The negative factor: Why Colorado schools are crying poverty

Students in Lesher Middle School's science classes don't always dissect cow eyeballs, frogs or fetal pigs to learn about anatomy.

Some days it's chicken wings.

Those wings don't offer any secret scientific advantage for students, but they are cheaper and their bones and muscles get the job done when money is tight and students need hands-on learning experiences.

Sometimes cheaper is what you settle for in a state where lawmakers take millions of dollars from public schools every year to balance the budget, resulting in Colorado ranking among the bottom quarter in state education funding.

In a perfect world, Lesher Principal Tom Dodd would be able to fund new learning experiences and supplies for his students without a second thought. He could always purchase cow eyeballs, frogs and fetal pigs, or maybe even educational technology that would circumvent the need for real animal dissections.

Instead Dodd, the 2017 National Principal of the Year, feels the same crunch as leaders at each of Colorado's more than 1,800 public schools because of a recession-era decision that changed how the state funds its schools and balances its budget.

While the Great Recession ended in 2009 and U.S. News & World Report recently ranked Colorado's economy the best in the nation, Colorado public schools lost $830.7 million this school year to a budget-balancing tool called the negative factor. Poudre School District lost $25.8 million — enough to hire 445 additional teachers and pay them each about $58,000 in annual salary and benefits.

That's how you end up with chicken wings.

Colorado's high school graduation rate hit a six-year high in 2016. But at 78.9 percent, that high water mark trails the national average and graduation rates of all but 10 states and the District of Columbia for the 2014-15 year, the most recent nationwide data available from the U.S. Department of Education.

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"The critics will say, 'You're doing pretty good with what you've got,'" Dodd said. "Yes, we are. We're doing pretty good with what we have, but it's not good enough."

The modern-day symptoms of Colorado's school funding dilemma are sprinkled throughout every aspect of PSD's operations, They are felt in the $800,000 in central office cuts the district is considering to an announcement last spring that teachers wouldn't receive merit or experience-based raises this school year. They can also be seen in the $2,500 tuition PSD asks of parents to keep their students in full-day kindergarten, and in the multimillion-dollar mill levy overrides PSD asked voters to approve in 2010 and 2016.

More: Poudre School District plans $800K cut in 2017-18

If Colorado's school funding situation doesn't improve, PSD could lose enough funding to cover the salaries of 310 of its current teachers. A district task force is in the process of planning for what that worst-case scenario would mean for the education of more than 29,000 students living in and around Fort Collins.

Though Superintendent Sandra Smyser said the district is not speculating about or planning any cuts beyond those announced at the central office, district spokeswoman Danielle Clark told the Coloradoan funding reductions could result in the elimination of anything from teachers or school counselors to elective classes. Schools determine their budgets each year based on allocations from the district, adjusting programs and staffing to match the available funding.

"When you look at budgets, it's hard not to go people," Clark said. "That's what we pay for. We are a people- and service-driven industry."

Clark said PSD's task force examining Colorado's school funding predicament is internal and has only met once. No public meetings are scheduled.

"When and if the time comes that we do have to make significant changes to our budget, we will engage with our community and be transparent about the process and decisions that are made at that time. But we are not there yet," Smyser said in an emailed statement to the Coloradoan.

The negative factor

The amount of money Colorado spends to educate each of its public school students has trailed the national average since before the turn of the century.

Colorado ranked among the bottom 25 percent of states for K-12 funding in 2014, the year for which most recent national data is available. According to an analysis by the Colorado School Finance Project, Colorado directed an average of $9,471 to the education of each of its public school students — $2,685 less than the national average. The analysis, which included the District of Columbia, ranked the state 41st in financial support for public education.

Though there are many reasons Colorado school funding trails that of most other states, one component — the negative factor — has taken billions of dollars away from Colorado schools since 2009.

When it was first enacted, more than 100 PSD employees lost their jobs and an elementary school closed. Statewide, schools began trimming a collective $1 billion from their annual budgets.

More: Enrollment miss pushes PSD reserves too low for comfort

So how did the negative factor come to be?

A Colorado constitutional amendment in 2000 — Amendment 23 — was designed to boost and protect K-12 funding. But when the Great Recession cut Colorado's tax collections by 13 percent, a state budget crisis challenged Colorado's ability to make good on that promise. State lawmakers determined in 2009 that Amendment 23 only applied to a portion of school funding called the base.

With that decision, lawmakers shored up statewide budget woes by reducing the amount of money they directed to help rural schools, those serving high populations of at-risk students and those serving communities with a high cost of living, including Colorado's resort towns. The reduction of funding based on those situations, or factors, is called the negative factor.

PSD lost $3.9 million to the cuts in 2009-10 and $18.3 million the following school year. To cope with the lost funding, PSD trimmed $13.7 million from its budget over two years, including:

• $2.2 million in district-level reductions, including closing Moore Elementary School, reducing funding for small schools, changing bus routes and increasing athletic fees
• $4.5 million from school budgets, including the reduction of 60 teachers and licensed staff, extracurricular programs, classroom budgets and more
• $5 million from non-school district departments, including 52 staffing units
• $2 million from district department operating budgets

Now, more cuts are on the horizon because of what the negative factor might do in coming years. Smyser announced April 3 that up to nine central office positions will be eliminated and some central office budgets will be reduced next school year to put $800,000 into the district's rainy day fund in case state school funding declines.

Approximately 57 percent of PSD's funding, not including mill levy overrides approved by voters, comes from the state and is impacted by the negative factor. The rest comes from local sources, including property taxes.

PSD has lost $190 million — or about 12 percent of what it would have received from the state prior to the legislative change — since the negative factor took hold in the 2009-10 school year. That's nearly as much as the $193.6 million PSD received through the state's funding formula last school year.

PSD is now funded at $7,039 per student — $669 more than the minimum funding protected by the Colorado Constitution. PSD could hit that minimum as early as 2021, resulting in an $18 million funding cut in the next four or five years, according to Smyser's April 3 announcement.

As grim as it is and could be for PSD, cutting to the base would cripple rural school districts that stand to lose half or more of their per-pupil funding if their factors are fully eroded. Smaller, rural districts receive more state funding per student because they don't have large enough student populations to support operations with base funding.

"I've heard these little districts talk about this," said Dave Montoya, PSD's executive director of finance. "They're saying they're going to take the keys down to the capital and drop them off because they can't operate anymore. ... We will probably still be functioning, but we won't be the same district we are now."

More: Sacrificing Our Schools: What is the negative factor?

Searching for a solution

The negative factor is expected to increase statewide by as much as $51 million for the 2017-18 school year, adding to the $830.7 million already taken from Colorado schools this school year. The final tally for state funding for public education in 2017-18 will be announced when the state's budget is finalized in coming weeks, as will the final number of people who will lose their jobs in PSD's $800,000 cuts.

But despite Colorado's resurgent economy, there are no measurable changes to Colorado's school funding formula in the works this legislative session, which adjourns May 10.

A House of Representatives Bill to increase the amount of tax revenues Colorado is allowed to keep under the Taxpayer Bill of Rights was effectively killed, or postponed indefinitely, by the Senate's State, Veterans and Military Affairs Committee.

The bill, had it been sent to voters, sought to decrease the state's TABOR refund obligation by $132.8 million in 2017-18 and $209.3 million in 2018-19, according to a fiscal note. That would have put more money back into the state's general fund to bolster education or other needs such as transportation and health care services.

More: Fort Collins student wins CO National Geographic Bee

Tracie Rainey, executive director of the Colorado School Finance Project, said it's hard to tell if more bills impacting K-12 funding will come forward with little more than a month to go in the legislative session. Rainey said members of the Joint Budget Committee have floated the idea of a bill to restore statewide education funding but that it likely won't surface until after the state budget is finalized, if at all.

A bipartisan coalition to address Colorado's public school funding crisis is in the works, but has not been formally announced.

In lieu of legislative fixes, many districts have asked voters for help to weather budget cuts. In 2010, voters approved PSD's $16 million mill levy override to overcome the negative factor's initial effects. The voter-approved funding helped the district restore much of $13.7 million in budget cuts, which included the equivalent of 139 full-time staff.

In November, PSD asked voters for an incremental $8 million mill levy override to support the district's plan to build three new schools. Voters approved the increase, which was part of more than $4.4 billion Colorado public school districts sought through 62 items on November ballots, according to the Colorado School Finance Project.

Beyond that, many schools have looked to parents and other education-supporters to fund students through everything from band and athletic fees to equipment donations.

Remember those chicken wings? A Leadership Fort Collins class hopes to make a tangible difference at Lesher and, if its plan is successful, other schools across the district.

Jennifer Ray, who is part of Leadership Fort Collins' 2016-17 class and works in corporate affairs at Woodward, said the group plans to launch a portal that will match area businesses with tangible needs at Lesher, including new microscopes for Lesher's science classes.

Today, Lesher's students use decades-old microscopes and slides of bacteria from circa 1970 while Dodd tries to come up with a way to fund a classroom set for the school to share. At approximately $300 per microscope, that's a significant ask. If an outside donor, or donors, were to cover those costs, Dodd would have about $10,000 to direct toward other school needs.

Other items on the list include volunteer needs; funding Lesher's therapy dog, which helps students at risk and costs about $300 a year; providing new and donated books; head phones; healthy snacks; and mental health supports.

The website is expected to go live in April. And though it won't fix the state's funding formula, it will help students at local schools until a more permanent solution can be found.

"This is the perfect opportunity for businesses, whether large or small, to help these schools bridge the financial gap," Ray said.

Sacrificing Our Schools

This story is part of "Sacrificing Our Schools," a Coloradoan series on school funding in Colorado. As these stories unfold, you'll learn tangible ways you can help local students and drive change. Send your story ideas for this series to SarahKyle@coloradoan.com.

Timeline: Colorado legislation impacting school funding

1982 – Gallagher Amendment required the state to adjust the residential property tax assessment rate every two years. Gallagher states the ratio of property tax revenue should be 55 percent business and 45 percent residential. 

1992 – Taxpayer Bill of Rights (TABOR) imposed a limit on property taxes and the amount of revenue state and local governments can collect and took away elected officials’ ability to increase revenue or change assessment rates without voter approval.

1994 – School Finance Act determined how funding from state and local tax collections go to Colorado’s 178 school districts. The formula attempted to make funding more equitable by including student and district characteristics. 

2000 – Amendment 23 established a minimum increase in base funding per pupil in Colorado to keep up with inflation and restore funding levels.

2005 – Referendum C allowed Colorado to keep and spend revenue above the TABOR limit for five years.

2007 – Mill Stabilization kept local property taxes from being automatically cut when collections were expected to exceed TABOR limits.

2009 – Negative factor took effect when legislators deemed that only part of the school funding factor, the base, was protected under Amendment 23. The negative factor is what is cut from schools each year. 

Follow Sarah Jane Kyle on Twitter @sarahjanekyle or on Facebook at www.facebook.com/reportersarahjane.