's likely the incoming additional revenues would help school districts grapple with the ever-rising cost of the Public Employees Retirement Association, or PERA.
In 2012, the 15 school districts in El Paso County paid nearly $72 million to PERA for employee retirement programs, according to districts' Comprehensive Annual Financial Reports. That represents a mandatory payment of 15.65 percent of each employee's salary. Under PERA reforms, that will make the pension whole in coming years, and the district's mandatory payment will increase steadily, reaching 20.15 percent in 2018.
Most districts have budgeted for that growing expense. Under law, the increase is intended to come from foregone salary increases in the coming years.
Increasing PERA costs are one of hundreds of demands on a district's budget.
After all the money from Amendment 66 is plugged into the school finance formula, leftovers would go to fund other pet projects prioritized by lawmakers, such as:
- $100 million for an education innovation grant program - giving teachers, principals and districts the ability to apply for funding for their projects;
- $188 million for special education funding;
- $22 million for charter school facilities; and
- $7 million for gifted and talented student programs.
However, it's important to note that projections from the March revenue forecast done by the Legislative Council staff estimates that in 2015-16 there wouldn't be enough money raised by the tax increase to pay for all of the $331 million in other spending called for under SB213.
But as the economy improves, revenue projections should improve and the funds could be available by the time the law was fully implemented.
Checks and balances
Hubbard, the campaign spokesman, emphasized that while decisions would be left to the local school boards, voters and taxpayers would simultaneously be more informed than ever under the law.
"That also then requires an annual audit to make sure that the money is being spent on those areas that qualify as reforms and enhancements," Hubbard said. "We then require every four years a state study to measure the return on investment, and if students are not improving then we've given the Legislature the power to redirect the money to those programs that prove to be working."
The bill calls for a website to be developed where the public could see exactly how a district is spending its money with comparison numbers from prior years.
Hagedorn remains skeptical, saying that even if the reforms called for in SB213 are fully funded, there's no guarantee they will work to improve the state's education system.