HOUSE 3rd Reading Unamended April 21, 2015 HOUSE Amended 2nd Reading April 20, 2015First Regular Session Seventieth General Assembly STATE OF COLORADO REENGROSSED This Version Includes All Amendments Adopted in the House of Introduction LLS NO. 15-0351.01 Julie Pelegrin x2700 HOUSE BILL 15-1334 HOUSE SPONSORSHIP Hamner and Rankin, SENATE SPONSORSHIP Hill and Kerr, House Committees Senate Committees Education Appropriations A BILL FOR AN ACT Concerning creation of a legislative committee to study school finance, and, in connection therewith, making an appropriation. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) The bill creates the legislative oversight committee on school finance (oversight committee) to study tax policy issues relating to school finance and the components of a new school finance system. The bill specifies issues that the oversight committee and the technical committee created in the bill will address. The oversight committee consists of the chairs of the education and finance committees of the house of representatives and the senate, or their designees; 2 members of the joint budget committee; and other legislators appointed by the senate president, the speaker of the house of representatives, and the minority leaders of the senate and the house of representatives. The chair and vice-chair of the oversight committee will jointly appoint a technical committee that consists of chief financial officers from urban, suburban, and rural school districts; persons who represent charter school interests and serve in a financial oversight capacity; and persons with expertise and experience in tax policy and school finance. The assistant commissioner for school finance in the department of education is also an ex officio, nonvoting member of the technical committee, and the governor must appoint a member of the governor's staff to serve on the technical committee. The legislative staff and the department of education will provide staff support for the oversight committee and the technical committee. The oversight committee must contract with an entity to act as a facilitator for the oversight committee and the technical committee. The facilitator must provide research and explanations of school finance issues and policies, the Colorado school finance system, the school finance systems implemented in comparable states, innovative and proven policies for designing a new school finance system, and tax policies in other states. The facilitator will also provide technical support to the oversight committee and the technical committee in designing a new school finance system and proposing changes to tax policy. The oversight committee, the technical committee, and the facilitator must meet up to 5 times from August to December 2015. During 2016, the oversight committee and the technical committee must meet at least quarterly for the technical committee to report progress and make recommendations to the oversight committee. The technical committee will meet as often as necessary to accomplish its responsibilities, and oversight committee members are encouraged to attend these meetings. The technical committee must hold public meetings and solicit and consider input from interested persons throughout the state. The oversight committee may introduce legislation during the 2016 regular legislative session concerning the goals for funding public education and a method for determining the cost of the public education system. During 2016, the task force must prepare proposals to submit to the oversight committee concerning a new school finance system and tax policy proposals to support the system. The oversight committee may introduce legislation during the 2017 regular legislative session and may consider, modify, or reject the technical committee's recommendations. Legislation that the oversight committee introduces is not subject to the bill and resolution limits imposed by the legislative rules, and the oversight committee is not required to report its recommended legislation to the legislative council. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, add part 19 to article 2 of title 2 as follows: PART 19 LEGISLATIVE OVERSIGHT COMMITTEE ON SCHOOL FINANCE 2-2-1901. Legislative declaration. (1) The general assembly finds that: (a) The state faces increasing financial pressures arising from the constitutional restraints relating to spending limitations and the general assembly's ability to set state and local tax policy; (b) These financial pressures increasingly restrict the general assembly's ability to fund the state system of public education; (c) The balance of funding for public education between state and local resources has significantly shifted in the last several years, raising issues concerning equity for taxpayers and students, accountability, and sustainability; (d) The state has operated under the "Public School Finance Act of 1994", article 54 of title 22, C.R.S., for twenty years, more than twice the duration recommended by most school finance experts for a single school finance act, and the formula for calculating total program funding may no longer reflect or adequately or fairly address the most important cost elements that affect the delivery of a high-quality public education; and (e) Funding for special education services, gifted and talented programs, and English language proficiency programs is not significantly addressed in the formula for calculating total program funding, which raises questions regarding the adequacy and sustainability of the funding for these programs. (2) The general assembly finds, therefore, that it is necessary to create a legislative oversight committee to work with a technical committee of school finance experts to evaluate and research alternative models for providing education that may result in greater efficiencies and more effective use of resources, the goals and elements of an effective tax policy to provide the state and local resources needed to support preschool through secondary education in the state in an equitable, adequate, and sustainable manner and the structure of and formula for calculating public school funding in the state. The goal of the legislative oversight committee and the technical committee is to make recommendations regarding constitutional changes to strengthen the ability of the state and local governments to provide funding for public education that is equitable, adequate, and sustainable and to recommend legislation for introduction during the 2017 regular legislative session to allow the use of alternative models to improve the efficiency and effectiveness of providing education and to replace the "Public School Finance Act of 1994", article 54 of title 22, C.R.S. 2-2-1902. Definitions. As used in this part 19, unless the context otherwise requires: (1) "Facilitator" means the entity that the oversight committee contracts with pursuant to section 2-2-1905. (2) "Oversight committee" means the legislative oversight committee on school finance appointed pursuant to section 2-2-1903. (3) "Technical committee" means the technical committee on school finance appointed pursuant to section 2-2-1904. 2-2-1903. Legislative oversight committee on school finance - created - duties. (1) Notwithstanding the provisions of section 2-3-303.3, there is created the legislative oversight committee on school finance to work with the technical committee to study and recommend legislation regarding tax policy, authorization of alternative models to improve the efficiency and effectiveness of providing education, and school finance. The oversight committee consists of ten members as follows: (a) The persons serving as chairs of the education committees of the house of representatives and the senate, or any successor committees, or their designees; (b) The persons serving as chairs of the finance committees of the house of representatives and the senate, or any successor committees, or their designees; (c) Two members, one of whom serves on the joint budget committee, appointed by the speaker of the house of representatives; (d) One member appointed by the minority leader of the house of representatives; (e) Two members, one of whom serves on the joint budget committee, appointed by the president of the senate; and (f) One member appointed by the minority leader of the senate. (2) (a) The appointing authorities shall appoint the members of the oversight committee as soon as possible after the effective date of this part 19 but no later than July 1, 2015. The appointing authorities shall, to the extent practicable, ensure that there are legislators serving on the oversight committee that represent school districts in all areas of the state, including urban, suburban, and rural school districts, school districts of varying wealth in property tax and other local revenues, and varying student demographics. If a vacancy arises on the oversight committee, the appropriate appointing authority shall appoint a legislator to fill the vacancy as soon as possible. (b) The speaker of the house of representatives shall appoint the first chair of the oversight committee, and the president of the senate shall appoint the first vice-chair of the oversight committee. The chair and vice-chair shall alternate annually thereafter between the two houses. (3) The chair of the oversight committee shall schedule the first meeting of the oversight and the technical committees to be held no later than August 1, 2015. From August through December 2015, the oversight committee shall meet up to five times with the technical committee and the facilitator as provided in section 2-2-1905. From January through December 2016, the oversight committee shall meet with the technical committee and the facilitator at least quarterly, at the call of the chair, to accomplish its duties. The oversight committee may meet at other times during the legislative session and during the legislative interim, at the call of the chair, as necessary to complete its duties. Members of the oversight committee are strongly encouraged to attend meetings of the technical committee. A member of the oversight committee who attends a technical committee meeting is entitled to reimbursement for all actual and necessary expenses incurred in attending the meeting. (4) The director of research of the legislative council and the director of the office of legislative legal services shall provide staff assistance to the oversight committee. (5) Pursuant to section 2-2-1906, the oversight committee may annually introduce up to a total of five bills, joint resolutions, and concurrent resolutions in each of the 2016 and 2017 legislative sessions. Bills that the oversight committee introduces are exempt from the five-bill limitation set out in rule 24 (b) (1) (A) of the joint rules of the senate and the house of representatives. Joint resolutions and concurrent resolutions that the oversight committee introduces are exempt from the limitations set out in rule 26 (g) of the rules of the house of representatives and rule 30 (f) of the rules of the senate. The oversight committee is exempt from the requirement specified in rule 24 (b) (1) (D) and rule 24A (d) (8) of the joint rules of the senate and the house of representatives and in section 2-3-303 (1) (f), to report bills or other measures to the legislative council. (6) All expenditures incurred by the oversight committee, the technical committee, and the facilitator shall be approved by the chair of the legislative council and paid for by vouchers and warrants drawn as provided by law from moneys appropriated by the general assembly to the legislative department for purposes of this part 19. 2-2-1904. Technical committee on school finance - created. (1) There is created the technical committee on school finance to assist the oversight committee in researching and developing tax policies and structures for collecting resources to support the public school system, alternative models to improve the efficiency and effectiveness of providing education, and a formula and policies for distributing the resources. The technical committee consists of nine persons as follows: (a) The associate commissioner for the public school finance division in the department of education, or his or her designee, who shall serve as an ex officio nonvoting member of the technical committee; (b) A person from the governor's office, appointed by the governor, who has expertise in elementary and secondary education or finance; and (c) Seven persons appointed jointly by the chair and the vice-chair of the oversight committee who have direct experience and expertise in implementing school finance or working with tax policy issues or both. The persons appointed to serve on the technical committee must include chief financial officers, which may include persons who serve as both chief financial officer, or the equivalent, and superintendent, of urban, suburban, and rural school districts, at least one representative of charter school interests who serves in a financial oversight capacity, and at least two persons who have expertise in tax policy and school finance and who are not employed by a school district, a board of cooperative services, a public school, or an education advocacy group. (2) The chair and the vice-chair of the oversight committee and the governor shall appoint the members of the technical committee no later than August 1, 2015. The appointed members serve at the pleasure of the appointing authority. If a vacancy arises, the appropriate appointing authority shall appoint a person to fill the vacancy as soon as possible. In making appointments, the appointing authorities shall, to the extent practicable, ensure that the technical committee includes representatives from school districts located throughout the state that are of varying size, wealth in property tax and other local revenues, and student demographics. (3) The appointed members of the technical committee serve without compensation but receive reimbursement for reasonable expenses incurred in participating on the technical committee. (4) The chair and the vice-chair shall designate one of the appointed members of the technical committee to serve as the chair of the technical committee. The technical committee shall meet as often as necessary at the call of the chair to fulfill its responsibilities. In addition, in 2015 the technical committee shall meet up to five times with the oversight committee and the facilitator as provided in section 2-2-1905. From January through December 2016, the technical committee shall meet at least quarterly with the oversight committee to report its progress, findings, and recommendations with regard to the issues specified in section 2-2-1905. (5) The director of research of the legislative council and the director of the joint budget committee staff shall each provide at least one staff person with expertise in school finance to assist the technical committee. The director of the office of legislative legal services and the commissioner of education shall supply additional staff assistance to the technical committee as necessary. The technical committee may also accept staff support from the private sector. 2-2-1905. Facilitator - selection - duties. (1) As soon as possible after the effective date of this part 19, the chairs of the education committees and the finance committees of the house of representatives and the senate, or any successor committees, or their designees, shall work with the legislative council staff to prepare and issue a request for qualifications for an entity to serve as a facilitator for the oversight committee and the technical committee. Based on the responses received, the chair and vice-chair of the oversight committee shall select and contract with a facilitator no later than August 15, 2015. The chair and vice-chair of the oversight committee must ensure that the entity selected as facilitator at a minimum demonstrates: (a) Expertise in the school finance system implemented in Colorado and the systems implemented in other comparable or model states; (b) Expertise and experience in designing and developing school finance systems; (c) Expertise and experience in working with alternative models of providing education that are designed to improve efficiencies and system effectiveness; (d) Expertise in tax policy; and (e) Employment of a staff of persons with the capacity and expertise to work with multiple stakeholder groups and to research and analyze existing and proposed school finance systems in other states and their potential applicability in Colorado and tax policy implemented in other states. (2) In meetings with the oversight committee and the technical committee held from August through December 2015, the facilitator shall provide research and explanations for the oversight committee and the technical committee concerning: (a) The policy considerations and issues that the school finance system in Colorado has addressed and may be designed to address in the future; (b) Studies of the school finance system in Colorado that have been conducted since adoption of the "Public School Finance Act of 1994", article 54 of title 22, C.R.S.; (c) The school finance systems implemented by other states that are comparable to Colorado in size, demographics, and exercise of local control; (d) Innovative and proven policies for designing alternative models of providing education that result in improved efficiencies and system effectiveness and for designing and implementing a school finance system; and (e) Potential alternative models for providing education and potential models for a new school finance system in Colorado. (3) From January though December 2016, the facilitator shall assist the oversight committee and the technical committee in designing alternative models for providing education and one or more school finance systems that the technical committee may recommend to the oversight committee. The facilitator may also assist the technical committee in formulating recommendations for tax policy changes to provide sufficient resources to support a school finance system in Colorado that is adequate, equitable, and sustainable. 2-2-1906. Oversight committee - technical committee - duties. (1) During the 2016 regular legislative session, the oversight committee may introduce legislation that addresses the goals for funding public education and a method for determining the cost of maintaining the public education system. Beginning in June 2016, the technical committee, working with the facilitator, shall research and design one or more proposals for alternative models for providing education and for school finance systems to submit to the oversight committee by December 2016. The technical committee shall also develop and submit to the oversight committee one or more tax policy proposals that are designed to ensure a sufficient level of state and local resources to fund a school finance system that is adequate, equitable, and sustainable. During the 2017 regular legislative session, the oversight committee may introduce legislation concerning tax policy, models for providing education, and a new school finance system. The oversight committee may consider and adopt, modify, or reject the proposals that the technical committee submits. (2) In preparing recommendations, the technical committee, at a minimum, shall study the following issues: (a) Tax policy to support preschool, elementary, and secondary school funding, which policy is designed to provide equity, adequacy, and accountability in public school funding and to be sustainable for school districts and the state; (b) The mechanism and procedure for counting students for the purposes of calculating public school funding; (c) The components of the formula for calculating public school funding, including at a minimum components that address: (I) The cost pressures on school districts such as school district size and location and the varying costs of doing business within the school districts; (II) The costs of providing mandatory programs such as special education and English language proficiency; (III) The increased costs of educating students who are at high risk of academic failure and the mechanism for identifying these students; (IV) The costs of providing a wide range of educational opportunities for all students; and (V) The costs of providing high-quality professional development and other supports for educators; (d) Mechanisms to address revenue shortages and increase the revenues that are available for public education while maintaining a constitutional level of equity in funding for school districts and equity for taxpayers, which at a minimum must include consideration of: (I) The calculation of school districts' local share of funding and possible changes to the local tax base; (II) The impact of authorized mill levies that are in addition to the total program mill levy; (III) The variation in school districts' capacity to issue bonds and the relationship of bonding capacity to school districts' ability to obtain authorization for mill levies that are in addition to the total program mill levy; (IV) The annual increases in statewide base per pupil funding and funding for categorical programs mandated by section 17 of article IX of the state constitution; (V) The refund of excess revenues required by section 20 of article X of the state constitution; and (VI) Restrictions on the valuation for assessment for residential real property imposed in section 3 of article X of the state constitution, commonly known as the "Gallagher amendment"; (e) A mechanism for establishing an adequate level of spending for public education, taking into consideration equity concerns including: (I) Student equity; (II) Taxpayer equity; (III) Equity of access to a variety of educational courses and programs; and (IV) The ability to attract and retain high-quality staff for all positions; (f) The mechanisms for implementing and timing in which to implement tax policy and school finance reforms; and (g) Other issues that the oversight committee finds are relevant to increasing the amount and availability of funding for public schools and raising the level of equity and efficiency in allocating funding for public schools. (3) The technical committee, in working with the facilitator to develop its recommendations, shall hold public meetings throughout the state and in other ways shall solicit and consider input from interested persons, including representatives of school district boards of education, school district superintendents, school administrators, boards of cooperative services, educators, charter schools, parents, students, members of the business community, education advocacy organizations, and other taxpayers. 2-2-1907. Repeal of part. This part 19 is repealed, effective July 1, 2017. SECTION 2. Appropriation. (1) For the 2015-16 state fiscal year, $242,635 is appropriated to the legislative department. This appropriation is from the general fund. The legislative department may use this appropriation as follows: (a) $144,000 to contract with a facilitator pursuant to section 2-2-1905, C.R.S.; (b) $21,780 for the general assembly; (c) $39,646 for the legislative council, which amount is based on the assumption that the legislative council will require an additional 0.6 FTE; (d) $34,719 for the committee on legal services, which amount is based on the assumption that the committee on legal services will require an additional 0.4 FTE; and (e) $2,490 for the joint budget committee. (3) For the 2015-16 state fiscal year, $26,886 is appropriated to the department of education. This appropriation is from the general fund and is based on an assumption that the department will require an additional 0.3 FTE. To implement this act, the department may use this appropriation for public school finance administration. SECTION 3. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.