JBC: K-12 to take another hit in 2011-12

By Marianne Goodland

Despite a decade of improved funding for K-12 education, the outlook for its funding is likely to take another substantial hit in 2011-12.

The Joint Budget Committee got that forecast from its two staff analysts on Dec. 3 as part of the annual briefing on the Department of Education and its budget.

The 2011-12 budget proposed by Gov. Bill Ritter asks for a $93.7 million increase (general and cash funds) for K-12 education, but that request is $92 million short of fully funding inflation and enrollment increases required under Amendment 23.

However, local funding for K-12 is projected to decrease, to the tune of about $48 million, according to JBC staff analyst Carolyn Kampman, and the state’s K-12 population is expected to increase by at least 1 percent. That means that despite an increase in the state’s total funding for K-12, the average per-pupil funding will drop by about 0.6 percent, or about $40 per student. This comes on top of the cut to per-pupil funding in 2010-11, which was about 3.6 percent, or about $240 per student.

Analysts pointed out that the DOE budget now takes 45.6 percent of the state’s general fund revenues, and that general fund portion, $3.2 billion, represents 73.2 percent of the department’s budget.

State funding for K-12 has increased by $150 million in general funds since 2007-08, according to a JBC briefing document, most of it due to increases in student enrollment. The department’s funding peaked in 2009-10, mostly due to the influx of federal money from the American Recovery and Reinvestment Act (ARRA).

But K-12 funding started taking large hits when the state’s budget went out of balance, beginning in 2009. For 2010-11, K-12 was reduced through a change to the state finance act formula, known as a “state budget stabilization factor.” That factor, which will also be applied to the 2011-12 budget, reduced K-12 general fund support in 2010-11 by $365.4 million.

The state also has relied on cash funds to replace general fund support in the last three budget cycles.

Colorado’s Constitution requires a certain level of funding for what is known as categorical programs, which includes: public school transportation, special education, English language proficiency, and career and technical education. In 2008-09, the state swapped out $33 million in general fund with the same amount from the State Education Fund, which annually collects 7.4 percent of the state’s income tax revenues plus interest. That same source also replaced $15.7 million in general funds for the state’s Colorado Student Assessment Program, or CSAP, in the same year. In 2010-11, the SEF was tapped for $390 million to cover public school finance and categoricals.

In order to keep the State Education Fund solvent, the General Assembly has taken steps in the past to suspend or eliminate funding for 13 education programs, such as full-day kindergarten, charter school facilities, and summer school grants. However, the SEF was able to fund $12 million for full-day kindergarten and charter school construction in 2010-11.

The budget picture doesn’t get any better for 2012-13, the analysts said. It is unlikely the General Assembly will be able to fully fund the existing school finance formula, and as a result the analysts recommended the legislature extend the state budget stabilization factor into that year. Absent the stabilization factor, for 2012-13, the state’s share of K-12 funding will have to increase by $705.7 million.

Long term, the General Assembly should consider modifying the school finance formula, the analysts said.

Department of Education officials will respond to JBC questions and concerns Friday afternoon.

And Ritter’s proposal to balance the 2011-12 budget has hit a snag, or maybe a dead horse: JBC members have informally rejected a proposal to take $20 million out of a fund that subsidizes phone service for high cost areas of the state.

In 2009, Ritter took $15 million from the High Cost Support Mechanism, which is funded by a surcharge on customer intrastate communications and in turn goes to telephone providers who service high cost rural areas of the state.

In a Dec. 2 briefing for the Department of Regulatory Agencies, JBC analyst Megan Davisson warned that the transfer sought by Ritter for the 2011-12 budget would wipe out the fund’s balance.

“Staff doesn’t believe the money is there,” Davisson told the JBC. Money flows in the fund monthly and is distributed quarterly, she explained, and at the end of October, following a September distribution, the fund had only $4 million and no reserve, she said.

Rep. Larry Liston, R-Colorado Springs, who sat in on the briefing, asked who had the higher claim to the money — consumers or the phone companies? “Or can the governor just come in and raid it?” he asked, referring to it as a “cookie jar” that the state could come in and grab at any time.

JBC Chief of Staff John Ziegler explained that to transfer the money would take action by the legislature, and that the governor couldn’t just take it out on his own. That led to JBC members and other legislators sitting in on the hearing to start referring to the request as a “dead horse” that would be beaten out of existence.

“I would be very surprised” if the JBC supported this request, said Rep. Cheri Gerou, R-Evergreen, a JBC member.