Final
Cost-of-Living Study
SCHOOL FINANCE SYSTEM
Votes:
Action Taken:
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11:47 AM -- Cost-of-Living Study
Chris Ward, Legislative Council Staff, came to the table to provide an overview of the Cost-of-Living Study to the committee. Mr. Ward noted that cost-of-living factors are not contained in law. What the law requires, he said, is that the Legislative Council Staff certify factors, every other year, to the Department of Education based on a cost-of-living study. He commented that the purpose of the study is to measure the cost of the same items in every school district to determine the relative difference in costs among school districts. Mr. Ward discussed three key terms of art used in relation to the study: benchmark household, market basket, and labor pool areas.
11:50 AM
Mr. Ward answered questions from the committee, providing clarification of the benchmark used in the study. He noted the benchmark household in the study is a family of three with a total family income of $43,000. Federal Bureau of Labor statistics were used, he said, to help define what that household would purchase during the year. Mr. Ward commented that it may not be reflective of the standard of living in some school districts. The purpose of the study, he said, is to determine relative differences. Mr. Ward answered follow-up questions regarding the benchmark. He commented further on the purpose of the study. In response to a question from Senator Windels, Mr. Ward noted that the market basket does not include school items such as textbooks. Senator Windels commented on the economy of scale in purchasing enjoyed by larger districts and asked if there was acknowledgment in the cost-of-living factor for a smaller district that does not have the benefit of economy of scale.
11:56 AM
Ms. Godshall returned to the table to respond, with Mr. Ward, to questions from the committee. She noted that in 1994 when the General Assembly enacted the School Finance Act, it was looking at cost differentials for personnel, for how teachers are compensated. The size factor, she said, would adjust for the fact that small districts do not have the same economies of scale in purchasing textbooks. In response to questions from Representative King, Ms. Godshall noted that the study does not measure the change in prices over time, it measures changes in purchasing power among districts. Ms. Godshall explained that a district's cost-of-living factor never decreases, even if the district's cost of living does decrease.
12:04 PM
Ms. Godshall responded to follow-up comments by Representative King regarding changes to the cost-of-living factor for school districts. The factor has changed in very small increments over time, she said. Representative King commented on the situation in El Paso county, where there are 17 school districts. Ms. Godshall noted that there are a number of different communities in El Paso county and that housing is the largest component of the cost-of-living factor. Mr. Ward responded to a question from Senator Windels regarding school district feedback on the cost-of-living study.
12:07 PM
The committee recessed until 1:30.