Colorado Funding for Public Schools Act, Amendment 23 (2000)
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Text of measure
The language that appeared on the ballot:
Initiative Constitutional Amendment Analysis by Colorado Legislative Council: Increases per pupil funding for public schools and total state funding for special purpose education programs by at least the rate of inflation plus one percentage point for the next ten years and by at least the rate of inflation thereafter; sets aside a portion of the state's income tax revenue to establish the State Education Fund and exempts this money from state and school district revenue and spending limits, thereby decreasing tax refunds when excess revenue exists; allows moneys from the State Education Fund to be used to meet the funding requirements of the proposal; and requires state aid under the school finance act to increase by at least five percent annually.
Background and Provisions of the Proposal: Financing public school education. Colorado public schools receive funding from a variety of sources. Last year, public schools received an estimated $5.0 billion, for an average of $7,323 per pupil. This proposal changes funding received by schools under the state school finance act and for special purpose programs. As indicated in Graph 1, about 70 percent of the total money received by schools was allocated through these two funding mechanisms. Under current law, the legislature determines any increase or decrease in funding provided through these two mechanisms. Under this proposal, the state constitution sets a minimum increase in funding.
School finance act. Under the school finance act, every school district starts with the same per pupil funding amount called the "base." The base is then adjusted in each school district for special district characteristics such as the number of students and the local community's cost of living. This proposal requires a minimum increase in the base equal to the rate of inflation plus one percentage point for the next ten years, and inflation thereafter. This year, the base in the school finance act is $4,00o, which results in an average per pupil funding of $5,175. Under the proposal, if inflation is 3.7 percent in each of the next ten years, the base will increase by at least 58 percent to $6,335, for an average per pupil funding level of $8,192. Per pupil funding under the school finance act is paid for from state and local taxes. On average, 57 percent comes from the state and 43 percent from local taxes. The proposal requires the amount provided by the state to increase by at least five percent annually for the next ten years, unless Colorado personal income grows less than four and one-half percent between the two previous calendar years. The state aid that would be affected by this proposal is $1.98 billion. With five percent annual growth rate, the state aid in ten years must be at least $3.22 billion.
Special purpose programs. The state currently spends $140.5 million on special purpose programs which provide funding for transportation; English education for non-English-speaking students; expelled, suspended, and at-risk students; special education, including gifted and talented students; vocational education; small attendance centers; and comprehensive health education. This proposal requires a minimum increase in total funding for these and any other special purpose programs designated by the state legislature. The increase must be equal to the rate of inflation plus one percentage point for the next ten years, and inflation thereafter. If inflation is 3.7 percent in each of the next ten years, the $140.5 million will increase by at least 58 percent to $222 million.
State Education Fund. The proposal creates the State Education Fund and requires that the revenue from a tax of one-third of one percent of Colorado's taxable income be deposited in the fund every year. Given the current income tax rate of 4.63 percent, one-third of one percent is 7.2 percent of the total state income tax collected. State officials estimate revenue to the fund will total $313 million in 2001, growing to $638 million in 2010, and increasing each year thereafter. The total for the first ten years is estimated to be $4.58 billion. The state legislature can use money in the fund to pay for the increase in this proposal in the base under the school finance act, as long as it is in addition to the five percent increase in state aid. The fund may also be used for the required increase in special purpose programs and for educational reforms, class size reduction, technology education, student safety programs, performance incentives for teachers, and public school building capital construction.
Excess state revenues. The state constitution limits most annual growth in state revenue to inflation and the annual percentage change in state population. Revenue above this limit must be refunded to taxpayers unless the voters allow the state to keep and spend it. Under current economic projections, moneys deposited in the State Education Fund under this proposal will reduce excess state revenues by $313 million in the first year and $4.58 billion over the first ten years. This money would otherwise be refunded to taxpayers. The proposal would reduce the average tax refund by approximately $113 per taxpayer or $226 for a married couple in the first year. The total ten-year impact would be approximately $1,500 per taxpayer or $3,000 for a married couple.
Fiscal Impact: The Office of State Planning and Budgeting foresees that the measure will have a state fiscal impact based on the increases in funding for preschool through twelfth grade public education and categorical funding and the increases in total program funding required by the measure. In addition, the measure excludes approximately $320 million in revenue from the constitutional limitation on fiscal year revenue. In good economic times, such as the State is currently experiencing, this means that the amount of excess revenues that must be refunded to citizens will be reduced by approximately $320 million. The $320 million not refunded would then be available to offset the cost of the increased funding for education that is required by the measure. However, when economic conditions are poor, excess revenues may decline over time. Under these circumstances, this measure may require decreases in funding for other State programs.