Proponents and opponents of a $950 million tax increase for schools have kicked their campaigns into high gear, hoping to educate voters before the November bell rings on Election Day.
As voters begin to receive their ballots in the mail, proponents have been using about $10.3 million to pump out television and radio advertising, among other expenditures.
In the last fundraising period, major contributions included $1.05 million from Bloomberg Philanthropies, founded by New York City Mayor Michael Bloomberg, and $1 million from the Bill and Melinda Gates Foundation.
Voters are asked to create a two-tier state income tax rate. Taxpayers earning up to $75,000 per year would see their rate increase from 4.63 percent to 5 percent; and earners above $75,000 would be taxed at 5.9 percent.
Based on the median household income in Colorado of $57,000, taxpayers would see their annual income tax increase by about $133.
The initiative stems from Senate Bill 213 this year, in which the Democratic-controlled legislature rewrote the School Finance Act. The law calls for all-day kindergarten; reforms to enrollment funding; more money for at-risk students and English language learners; measurements of academic growth and achievement; spending transparency; and equitable funding for all public schools, including charters.
Opponents this week have focused on concerns related to the state’s retirement system, or PERA. They point out that school districts’ budgets are fungible, meaning revenue could be used to backfill the state’s underfunded teacher pension plan.
Speaking at a debate hosted by the Lincoln Club Wednesday at the Denver Athletic Club, Republican Treasurer Walker Stapleton said much of his concern rests with banking on an 8 percent assumption rate of return. With as much as $23 billion in unfunded liabilities, Stapleton says that by 2018, 20.15 percent of the budget for teacher salaries will be directed to PERA.
“You cannot have effective or efficient education reform in the state of Colorado without having commensurate reform of our retirement system, it just is not possible,” said Stapleton.
When the legislature was considering SB 213, Stapleton suggested tying it to PERA reform in order to ensure that funds are directed into the classroom and not used to backfill unfunded liabilities.
“Under Colorado law, those liabilities get borne solely by the employer and not the employees,” added Stapleton. “The employer is the budgets of our school districts; the employer is our cities, not the public school teacher, not the city workers.”
He pointed to the funding difficulties associated with Amendment 23, which voters backed in 2000 to require education funding at inflation plus 1 percent. But under that formula, education funding is cut during economic downturns, and the Taxpayer’s Bill of Rights prohibits taxes raised without a vote of the people.
Amendment 66 repeals Amendment 23 by creating a new funding formula. But Stapleton says it poses the same trouble.
“Creating automatic ratchets for education in Colorado’s budget actually doesn’t produce the results that we want for Colorado kids…” he said, pointing to slow progress in graduation rates and early literacy.
“I am against replacing one automatic ratchet… with another automatic ratchet,” Stapleton added.
Proponents, however, say the state has already begun work on pension reform. Sen. Mike Johnston, D-Denver, who sponsored SB 213 and is a lead proponent of Amendment 66, challenged Stapleton at the debate, saying progress was made with Senate Bill 1 in 2010.
The measure requires employees and their employers to increase their contributions to help reduce pension liabilities. But Johnston added that the effects of SB 1 have yet to be seen. Some school districts have found themselves absorbing the costs by cutting or freezing salaries.
“The reality is we did start with pension reform before we came to this proposal… we’ve made those changes,” said Johnston. “Are they going to be sufficient? We’re going to have to wait to find out.”
Johnston added that there is language in SB 1 that capped the rate of PERA as it increases. He also pointed out that SB 213 and Amendment 66 include specific language that prohibits revenue raised to be used to backfill PERA. There is also a safeguard that prohibits putting new money into an education achievement fund only to take old money out to spend on pension liabilities.
“Those protections are in place, they’ll stay in place, we’ve added those common sense changes,” said Johnston.
He does not believe pension reform is necessary for education reform to move ahead. Johnston used recent examples, such as 2010’s Senate Bill 191, which is implementing tenure and accountability reform, as well as a new teacher evaluation system.
“What this investment is going to do is target those investments in ways that drive better outcomes…” Johnston said of Amendment 66.
Coalition lacks support from business community?
Opponents this week also highlighted lackluster support from the business community, including opposition from Colorado Concern, a group of Colorado business executives.
Colorado Concern joined the South Metro Chamber of Commerce in expressing opposition from the business community. Other notable opponents include rural associations, such as Club 20, Progressive 15 and Action 22.
The trepidation by Colorado Concern is over shifting to a tiered tax rate. But they are also concerned that the Colorado Education Association, which has donated $2 million to Amendment 66, has threatened to sue over SB 191. Many of the reforms in SB 191 would be funded by revenue raised through Amendment 66.
“To us, asking for nearly $1 billion annually on the one hand — as CEA is doing as a proponent of Amendment 66 — when you plan to file a lawsuit over components of the very measure you are seeking to fund, felt disingenuous at best,” said Tamra Ward, president and chief executive of Colorado Concern.
“Voters will decide the outcome of Amendment 66, as they should,” Ward continued. “Our goal in this exercise was simply to shine the light of day on actions we believe were less than transparent, ensuring our fellow Coloradans were provided with all the relevant facts as they cast their ballot.”
But Amendment 66 proponents highlight endorsements from the Greeley Chamber of Commerce, Hispanic Chamber of Commerce of Metro Denver, the Public Education and Business Coalition, Colorado Black Chamber of Commerce, Colorado Women’s Chamber of Commerce, and the Boulder Chamber, among other business groups.
Curtis Hubbard, spokesman for Amendment 66, said the initiative has a unique coalition.
“We have more than 135 CEOs and business leaders signed on, we are at or just surpassed 400 total endorsements, we have education reformers, the teachers’ unions — who are not normally aligned — we have the health care community, we have the higher education community, we have school boards, we have chambers of commerce — so, we have a big coalition,” said Hubbard.
“It may not be the traditional coalition, but that’s because there’s never been a ballot issue like Amendment 66,” he continued.
Health care professionals made their support known on Tuesday at Civic Center Park. They pointed to a September report by Jack Strauss, an economics professor at the University of Denver. The report stated that health care savings could total $500 million, pointing out that education results in less smoking, drinking and obesity.
“Everybody has to care about everybody’s health. Everybody has to care about everybody’s education,” said Andrew Freedman, Amendment 66 campaign director. “We as Coloradans know how to do things differently… we know that if we’re never successful in education, we will never get to the places we need in healthcare.”
Sue Birch, executive director of the Colorado Department of Health Care Policy and Financing, joined the news conference, directly linking education to health care.
“I often times say, ‘Spend a dollar on education versus another dollar in the over-medicalization of health,’” explained Birch.
Dr. Jandel Allen-Davis, vice president of government and external relations for Kaiser Permanente, said the future of the state depends on Amendment 66.
“If we’re going to solve the health and healthcare crisis in our country — and our state — we need Amendment 66 to pass,” said Allen-Davis. “It is a critical piece of the solution for Colorado.”