School districts across the state feel the pull of the negative factor
Negative factor sparked decrease of $1.9 million dollars in Moffat County School District for 2015-16
March 21, 2016
Craig — As people concerned with the Moffat County School District grapple with budget decisions, one phrase that entered the state lexicon several years ago looms large.
The negative factor.
In the Moffat County School District, application of the negative factor — a calculation used by the Colorado General Assembly — resulted in a reduction of about $1.9 million for the 2015-16 fiscal year, according to research conducted by the Colorado Legislative Council staff. Throughout the state, the difference stands at more than $800 million for the same period.
One consequence of these reductions may be that mill levy overrides are playing greater roles for school districts than they have in the past.
"We were getting to the point where we couldn't do business," said Doug Tredway, superintendent of the Gunnison Watershed School District. "It was getting harder and harder to achieve our mission."
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Two years ago, Tredway said, the Gunnison community passed a $2.5 million-per-year mill levy override.
"It wasn't for salaries and benefits for staff," he said. "It was really about bringing back things that we had lost."
The Gunnison Watershed School District, with 1,987 students, is just slightly smaller than Moffat County School District.
Tredway said the mill levy override focused on teachers, curriculum and infrastructure. He said it allowed the district to bring back 12 instructional staff member positions it had cut, to restore elements of the curriculum and also to finance buses, roofs and other needs. He noted, too, that the district will save a portion of the levy funds for the next 10 years as a means of guarding against inflation.
The negative factor's roots
The Colorado General Assembly implemented the negative factor fully in 2010-11, after the recession had hit. It came into being about a decade after the passage of Amendment 23, in Colorado, which in the year 2000 required base per-pupil funding — "base" later turned out to be a key word — to increase by the rate of inflation, plus one percent, for each year for 10 years. The inflationary increase is in place indefinitely.
But per-pupil funding includes more than just "base" funding: it also includes additional factors that change from district to district. The state's School Finance Act of 1994 allots additional funding, beyond the base, for expenses related to cost of living, small district size and students deemed to be at risk, as explained by Craig Harper, a member of the Joint Budget Committee Staff, and Todd Herreid, on the Legislative Council Staff. When districts face challenges related to these factors, their state funding is increased.
It's at that point, after the additional funding is calculated, that the Legislature considers the available resources for all state programs and then adjusts the amount it deems to be affordable for education spending.
"The general assembly has to make the difficult decision of how they are going to allocate scarce resources into all state programs," said Leanne Emm, associate commissioner of School Finance and Operations for the Colorado Department of Education. "Due to the constitutional constraints of the state budget, the general assembly cannot fully fund education, and therefore utilizes the negative factor as a mechanism to balance the state budget."
One of the constraints Emm was referring to comes from the Taxpayer Bill of Rights, or TABOR, which limits yearly state revenue growth using a formula based on population growth and inflation.
Because the negative factor is not applied to "base" per-pupil funding, but rather to other expenses districts encounter, it's been ruled to be technically in keeping with Amendment 23 — a ruling that came last summer from the Colorado Supreme Court by a vote of 4 to 3. The ruling ended a lawsuit contending that the negative factor violated Amendment 23.
Alternatives to school funding
Rep. Bob Rankin, R-Carbondale, cited tight budget constraints as he reflected on what's often called the negative factor.
"They're getting every penny of money that we have available to give them," Rankin said. "That money is not being held back for another purpose."
Rankin characterized local funding efforts as potential solutions for districts' funding problems.
"I would tell them that your only real solution is to pass a mill levy override," he said. Such a measure, he said, would raise taxes but would also "keep the taxes at home."
Rankin noted that he and Rep. Milllie Hamner, D-Dillon, have been coordinating a series of meetings between the Joint Budget Committee and the House and Senate Education Committees to discuss education funding. Hamner chairs the budget committee, and Rankin is a member.
For additional information, see the Colorado School Finance Project's report, Negative Factor by County:
Information about education funding can also be found at Great Education Colorado:
But Rankin noted, too, that it can be harder to pass mill levy overrides that yield significant resources in districts with low property values than it is in districts with high ones.
Joe Watt, communications director of the Colorado Association of School Boards, added: "If your district is really poor, and you go ask for a mill levy increase, it's not going to give you enough. In (some) other districts, the voters simply won't approve one."
That's a point explored by Harper, in a Joint Budget Committee briefing completed in December.
"In some school districts with relatively high assessed value, the district and/or the voters may simply not have the desire to collect (or provide) override revenues," Harper wrote. "In lower assessed value districts, however, collecting significant revenues may simply not be possible."
According to Rankin, "Moffat County is somewhere in the middle."
Tredway, the superintendent of the Gunnison Watershed School District, expressed concern about the increased roles of mill levy overrides in the current funding climate.
"The School Finance Act is supposed to set up education across the state where students have equal opportunities," Tredway said. "Because communities have had to resort to (mill levy overrides), it's really creating inequities across the state. What's happening now is that we're creating haves and have-nots throughout the state. We, as a state, need to grapple with that, because that is not OK."
Local effects of budgetary constraints
Tinneal Gerber, the district's executive director of finance and operations, has estimated a budget gap of $1.76 million for the coming year, along with a "budget challenge" of $2.36 million when technology expenses, curricular costs and other items are added in. The negative factor for this current school year accounts for more than that budget gap — and close to the amount of the budget challenge.
According to figures from the Colorado Legislative Council, the total 2015-16 state and local program funding for the Moffat County School District was $16,468,691 before the negative factor was applied. After it was applied, that total decreased to $14,520,400. That's a decrease of more than $1.9 million.
At one of the community budget meetings — also called stakeholder meetings — Gerber detailed a list of cuts the district has made over the last 10 years.
"That is really what has led to that: the negative factor," she said after the meeting. "We were over $6 million in reductions on that reduction list. A lot of that feeds back to the negative factor, because without that we would have had well more than $6 million over that recent time period."
In fact, over the last six years, the negative factor has accounted for state funding decreases totaling about $12.2 million, according to data from the Colorado Legislative Council.
Emm, with the Colorado Department of Education, noted the roles of mill levy overrides in this climate.
"The mill levy override revenue has increased since 2008," she said. "These additional resources could potentially help districts lessen the impact of the negative factor."
It's a route that some districts, such as Gunnison Watershed School District, have taken. In Moffat County, Gerber has said the district's amount of "additional override revenue available" is about $1.9 million per year. The last voter-approved mill levy override in the district was passed in 1997.
Gerber described the choices that districts face across the state.
"A lot of the districts have had to make significant cuts, or they've been able to bring in (funds) through override levies," Gerber said. "Those really have been the options across the state."