School Finance System (09/27/2005)

Final
STAFF SUMMARY OF MEETING

SCHOOL FINANCE SYSTEM

Date:	09/27/2005	ATTENDANCE

Time:	09:11 AM to 04:07 PM	Anderson	X
		Bacon	X
Place:	SCR 356	Benefield	X
		King	*
This Meeting was called to order by		Penry	*
	Senator Windels	Pommer	*
		Spence	*
This Report was prepared by		Tupa	*
	Jennifer Thomsen	Merrifield	X
		Windels	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
Call to Order Overview of Federal Education Funds Received by Colorado Committee Discussion of Possible Legislation		- - -

09:12 AM

The meeting was called to order by the chairman, Senator Windels. Members present were: Senators Anderson and Bacon and Representatives Benefield and Merrifield. Senators Spence and Tupa and Representatives King, Penry, and Pommer were present after roll call.
09:13 AM

Karen Stroup, Chief of Staff, Colorado Department of Education; Vody Herrmann, Director of Public School Finance, Colorado Department of Education; and Pat Chapman, Director of Federal Consolidated Grants, Colorado Department of Education, came to the table to provide an overview of federal education funds received by Colorado. Ms. Stroup commented on federal funding of education, noting that federal funding represents less than 10 percent of the department's total funding.

09:14 AM

Ms. Herrmann began the presentation, referring to a handout (Attachment A), entitled "Federal Grant Activity FY2001-02 to FY2005-06." She walked the committee through the handout, highlighting the totals. She provided a second handout (Attachment B), from the President's budget proposal, which provides an overview of the purpose of each grant. She went on to explain that there are three programs that account for a large portion of the federal funding: Title I at $123 million; special education at $138 million; and nutrition at $72 million.

09:18 AM

Mr. Chapman spoke to increases in funding received under No Child Left Behind (NCLB) programs. He noted that much of the increase has been targeted to the highest poverty areas, so, over the past few years, he said, there are some "winners" and some "losers." He remarked that much of the increase has been to the Title I program. He noted that some other programs that reach all school districts have been cut and are threatened for elimination. He said that the Colorado Department of Education (CDE) cannot increase the amount used for administration, even though the administrative responsibilities have dramatically increased. All districts, he said, have increased responsibility under the accountability provisions of NCLB and rural districts have begun to lose funding as more money is targeted to high-poverty areas.

09:21 AM

Mr. Chapman noted, in response to a question from Representative Penry, that some districts have seen funding decreases under NCLB in the last two years. Senator Windels asked if there had been an analysis of how the funding aligns with required mandates. Mr. Chapman responded that an analysis had not been done, but that districts are asked to set aside federal funds to fulfill NCLB responsibilities. Mr. Chapman responded to follow-up questions from Senator Windels regarding NCLB responsibilities and funding. Mr. Chapman described the historical use of Title I funds to hire teachers and the current uses of those funds.

09:26 AM

Ms. Herrmann, in response to questions from Representative King, noted that all of the federal grants come with requirements and are specific purpose grants. Mr. Chapman provided further clarification regarding discretion in spending grant funds and responded to follow-up questions regarding whether all school districts apply for grants or whether some school districts decide not to apply. He noted that CDE makes a concerted effort to assist districts in applying for grants.

09:32 AM

Ms. Herrmann noted that a spreadsheet is available that shows all funds each school district receives. Mr. Chapman said, in response to a question from Representative Merrifield, that the Reading Excellence and Bilingual programs were eliminated under NCLB. He responded to follow-up questions from Senator Windels and Representative Merrifield regarding the programs. Mr. Chapman responded to questions from Representative Pommer about Learn and Serve and the Migrant Even Start Programs. Ms. Stroup noted that specific questions about the grants would be best answered by the experts in the department.

09:39 AM

Mr. Chapman said, in response to a question from Senator Bacon, that very few of the programs require a state or local district match. Mr. Chapman responded to additional questions from Senator Spence regarding the Migrant Even Start program. Mr. Chapman noted that there are two additional programs for migrant students that provide funding for migrant students. Ms. Herrmann provided further clarification, referring to Attachment A. Ms. Stroup provided further clarification. Ms. Stroup responded to a question from Senator Windels about Educational Technology State Grants noting that no alternative funding has been identified, but that CDE is looking for funding.

09:43 AM

Representative King asked about the Library Services and Technology Act, Ms. Stroup responded, noting that administration is formulated in the grant. Ms. Herrmann provided further clarification, noting that there is often contracted services included in administration. Senator Anderson commented that all of these funds are custodial funds over which the state has no control. Senator Windels made further comments regarding the programs, including the Learn and Serve program.

09:47 AM

Senator Windels reiterated her earlier question regarding adequate federal funding of NCLB, asking again if the panel, as administrators of NCLB, believes NCLB is adequately funded. Mr. Chapman responded, noting that some correction is expected when NCLB is reauthorized. He mentioned assessment moneys and required programs. Ms. Stroup noted that CDE is struggling to respond in the way districts expect them to respond. She commented that this impact is most likely magnified at the district level. Senator Windels made follow-up comments.

09:53 AM

Ms. Stroup noted that CDE stays in close contact with Pat Chlouber, the federal regional NCLB representative, and that CDE is in close contact with districts to identify issues, in response to a question from Senator Spence. Senator Windels asked if the state has applied for any NCLB waivers. Mr. Chapman responded that CDE is working on an amended state plan, which will be submitted in January, asking for flexibility in several areas. Senator Windels made follow-up comments about waivers. Mr. Chapman responded, saying that the state has taken advantage of all additional flexibility granted. Representative Merrifield asked for additional clarification on waivers. Mr. Chapman responded, commenting on the work of the hub committee.

09:59 AM

Ms. Stroup said that there is a staff member at CDE who helps school districts apply for Medicaid dollars, in response to a question from Representative Pommer. Mr. Chapman, in response to a question from Senator Spence, said that Bill Windler is the NCLB contact at CDE.
10:02 AM

Senator Windels asked the committee members if they had legislative ideas that were not previously emailed or called in to staff. Senator Tupa noted that he has been working on possible legislation on an interim committee for the P-16 initiative. Senator Windels, referring to her handout, "Summary of goals for 2006 School Finance Act" (Attachment C), began the discussion of proposed legislation. She began her presentation with the first goal on Attachment C -- Base Funding. She commented on the setting of the base in the 1994 School Finance Act, noting that previous testimony before the committee suggested that the base was set somewhat arbitrarily at that time.

10:08 AM

Senator Anderson said that she was a member of the General Assembly when the base was set. She commented that, prior to the 1994 act, funding was not provided on an individual basis, rather on a classroom basis. She said the General Assembly looked at "uniform and thorough" when setting the base. She commented on Amendment 23, noting that it applies only to the base. Senator Windels asked for additional clarification, which Senator Anderson provided. Senator Anderson said, in 1994, it was determined that funding should happen on a yearly basis. Senators Anderson and Windels asked Deb Godshall, Assistant Director, Legislative Council Staff, to come to the table to provide her input on the process of setting the base in 1994.

10:12 AM

Ms. Godshall commented that in 1992 or 1993, the General Assembly asked the Legislative Council to perform a study of school finance to present to an interim committee. She described the purpose of the study and explained how the study was conducted. She commented on at-risk, noting that Legislative Council Staff compiled information on poverty, language spoken at home, education level of parents, and what other states were doing in regards to funding the at-risk population. This information, she said, was used, along with size and cost-of-living, to come up with a base in conjunction with the interim committee. In response to a question from Senator Windels, Ms. Godshall described the process by which the base was set. Senator Windels asked for clarification, which Ms. Godshall provided. Senator Anderson spoke to the idea of "equal and uniform" in response to Senator Windels' questions.

10:17 AM

Senator Windels made further comments regarding the base, to which Senator Anderson responded. Senator Windels commented on the shift from a focus on universal access to a focus on universal proficiency. Senator Spence spoke to Senator Windels' comments and asked Senator Windels if her proposal is a new school finance act. Senator Windels responded, noting that there are some new components in her proposal. She also remarked that recent lawsuits have been revolving around proficiency rather than access.

10:21 AM

Representative Pommer commented on the struggle between base and at-risk funding, asking about proficiency and the definition of at-risk. Senator Windels responded, noting that base funding should be considered in light of what the student at the bottom of the J-curve gets. Senator Anderson commented on base funding and access and commented that the modifiers are what create funding differences. Senator Windels clarified her comments regarding access and modifiers.

10:27 AM

Representative King remarked that he has concerns about changing the base in light of Amendment 23. He noted that the school finance act spends $4.5 billion, of which the base is about $3.5 billion. $600 million, he said, is in cost of living, roughly $200 million is in the size factor, and roughly $200 million is in at-risk. The commented that the legislature has discretion over the $1 billion difference between the total amount and the base, but no discretion over the statewide base. Senator Windels asked for clarification, which Representative King provided. He noted that total program is not mentioned in the act. He asked if raising the statewide base would take discretion away from the legislature. He said he would like to see the spread between the statewide base and total program increase in order to preserve legislative flexibility in allocating funds. Senator Windels asked for clarification, which Representative King provided.

10:32 AM

Representative Penry commented on the base, noting that once the base is grown there is no going back due to Amendment 23. He said that factor funding could be crowded out by the rising base. Senator Windels asked Tracie Rainey, Director of the Colorado School Finance Project, and John Augenblick, Augenblick, Palaich & Associates, to come to the table to provide further information.

10:33 AM

Dr. Augenblick said that the base is the cost of serving a student with no special needs in a district with no unusual circumstances. He said the Colorado School Finance Project worked to come up with a base. He described the methodology used and spoke to adjustments made to the base based on student and school district factors that are beyond the control of the districts. He described an updated study, which provides a set of figures, including a base cost and adjustments made depending on school district factors -- size and cost-of-living. He spoke to cost-of-living, noting that adjustments could be made up or down. Senator Windels asked him to share the base cost figure. Dr. Augenblick noted that, for the year 2001-02, the base they used was $4800, for 2003-04 they used $5180, and for 2004-05 they used $5727. He explained that the reason for the increases in the base was increased student performance expectations.

10:41 AM

Representative Merrifield asked for clarification of how the base was determined. Dr. Augenblick responded, speaking to adjustments made depending upon the characteristics of the school district. Representative Penry said, in response to a question from Senator Tupa, that the base under current law is $4717. Senator Tupa asked what the additional cost to the state would be, using the $5727 base. Dr. Augenblick responded that he could not provide that information. Senator Windels asked Ms. Godshall back to the table.

10:47 AM

Ms. Godshall commented on her progress toward a model of costs associated with Senator Windels' proposals. She said that the base, under the proposal, was going up approximately $1000 per student, but that size and cost of living would play a much smaller role. Senator Tupa commented further on an increased base and its relationship to categoricals. Ms. Godshall responded to Senator Tupa's comments. Ms. Godshall, in response to a question from Senator Tupa, said there are about 770,000 children in K-12. Senator Tupa made additional comments about the base and its interaction with Amendment 23. Senator Windels and Senator Tupa discussed a new school finance act for 2006 versus making modifications to the current act.

10:53 AM

Representative King commented on Senator Windels' proposal noting it put base funding at almost a statewide minimum. Dr. Augenblick, in response to a question from Representative King, said that there is a piece of the proposal that is district-based -- size and cost-of-living -- and those factors could lower the base. That piece would then be adjusted by student factors, making it a weighted student formula, he said. Ms. Rainey provided further clarification, noting there is a relationship to size. Representative King asked for further clarification about adjustments to the base and its interaction with Amendment 23. Ms. Godshall provided the clarification, noting that the proposal is similar to the current formula and that she doesn't see an issue with Amendment 23.

10:59 AM

Senator Bacon and Senator Anderson commented on the idea of lowering the base based on cost-of-living or the number of at-risk students. Ms. Godshall and Dr. Augenblick responded to Senator Bacon's comments.

11:02 AM

Dr. Augenblick described the methodology used in calculating the base in response to a question from Representative Penry. Representative Merrifield asked if the base fluctuates from district to district. Ms. Godshall said the base is the same for all district, and when the size and cost-of-living factors are applied, the per pupil funding level is reached. Ms. Godshall noted that the basic premise is not different from how school finance is calculated today. She commented on how the proposal is different from current practice. Dr. Augenblick provided further clarification.

11:08 AM

Senator Anderson remarked that if the base can be lowered, the basic premise is not the same. Representative King noted that the proposal's base funding is driven by NCLB mandates and asked how a change in NCLB at the federal level might affect the proposed base. Ms. Rainey responded, explaining the rationale. Representative King made follow-up comments to NCLB driving school finance in Colorado. Dr. Augenblick responded.

11:14 AM

Senator Anderson commented on NCLB, the possibility of change to NCLB, and her belief that school finance should be based on the Colorado Constitution. Senator Windels commented on Representative King's and Senator Anderson's comments. Representative King made further remarks to NCLB and longitudinal growth. Representative Pommer asked how to align the school finance act with how districts actually spend the money. Dr. Augenblick responded, noting that the proposal is a logical way to look at school finance and getting funding where it needs to be. Districts, he said, need to understand that when the number of students decreases, or when cost-of-living decreases, funding may need to decrease.

11:20 AM

Senator Windels asked Ms. Godshall to comment on the cost-of-living factor. Ms. Godshall described a pure relativity measure, which was the original concept of the cost-of-living factor. Senator Windels asked for clarification of the 1994 concept, which Senator Anderson and Ms. Godshall provided. Ms. Godshall provided a handout (Attachment D) describing how the cost-of-living factor was originally calculated. She walked through portions of the handout for the committee, describing the methodology of calculating cost-of-living factors. She described the pages of the handout containing a recalculation of cost-of-living factors using the 1994 methodology, which would have caused a decrease in the cost-of-living factor for many districts.

11:30 AM

Senator Tupa asked for clarification, which Ms. Godshall provided. Ms. Godshall provided additional information on how the factor is calculated in response to questions from Senator Anderson, noting that the second cost-of-living study was a much broader study than the first study. Ms. Godshall commented on small district data and noted that the factor is calculated from the lowest dollar amount. Representative King asked if the school districts with the most new construction had the highest factor. Ms. Godshall responded, noting that new housing may contribute, but that she has not done an in-depth study on that issue. She described how the housing figures are reached.

11:37 AM

Senator Bacon asked if districts are currently held harmless if their cost-of-living decreases. Ms. Godshall responded, saying that each cost-of-living study adds on to the prior year's factor if there is an increase in cost of living, but that a district's factor never decreases. Ms. Godshall responded to a question from Senator Anderson regarding study income. Dr. Augenblick and Ms. Godshall provided further clarification of the cost-of-living factor and how it is applied.

11:41 AM

Senator Windels asked Ms. Godshall to comment on the size factor. Referring to her Attachment D, Ms. Godshall explained that in general, school districts would get increases in funding the smaller they are. Dr. Augenblick responded to questions from the committee regarding the size factor in a district with 30,000 students. Dr. Augenblick said, in response to a question from Representative Penry, that the weight of the size factor is diminished in the proposal. Ms. Godshall provided further clarification, describing the adjustment of the size factor over the years, which brought the J-curve up, and noting that the proposal brings the factor back down to 1, thus diminishing the impact. Representative Penry asked if the effect of the proposal is to reinstitute the J-curve. Ms. Godshall responded.

11:48 AM

Ms. Rainey commented on tying the size factor into the whole. The base amount, she said, is increased so the relationship between the base and the size factor is different under the proposal than it is in current practice. Representative Penry asked about the economic model used to drive the numbers used in the size factor. Dr. Augenblick responded, describing the methodology used. Representative Penry asked a follow-up question on methodology to which Dr. Augenblick responded. Representative King commented on the proposed size factor and its affect on small districts and local control. He remarked on the correlation between school district size and getting students to proficiency. Representative Pommer commented on the proposed size factor and categoricals. Dr. Augenblick responded. Representative King asked about central administrative costs and how it drives the size factor. Dr. Augenblick responded, describing the difference between how the size factor was calculated in 1994 and how it is calculated in the proposal.

11:57 AM

Dr. Augenblick responded to follow-up comments from Representative King. Ms. Rainey provided further clarification, noting that larger districts expressed a need to lower class size, fund summer school, after-school programs, and other programs. Representative Penry asked if there was a district by district breakout of the cumulative impact of the proposed sized factor. Ms. Godshall responded that there was not, but that it could be prepared. Senator Bacon commented on the size factor, noting new college entrance requirements and highly qualified teacher requirements. Representative Pommer commented on the cost of implementing NCLB.

12:03 PM

Senator Windels noted she would like to dedicate the afternoon to looking at pieces the committee would like to add to the School Finance Act and deletions that might make the act more equitable. Committee discussion of the mechanics of committee legislative proposals ensued. The committee recessed.

01:33 PM

Senator Windels called the committee back to order.

01:34 PM

Senator Tupa described his ideas surrounding P-16 integration and the formation of an interim committee to discuss the issue. In response to a question from Senator Windels, Senator Tupa said that he was proposing an interim committee and task force to study the connections between early childhood development through postsecondary education. Senator Windels invited Karen Middleton, Colorado State Board of Education, and Spud Van de Water to the table.

01:38 PM

Ms. Middleton and Mr. Van de Water introduced themselves. They provided the committee with two handouts (Attachments E and F), one providing an overview of the P-16 concept, the other describing what other states are doing in this area. Ms. Middleton spoke to the committee regarding the suggestion of the School Finance Task Force that the General Assembly address P-16 education. Mr. Van de Water commented on the issue, providing an overview of the P-16 concept. He noted that P-16 takes a big picture approach, and said that an essential component of P-16 is publicly supported preschool. He commented on the focus on closing the achievement gap. He spoke to the outcomes of P-16. Ms. Middleton remarked that currently educational systems are disconnected and that a strong balance of interests is needed. Senator Windels asked about the make-up of the proposed entity. Mr. Van de Water responded, stating that the entity could take many different forms.

01:44 PM

Senator Tupa commented on his interest in an interim committee noting that it is an important issue that deserves full consideration. Ms. Middleton suggested the creation of task-force-like entity to look at the issue prior to the meeting of the interim committee. Mr. Van de Water commented on this as well.

01:47 PM

Senator Windels reviewed the requirements for interim committee legislation. Senator Spence asked how the P-16 concept would impact CDE and the Department of Higher Education. Mr. Van de Water described what other states are doing in this regard. Ms. Middleton commented further on the idea of an interim committee. Senator Tupa made further remarks on his proposal. Senator Windels reminded the committee that interim committee legislation must fit under the charge of the committee. The committee agreed Senator Tupa could move forward with drafting his proposed legislation.

01:55 PM

Representative King described his proposal for a special education insurance pool. He provided two handouts to the committee (Attachments G and H), one of which listed the 2003-04 cost for students with disabilities in residential treatment centers, the other of which outlined the impact of distributing state special education funds by a flat dollar amount for each special education student. He walked through his handouts with the committee, noting that an insurance pool of almost $10 million would be formed. He commented that another way to allocate these resources would be to base the flat dollar amount per pupil on total enrollment of the district as opposed to the total number of students enrolled in special education, thereby avoiding an incentive to put students in special education. He described one way the money could be allocated, referring to Attachment G. He referred to Denver Public Schools (DPS), noting that DPS has the largest number of students in residential treatment centers. He said that the district does not have control over the number of students who are adjudicated and placed in residential treatment centers.

02:03 PM

Representative King continued his discussion. Senator Windels asked how the flat dollar amount per pupil was decided upon. Representative King responded that the existing special education categorical amount was divided by the number of students in special education. He provided further clarification of the numbers for the committee and commented on options for expending the funds in the insurance pool.

02:07 PM

Representative King provided clarification in response to questions from Senator Tupa about the moneys in the insurance pool. He said that the moneys in the insurance pool would cover nearly all the students in residential treatment centers in the state. Representative Benefield asked for further clarification of the numbers, which Representative King provided. Representative King responded to further comments from Representative Benefield, noting that there may be a better way to allocate the insurance pool moneys. Representative King and Representative Benefield continued their discussion. Representative King noted that the baseline funding, which was established in 1994, may no longer be appropriate, as students who were in the system in 1994 may no longer be there. The insurance pool, he said, was intended to help smaller school districts with uncontrollable expenditures when students are placed in high-cost facilities.

02:16 PM

Senator Bacon suggested another method of establishing an insurance pool, asking school districts to contribute a percentage of what they are currently receiving into an insurance pool to take care of high-cost special education needs. Representative King responded to Senator Bacon's comments, noting that he is open to various ways of establishing the insurance pool. Senator Windels asked if the school districts with students in residential treatment centers are accessing Medicaid dollars, Ms. Herrmann responded that she did not know. Representative King responded to the issue of Medicaid dollars. Senator Bacon asked to hear from school district representatives.

02:20 PM

Glen Gustafson, Chief Financial Officer of Colorado Springs School District 11, and Guy Bellville, Chief Financial Officer of the Cherry Creek School District, came to the table to comment on the idea of the insurance pool. Mr. Gustafson said that the loss of revenue to a high enrollment district is a concern. He noted that it may be possible to find middle ground on the idea. Senator Tupa noted that the pool seemed to be aimed at small districts that cannot afford to educate special education children. In response to a question from Representative Pommer, Representative King noted that CDE tracks students by disability, not severity of disability. Mr. Bellville, in response to a question from Representative Pommer, said that Medicaid reimbursement does not supplant general fund dollars for special education services.

02:25 PM

Mr. Bellville remarked that school districts face a risk in the cost of educating severely disabled students. He commented that the insurance pool may shift the risk of educating special education children from school districts to the state. Senator Windels asked for clarification about the funding of special education students, which Mr. Bellville provided, noting that most of the funding is coming from local property taxes. Representative King asked Ms. Godshall about state and federal dollars. She responded that she does not know the dollar amount. Senator Windels and Representative King asked further follow-up questions to Ms. Godshall, who noted that the state has no discretion over how federal special education dollars are allocated. Senator Bacon asked about use of a mill override in Cherry Creek Schools. Mr. Bellville responded, saying that overrides pay for many necessary services. Senator Bacon asked follow-up questions regarding local ballot issues to which Mr. Bellville responded. Senator Anderson commented on self-insurance pools, noting that a "Robin Hood" plan would not work. Mr. Bellville responded, noting that self-insurance pools should be based on actuarial studies quantifying the amount of risk and level of contribution.

02:31 PM

Representative King asked the committee to allow him to move forward with legislation, noting that he is open to different ways to create the insurance pool and to expend the moneys in the insurance pool. Senator Windels asked if the Eligible Facilities Task Force had addressed this issue. Representative King responded, noting that he was not aware that the task force had considered an insurance pool. He commented on the current process for funding students in residential treatment centers. Senator Anderson commented that the federal government is currently providing some funding for residential treatment centers, but that funding may disappear. Senator Windels provided clarification in response to a question from Representative Merrifield regarding the interim committee process for requesting legislation. Representative King said he was open to committee input on possible legislation.

02:36 PM

Representative Pommer asked Ms. Herrmann if she had information on the severity of disabilities that could be used in working on an allocation formula. Ms. Herrmann responded, noting that some information is collected for the federal government, but that CDE has not wanted to use that information to address funding issues. She responded to follow-up questions from Representative Pommer on this issue, commenting that use of this information may be considered discriminatory. Senator Spence commented that some states do fund children on the basis of the severity of their disability and asked if Colorado could provide funding based on disability. Ms. Herrmann said that CDE has been resistant to funding in that way. She responded to further follow-up questions from Senator Spence regarding methods of funding special needs children. Senator Anderson commented on special education funding, suggesting a grant could be offered as an alternative to an insurance pool.

02:41 PM

Senator Bacon asked for the input of chief financial officers of various size school districts regarding the impact of the proposal. Senator Windels asked if Representative King would be willing to look at this idea after hearing from stakeholders, rather than looking at it as legislation coming from the committee. Representative King responded that he was trying to meet a need and how it is met is not important. Senator Spence remarked that the issue needs to be addressed and she hopes Representative King will follow through. Senator Anderson asked if staff could research what other states are doing on funding by severity of disability so the issue may revisited by the committee. Representative King responded to Senator Anderson's comments.

02:46 PM

Senator Anderson reiterated her request for research of how other states are addressing the issue of special education funding. Senator Windels noted that she will schedule another meeting of the committee if it is the will of the committee. Senator Bacon asked if drafting could go forward under a broad bill title, with the understanding that as the session goes on the committee could amend it. The committee agreed drafting could go forward using a broad title.

02:49 PM

Representative Merrifield asked the committee to consider the concept of a supplemental base over and above the current base. The supplemental base would be controlled by the General Assembly, he said, and would not affect Amendment 23's formula, but would be open to the districts to use. Senator Windels asked if the supplemental base was another factor and Representative Merrifield answered no, it would be an additional base, not affected by the formula. Senator Anderson commented that a base is a base and an additional base might raise constitutional issues. Representative King commented on the concept of a second count date for fast-growing districts. He said that districts experiencing rapid growth do not receive extra funding. He noted that this idea was in the School Finance Act, but was removed due to economic downturn.

02:54 PM

Representative Merrifield further described his proposal, explaining it would be a supplemental pot of money. Senator Windels asked for clarification of the supplemental pot, which Representative Merrifield provided. Representative Penry asked what dollar amount would be needed and what the revenue stream would be. Representative Merrifield said that would be at the discretion of the legislature. Senator Tupa asked how the supplemental pot differs from State Education Fund dollars. Representative Merrifield noted that the State Education Fund is tied to Amendment 23, and his proposal is not. Senator Windels asked for further clarification about whether his idea would be a factor in the School Finance Act. Representative King commented further, noting that when additional moneys are provided under the act, and then are taken away, it is disastrous for districts that are counting on the moneys.

02:59 PM

Representative Merrifield, in response to comments by Senator Anderson on local control, said that the supplemental pot would be subject to local control. Senator Anderson commented further on the concept of a supplemental pot. Representative Merrifield asked the committee to allow him to work further on the idea. Representative Penry asked what the revenue stream would be. Senator Anderson commented that adding extra money to the base may be a better option, noting that the extra one percent under Amendment 23 is only available for the next three years. Representative Merrifield was given permission to proceed with a bill draft on this issue.

03:02 PM

Representative Pommer proposed legislation that would allow school districts to put to a vote of the people a new supplemental that would be used for full-day kindergarten. If the voters approved it, the district would give up its full-day kindergarten slots under the Colorado Preschool Program. Senator Windels asked if the proposal allowed for a supplemental mill levy that would not count under the 20 percent window, and Representative Pommer responded affirmatively, noting that the School Finance Task Force recommended full-day kindergarten, but had no revenue stream and also recommended increasing the supplemental amount. Senator Bacon asked if capital expenditures would be included as well as operational expenditures. Representative Pommer said yes, it would include whatever the school district felt was necessary to implement the program. Senator Bacon commented further on capital versus operational needs. Senator Anderson made remarks regarding capital needs. Senator Windels asked if many districts are close to the 20 percent for mill levy override. Ms. Herrmann said quite a few districts are. The committee gave Representative Pommer permission to proceed with a bill draft.

03:06 PM

Representative King proposed legislation doing away with the restriction on home schooled children going into online educational programs, noting that these children can go to brick and mortar schools, but not directly into online programs. In addition, he said, students who come from out of state cannot go to online education programs their first year in Colorado. Senator Tupa commented on the history of the online education act and asked about the financial implications of Representative King's proposal. Representative King responded, noting that limiting the number of online program slots or using a lottery to fill the slots may address the funding issue. In response to a question from Senator Spence, Representative King said that a phase-in might be a good option. Representative Pommer commented on the possibility of abuse of such a change. Representative King provided clarification, noting that the affected students are not currently being counted at all by school districts. Senator Tupa remarked further on the original debate on the online education provisions.

03:13 PM

Representative Penry commented on the presentation before the committee on online education by CDE. Representative King remarked on the CDE presentation and previous committee discussion. Senator Windels remarked that discussion of online education may be premature and highlighted several issues regarding online education. The committee declined to give Representative King permission to pursue a bill draft on this topic.

03:17 PM

Senator Windels listed the legislative recommendations of the school land trust including: creation of a flexible maintenance and investment fund; legislative authority for the staff of the State Land Board to increase the value of land through zoning; reiterate in statute the constitutional mandate that the trust is not to supplant other methods of funding; to earmark interest earnings for specific area; and allow the trust five years rather than three years to recover a loss. Representative Penry commented that broader investment authority was another request of the State Land Board. The committee agreed to pursue legislation in this area.

03:20 PM

Representative King proposed legislation regarding the moral obligation provisions for charter school funding to raise the cap and to include small school districts. He provided information on money saved by charter schools through the moral obligation program. Representative Pommer asked if the legislation would affect the state limitation on how much of the base can be issued in bonds. Representative King commented on raising the assessed value to a cap equal to what the actual value would be. Senator Anderson commented on ratings and how caps relate. Representative King spoke to the self-insurance pool and how default would be paid for. Senator Anderson raised again the issue of ratings. Representative King responded, noting the cap could be raised.

03:26 PM

Representative King agreed to break the idea into two bills, one regarding raising the moral obligation cap for charter schools and the other adding small districts. Senator Windels asked about the current pool and Representative King responded, noting the current pool is self-funding and providing further information about the money saved by charter schools through the program. Senator Anderson expressed concern about raising the cap and how that might effect the state rating. Representative King responded to Senator Anderson's concerns, remarking that charter schools cannot qualify unless they are rated by Standard & Poor and have a proven track record. The committee declined permission to pursue legislation in this area.

03:29 PM

Senator Windels described an issue with statutes relating to charter schools and institute charter schools. She asked Julie Pelegrin, Office of Legislative Legal Services, to come to the table to describe the issue.

03:31 PM

Ms. Pelegrin described adjusted district per pupil revenues, which allocates at-risk funding to the charter school in proportion to the number of at-risk children in the school district. Some issues exist with defined terms, she said, which are not used uniformly in the text of the statute. In addition, there is ambiguity in where the formula for calculating district at-risk funding applies. An additional issue with the definitions exists with use of the term "authorized." Finally, she said, there is an issue with organization of part 5 of the statute, which addresses institute charter schools. District charter school funding provisions would be moved from part 5, she said, to part 1 of the statute.

03:36 PM

Representative King asked for clarification regarding the identified issue surrounding at-risk funding. Ms. Pelegrin responded, describing how at-risk funding is allocated. Ms. Herrmann responded to further questions from Representative King regarding at-risk funding for charter schools, noting that a district charter school may get a higher proportion of at-risk funding than the school district under certain circumstances. Ms. Pelegrin identified an additional issue regarding the definition of "at-risk" in the act. The committee gave permission to pursue drafting legislation to address these issues.

03:41 PM

Representative King described proposed legislation regarding the chart of accounts. Ms. Herrmann indicated that some consistency may be needed and that it remains to be seen how the issue is addressed. Ms. Herrmann responded to questions from Representative Pommer regarding use of the chart of accounts. Representative King described his concerns with the chart of accounts and his hope that some consistency in reporting could be found.

03:46 PM

Senator Windels commented on the chart of accounts and requirements on charter schools in giving information to districts. Representative King noted that there is no consistent method of reporting expenditures. Representative Penry noted that the issue is that apple to apple comparisons cannot be made because of variances in accounting categories. Senator Spence asked for clarification on the discrepancies noted by Representative King, which Representative King provided. Senator Windels commented further on the chart of accounts and Representative King responded. Representative Pommer commented on the cost to make changes to the chart of accounts and local control. The committee declined to pursue legislation on the chart of accounts.

03:51 PM

Senator Windels asked the committee to discuss whether the mill levy should be frozen or if "smoothing out" or averaging of assessments should be considered. Senator Anderson said yearly assessments are not possible. She went on to say that a uniform mill levy may be better than smoothing. Senator Anderson spoke to the Gallagher Amendment and its affect. She asked Christy Chase, Office of Legislative Legal Services, to come to the table to speak to the issue of mill levies.

03:54 PM

Ms. Chase spoke to recent efforts to address mill levies. The uniform mill levy, unless set at lowest mill levy in the state, needs voter approval. Freezing the mill levy doesn't help unless the locality has de-Bruced, because the locality would have to refund to its taxpayers. Representative King noted that many districts in El Paso County have not de-Bruced and they'd have to refund hundreds of thousands of dollars to the voters. Senator Anderson mentioned going to the voters to set a mill levy with adjustments as a portion of school finance, in other words, she said, if the state share was 90 percent and the local share 10 percent, the locality's share would always stay at 10 percent.

03:57 PM

Senator Windels asked if there was interest or reaction to a referendum for expanding funding for K-12, referring to referendum E on her handout. Senator Tupa remarked that more discussion is needed before anything like this could to be considered. Senator Anderson commented that addressing the mill levy would be a better step to take. Senator Windels asked Ms. Godshall for mill levy information. Senator Anderson said she would like to freeze the ratio and Senator Windels asked Ms. Godshall for information on the impact of freezing the ratio. Senator Spence commented on removing Amendment 23 language from the constitution. Senator Windels responded to Senator Spence's remarks.

04:04 PM

The committee agreed to pursue legislation on the mill levy issue. Senator Windels noted the committee had not discussed K-12 capital obligations. Senator Anderson remarked that capital issues are not ripe for discussion now. Representative Pommer asked if aligning the state English Language Learner (ELL) definition with the federal definition had been discussed. Senator Windels asked him to bring it up at the next meeting of the committee.

04:07 PM

The committee adjourned.