Moffat County School Board wary of ballot initiatives
September 2, 2010
The Moffat County School Board declared unanimous opposition on Aug. 26 to three ballot initiatives.
The three proposed measures, Amendment 60, Amendment 61 and Proposition 101, are aimed at cutting taxes and fees, and eliminating state borrowing. They will appear on the Nov. 2 general election ballot throughout the state.
Opponents — which now include the school board — say the initiatives, if passed, could jeopardize Colorado's per-pupil funding and hinder schools' ability to purchase big-ticket items, such as computers.
If passed, Amendment 60 would cut school district mill levies in half. The amendment would also allow voters to revisit, and perhaps roll back, voter approvals of tax increases from previous elections.
Amendment 61 would require voter approval before local governments could borrow money, and those debts — if approved — would need to be paid in full within 10 years. The amendment would also prohibit all borrowing by the state government.
Proposition 101 would reduce state income taxes from 4.63 percent to 3.5 percent over time.
The proposition would also reduce taxes and fees for vehicle registration and eliminate all taxes and fees on phone services, except those that fund the 911 program.
Prior to the school board's vote on the issue, finance director Mark Rydberg spelled out the potential effects of the initiatives to Moffat County School District.
Amendment 60 could jeopardize per-pupil funding, Rydberg said.
In Colorado, each student within a school district is entitled to a calculated amount of funding, or a per-pupil amount.
Districts contribute to their own per-pupil funding with local property tax money collected from within the district. If districts fall short of the per-pupil amount, said Rydberg, the state is obligated to pay the difference.
If property taxes are lowered, said Rydberg, the burden on the state becomes even greater.
"Less money from the local taxpayer in property taxes means a greater dollar amount will be (covered by state general funds)," Rydberg said. "The question is: Will the state have the money to cover it?"
Amendment 61 could cause partial-year closures of schools, Rydberg said.
Some school districts in Colorado experience "negative cash flow" during the school year, Rydberg said. This means their available money cannot meet the monthly obligations of salaries and operational costs.
In these instances, the state borrows money from the open market and lends the money — interest free — to districts in need. The districts are then obligated to repay those loans when property taxes become available in March.
"There's a timing effect," Rydberg said. "The state's portion (of funding), which is given out monthly, isn't enough to deal with (operational costs). In the past, the state and the school districts had an agreement where the state would offer interest-free loans to the schools (to cover operational costs). Then the schools would pay the state back when the property tax money becomes available."
If the state is prohibited from borrowing, said Rydberg, the school districts might be forced to close during the lean months — typically from November to March.
"In anticipation that Amendment 61 may pass, the state is not offering its interest-free cash flow loan program this year," Rydberg said. "There are 20 to 30 schools that are in that predicament, and they're not sure what they're going to do.
"(MCSD) has enough cash to hang on, but we're pretty close."
Amendment 61 will also make it difficult — or even impossible — for schools to buy new assets, Rydberg said.
"A concrete example is computer leases," Rydberg said. If Amendment 61 passes, the school district will have to "buy computers in cash instead of what we're historically done, which is a three-year lease program."
Rydberg said that computers tend to be obsolete within three years, so a lease program is more sensible than getting stuck with out-of-date assets. With the passage of Amendment 61, however, the district won't have the lease option.
Proposition 101 could make Colorado's budget problems even worse, Rydberg said.
The money raised from registration taxes and fees "get spread amongst the state entities," which includes school districts.
The proposition is particularly seductive to voters, Rydberg said.
"Depending on what kind of car you drive, you could (currently) be paying $60 or $220 or more a year. (If the proposition passes) over a graduated four-year period, vehicle registration will go down to either $11 or $12.
"It might look like a great way for individuals to save money, but it will have consequences."
As of Tuesday, a few days after the board voted to oppose the ballot initiatives, Superintendent Joe Petrone said he was unsure how the district would move forward with its opposition.
"I'm hoping we'll move expeditiously," Petrone said. "I'm meeting with a group of superintendents here on Sept. 8.
"It's a dialogue. It's an opportunity to seek advice. It's a chance to see what other districts are doing."
Despite the board's opposition to the initiatives, Petrone said he respects its supporters.
"Our effort will be to educate the public to understand the potential impact," Petrone said. "We want people from both sides (of the debate) to see the whole picture and to base their votes on the best possible information."
In her closing comments regarding Amendment 61's restrictions on long-term loans, board President Jo Ann Baxter, was more direct.
"It's unfortunate it has come to this," Baxter said of the lease restrictions. "It seems like a perfectly reasonable way to do business."