Colorado Springs News, Sports & Business

Colorado and local school tax questions cause conundrum for districts

By Carol McGraw Updated: October 28, 2013 at 10:05 am

If Amendment 66 is passed by state voters in November, Lewis-Palmer School District 38 could receive a projected $1.5 million from the state income tax increase it generates.

If Lewis-Palmer's mill levy override passes, the district would receive $4.5 million from Monument-area property tax increases.

The combined money from the two tax-increase measures would help the district recoup state money lost because of education budget cuts in recent years.

But D-38, the only district in El Paso County asking for a mill levy, and 11 other districts in the state also seeking mill levy overrides, are facing a conundrum.

Usually school districts going for a mill levy just have to convince their own community members of the need for more money.

But this time around, districts are vying for votes alongside the statewide $950 million education amendment.

Some voters in these districts are voicing concern that they will be double taxed if both measures pass.

It's not technically a double tax, because the money will come from two places. Amendment 66, which would trigger a revamp of Colorado school financing, would be a tax on income, with a typical family paying about $133 a year, according to some estimates.

A school mill levy is a tax based on local property assessments and would help pay for day-to-day school operating expenses. Lewis-Palmer's proposed mill levy would cost homeowners about $100 per year per $100,000 of property valuation.

Protecting their dollars

Cash-strapped districts with mill levy questions are holding their breath to see how the votes go. The possible scenarios: Voters approve only Amendment 66, approve only the local mill levy, approve both, or approve neither. Districts are trying to hedge their bets to ensure they get funding one way or another.

For example, Kit Carson School District R-1, on the eastern plains with 109 students, is asking voters for a $125,000 tax increase. The district has an operating budget of $1.8 million.

"We operate with slim pickings," said superintendent Brenda Smith.

Written into the District R-1 ballot question: The $125,000 tax increase would be put into action only if both its levy and Amendment 66 pass.

Smith explained that there are a lot of unanswered questions about how Amendment 66 will affect small rural districts. "It was thought that it could be detrimental to small districts like us because our mills are so low that there would be less money than usual. So we preemptively moved to protect our dollars."

Maintain the status quo

Adams County School District 50 in Westminster has a $5.2 million override on its ballot. The concern about double taxation has been raised in board meetings.

The district, which has a budget of $80 million, expects to do well under Amendment 66, which would set in motion the distribution set up in SB213. It is expected to funnel more money to districts with large numbers of disadvantaged students. About 81 percent of Adams' 10,000 students are impoverished, with significant numbers of English language learners.

Even if Amendment 66 passes, the local mill levy is needed, said Steve Saunders, Adams D-50 spokesman.

"We are doing the levy to maintain the financial status quo. We have had to go into reserves pretty significantly the past couple years, about $10 million.

"The mill would allow us to keep doing what we are doing, and the state money would allow us to expand programs."

One tax or two?

Estes Park School District R-3, which has 1,100 students and a $10 million budget, took the opposite approach from Kit Carson. If its $750,000 mill levy ballot request passes and Amendment 66 passes, the mill levy override will not go into effect.

"There was a big discussion. We decided we don't want to create a double jeopardy for our taxpayers," said Todd Jirsa, Estes Park school board president. "If 66 passes, we would get about $1.2 million. But Amendment 66 doesn't specify where the money would go. ... Its mill levy, on the other hand, would be used for teacher salaries and to pay the increases in state public employees' retirement fund, health insurance and some classroom programs.

Lewis-Palmer board members also have heard from voters worried that they would have to pay two taxes if both measures pass.

In March, before Amendment 66 was validated, the D-38 board decided to ask for $4.5 million because its $35 million general fund budget is $5.7 million a year below where it would have been if the state hadn't made cuts. As a result, it slashed its budget, including eliminating 22 teaching positions. Board members in a recent public meeting indicated that they would be sensitive to the community concerns about having two taxes.

The board doesn't have to put in place the mill levy tax increase, or can opt for a smaller amount. In the past, it has gradually put new mills in place. The 1999 mill levy of $4 million took seven years to get to the maximum amount, D-38 assistant superintendent Cheryl Wangeman said.

D-38 board member Mark Pfoff said he envisions that the board would determine what it will receive from Amendment 66 if it passes. "Then we would pull back the mill levy taxes to offset the additional revenue we would be getting from Amendment 66."

The problem with 66, Pfoff says, is there are strings attached to how the money is spent and it might not be what the district needs. "But, with our mill levy, we have earmarked specific things that we need."

Board member John Mann said, "We are hoping the pending rules of Amendment 66 will coincide with what we need so that would take that piece of our mill levy and leave the rest for other things."

Down to six administrators

D-38 officials were spurred to go for the money, in part because of signs of a downtick in student achievement, particularly in some lower grades that they believe is caused by larger class sizes, Mann said. Some high school teachers have student loads of up to 150 students, and some lower grades have 30 students in core classes.

D-38 is consistently at the top of various education indicators statewide, including ranking highest among traditional schools for preparing students for higher education. More than 80 percent of its graduates go to college. It also received the state's top "accredited with distinction" designation, placed in the top tier on state academic assessment tests, and is in the top 10 percent of ACT college entrance exams.

It often competes with Academy School District 20 and Cheyenne Mountain School District 12 in academic honors.

"If the new mill levy passes, it would keep D-38 at about the same level of funding that District 20 has for their kids. This is an open enrollment state and they're our competitors. We want our kids to have the same educational opportunities," said D-38's Pfoff.

If Amendment 66 passes, D-38 would get about $1.5 million or about 42 cents return on every dollar taxed in the D-38 community.

"We would be next to the lowest, aside from Douglas County schools," Wangeman said. One reason is because the district does not have a large number of at-risk students, which are a large focus of the new financing. Only about 7 percent of D-38 students receive free and reduced prices on school lunch, an indicator of poverty.

The Douglas County board voted to not endorse the state measure. The D-38 board does not intend to take a stand either way. It usually stays out of state measures. The D-38 board has worked to improve trust and transparency in recent years. Several years ago, the district was in the red and there were controversies, including a dispute over building a new high school. Confidence eroded and it took a while to come out of the financial problems because of declining enrollment, which is tied to money the state provides.

"We recognize that we weren't slim then. We don't want to go back there. There were 17 administrators six years ago. Now there about six," board member Mann said.

Doing right by the students

The community group Now is the Time D-38 favors of the mill levy, and a recent three-hour public meeting on the tax was very polite and mostly supportive. A group called Directions D-38 that has hammered against district policies for several years. It did not respond to emails to discuss its viewpoint on the mill levy. Its website lacks names or phone numbers to make direct contact.

There are criticisms in the El Paso County Election summary booklet by those opposed to the mill levy, including the board's decision to make classrooom cuts. One person wrote, "Can I trust them this time to get it right?"

Board members and administrators say they can.

Pfoff says, "The beauty of our mill levy is that the money stays local and that it is spent on what the district has earmarked it for. Bottom line: What is important is that we do right by our students."

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Contact Carol McGraw: 636-0371 Twitter @mcgrawatgazette

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