School finance 101 | SteamboatToday.com

School finance 101

Understanding the Steamboat Springs School District's budget crunch







— It's no secret that Colorado school districts are after the public's pocketbooks.

This November, public schools are asking voters to approve a record-setting $4 billion in taxes to fund everything from new schools or career tech centers to maintenance of aging buildings, storage, parking lots and landscaping.

In Steamboat Springs, district leaders in 2015 asked voters for $92 million to construct a new school and pay for millions of dollars in needed maintenance to district buildings. Voters overwhelmingly said 'no' to the 2015 plan, but district leaders are gearing up to ask for another large bond in 2017.

In the meantime, they're also asking voters whether to use tax money to fund free full-day kindergarten for Steamboat students.

With $6.3 billion in funding given to Colorado schools this year alone, some Coloradoans wonder why districts statewide, including Steamboat Springs, need more.

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Learn more about school finance:

The Community Committee for Education, or CC4E, in partnership with the Steamboat Pilot & Today, is hosting a community presentation on school finance from 6 to 8:30 p.m. Thursday, Oct. 27 at Steamboat Springs High School.

Carol Hedges, executive director of the Colorado Fiscal Institute, will present "Paying for schools: Everything you need to know," and Mark Rydberg, Steamboat Springs School District director of finance will present "A look behind the budget numbers."

Colorado school districts each receive the same base amount of funding each year, plus additional funding based on a complex set of "factors," including a district's size, local cost of living and number of at-risk kids. Rural districts are typically given more to compensate for the challenges associated with running small schools in more remote areas.Mackenzie Yelvington

School finance legislation 101

School districts across the country find themselves at the mercy of state laws and state legislators, which together determine funding formulas to disperse public money to schools, as well as for roads, prisons, law enforcement and other areas of government.

In Colorado, the state's financing formula is restricted by the Taxpayer's Bill of Rights, or TABOR, which voters approved in 1992 as a way to limit the growth of the government and put taxing policy into the hands of the public. TABOR limits made it difficult in the 1990s for legislators to increase education funding, keeping Colorado well below the national average in per-student funding going to schools.

In 2000, voters passed Amendment 23, a constitutional change requiring the legislature to increase funding for education every year to keep up with inflation.

In response to the Great Recession, legislators in 2009 chose to reinterpret Amendment 23, allocating less money to schools using a maneuver called the negative factor.

The negative factor's impact has varied each year, but in a given year it accounts for as much as $1 billion less in funding for Colorado schools.

"You have about a billion dollars that's been taken out of education when the recession hit that hasn't been repaid," said Tracie Rainey, executive director of the Colorado School Finance Project, a nonprofit that researches topics related to school finance.

Steamboat Springs' share of the negative factor is estimated at about $2.4 million this year, and it has totaled nearly $17 million since the negative factor was introduced.

"We've come to the resolution that we're not going to see that money again," said Steamboat Springs Superintendent Brad Meeks. "It's gone."

Balancing the budget

Because legislators knew the negative factor would negatively impact schools, they relaxed a previous state statute that required districts to set aside $300 per student each year for capital renewal — money to cover new roofs, updated windows, buses, and other expensive items.

"Relaxing this statute made legislators feel better about the implementation of the negative factor by not requiring districts (to do) this mandated set-aside," Rainey said. "With the negative factor and the lack of funding in general for education, maintenance and general repair of facilities have been hit very hard."

In a district such as Steamboat Springs with about 2,500 students, $300 per student amounts to $750,000 annually to put toward maintenance, capital renewal and repairs.

But when making choices on a tight budget, Steamboat Springs Board of Education members have encouraged district leaders to save programs and staff and to take advantage of the relaxed statute by setting aside less than $300 per student for capital improvements.

"It's been that way even prior to when I was on the board," said school board member Roger Good, who has served on the board since 2013.

"You have to recognize that the primary goal of the school district is to provide a great education for our kids," Good said. "And there was a period of time when there was a belief that the negative factor was going to be short lived."

Last year, the Colorado Supreme Court ruled that the state's implementation of the negative factor was constitutionally sound, delivering a tough blow to education advocates hoping for more money for schools.

Good said board members had supported investing in programs and staff, not capital renewal, thinking the negative factor would end and schools would again get the money they deserved under Amendment 23.

"The justification was that we believed the negative factor would go away," Good said. "It became apparent that it's not going to happen."

Despite the Supreme Court's ruling on the negative factor last September, board members this spring again prioritized staff positions and programs over capital needs during budget discussions, directing administrators to set aside just $250,000 for capital renewal — about $100 per student.

The money went quickly, paying for one bus and a truck and tractor for the district's grounds crews to keep up with snow removal.

Regardless of how much the district sets aside each year, the money will never go far on big ticket items like a new roof for Steamboat Springs High School, which is estimated to cost $1.1 million, or a new heating and cooling system at Steamboat Springs Middle School, which would cost $1.9 million.

While the Steamboat Springs School District has assets valued at $100 million, as of 2016, the district only has $1.3 million in a capital reserve fund.

"If a roof fails, that won't get us far," Meeks said.

District Director of Maintenance, Operations and Transportation Pascal Ginesta has itemized and prioritized maintenance needs for every district building and site, and the repairs and replacements surpass $15 million.

Most of those items were included in last November's proposed bond.

The full-day K question

While the Community Committee for Education, a district-supported advisory committee, works to formulate a large-scale plan for the district's future needs, school board members voted in August to take the pulse of voters with another question.

A proposed mill levy override would increase property taxes enough to generate the precise amount of funding to run a free full-day kindergarten program for district students. The amount is based on enrollment.

While the levy would vary each year, district estimates suggest that if there were 170 kindergarten students in a given year, the impact to a residential homeowner would be $5 per $100,000 of value, or $25 annually on a home with an assessed value of $500,000.

For a commercial property owner in the same scenario, the impact would be $18.50 per $100,000 of assessed value, or $185 annually for a commercial property valued at $1 million.

The ballot language reserves the right for the district to collect as much as $950,000 in the future if enrollment or the cost to run the program significantly increases over time.

"It's really about equalizing the playing field for everyone," said Mark Rydberg, Steamboat Springs School District's director of finance.

District money freed up if the mill levy passes would be used to chip away at the district's capital renewal needs, Meeks said.

Keeping up

As evidenced by more than $4 billion in proposed bond measures from Colorado school districts this year, most schools turn to the voters to make up for money they aren't receiving from the state.

"School districts in Colorado have been given only one option … local school districts have to go to their voters and ask voters for the school district support," Rainey said. "This is great for the districts that can do this, but it's unfortunate for the districts that can't. It creates a very inequitable system."

The Cherry Creek School District in Aurora will ask voters next month to approve a $250 million bond and $23.9 million mill levy override.

In addition to paying for new schools and safety and security upgrades, the bond money would also pay for a new Career and Innovation Academy to prepare students to be innovative in the constantly evolving 21st century workforce, and the mill levy dollars would provide operating funds to ensure all students have access to STEM (science, technology, engineering and math) instruction.

Facilities improvement tied to stronger programs, including STEM, were also part of Steamboat's proposed bond last year, and such upgrades are necessary to ensure Steamboat students enter college and the workforce on an equal playing field with students from other districts, according to Meeks.

"I want to make sure our students here are going to have that competitive advantage and the same opportunities," Meeks said.

Good said that while the district's test scores place Steamboat Springs near the top of the state, it's worth considering a broader perspective on how Steamboat compares to other schools.

"When it comes to school funding, Colorado is not the top in the U.S., and the U.S. isn't the top in the world," Good said. "We can feel good about our students being the best in the state, but they're competing on a world stage."

As district leaders consider the more than $15 million needed for maintenance, schools with outdated program spaces and enrollment numbers that continue to increase each year, Meeks said he expects board members to move forward with a new bond measure in the near future.

"It's the only way we can come up with that kind of money," Meeks said. "The community is going to have to agree on a plan."

To reach Teresa Ristow, call 970-871-4206, email tristow@SteamboatToday.com or follow her on Twitter @TeresaRistow

Learn more about school finance:

The Community Committee for Education, or CC4E, in partnership with the Steamboat Pilot & Today, is hosting a community presentation on school finance from 6 to 8:30 p.m. Thursday, Oct. 27 at Steamboat Springs High School.

Carol Hedges, executive director of the Colorado Fiscal Institute, will present “Paying for schools: Everything you need to know,” and Mark Rydberg, Steamboat Springs School District director of finance will present “A look behind the budget numbers.”