Overview of Current School Finance Act and Funding
STUDY OF THE FINANCING OF PUBLIC SCHOOLS
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01:03 PM -- Overview of Current School Finance Act and Funding
Nicole Myers, Office of Legislative Legal Services, provided an overview of school finance funding and the formula used to calculate per pupil funding. She provided a handout containing terms and definitions (Attachment B). Nicole explained the requirements for increasing the base contained in Amendment 23. She talked about the four factors that are factored in when calculating the base, saying the factors take into account the size of and cost-of-living in districts.
She continued, describing how district total program is calculated, explaining per pupil funding, the personnel costs factor, the cost-of-living factor, the nonpersonnel costs factor, and the size factor. She also touched on on-line and ASCENT program pupil enrollment. She also talked about the at-risk factor.
Ms. Myers continued her presentation, talking about local share of school finance funding. She explained how many mills a district may levy. Ms. Myers described the three primary sources of state aid -- General Fund, the State Education Fund, and school lands and federal mineral lease moneys. She explained mill levy override provisions in the School Finance Act, saying those revenues can be used for any purpose, including operating costs. Ms. Myers talked about bonded indebtedness and the limits on that indebtedness in statute.
Ms. Myers next talked about categorical programs. She listed the categorical programs that are defined in the state constitution in Amendment 23, saying that these programs are not funded through the school finance formula, but are funded separately. The categorical programs include:
- the English language proficiency (ELL) program;
- the expelled and at-risk student services grant program;
- special education programs;
- gifted education programs;
- the in-school or in-home suspension grant program;
- career and technical education;
- small attendance centers; and
- the comprehensive health education program.
She explained the provisions of Amendment 23, saying categoricals are allocated by the Joint Budget Committee (JBC).
Finally, Ms. Myers explained the difference between per pupil revenue (PPR) and per pupil operating revenue (PPOR).
Ms. Myers responded to committee questions, including a question from Senator King about at-risk funding and the at-risk factor. She also responded to a question from Representative Scanlan about the number of districts that take advantage of mill levy overrides. Senator Romer talked about changes made in the 2009 School Finance Act, saying about $400 per student was freed up for districts under the act. He spoke to differentiating between rural districts with low and high assessed value.
Representative Massey spoke to the issue of low and high assessed valuation districts, saying neither wants to approve mill levy overrides. Representative Scanlan asked whether the state is required to offer some state aid, or whether a district can be entirely funded with local funding. Ms. Myers said there is a requirement that each district receive some state aid. Conversation between Ms. Myers and Representative Scanlan ensued.
Senator Steadman asked how many districts are receiving the minimum amount of state aid. Marc Carey, Legislative Council Staff, came to the table and told Senator Steadman he would get back to him with that information.
Senator Johnston asked for clarification of the ELL portion of the at-risk calculation. David Porter, Legislative Council Staff, joined Mr. Carey at the table to make a presentation that is an overview of school finance formula. They provided a handout outlining their presentation (Attachment C). Mr. Porter described the total funding formula, first explaining how funded pupil count is determined. He said the total projected enrollment for October 2009 is 788,648 students. He responded to a question from Senator King regarding the identified number for incremental kindergarten. Committee conversation on this issue ensued.
Mr. Porter next spoke to the size factor, explaining there is a range that districts might receive under this factor. Next, Mr. Porter discussed the cost-of-living factor, which is determined in a biannual study contracted by Legislative Council Staff. He clarified that the cost-of-living factors is applied only to personnel costs. Mr. Porter responded to a question from Representative Massey, who asked if a one-year window would be more appropriate in determining the cost-of-living in a district. Mr. Porter also responded to an inquiry from Representative Scanlan about whether the cost-of-living factor includes housing.
Senator King asked how the items in the cost-of-living study "basket" are decided, saying that how housing is weighed can cause a problem. Mr. Porter responded, explaining that the items in the basket have changed somewhat over time. A conversation on this issue between Senator King and Mr. Porter ensued. Mr. Porter, in response to a question from Senator Romer, said that the cost-of-living factor comprises 14.6 percent of the formula. Representative Scanlan weighed in on the issue as well.
Mr. Porter continued, talking about the district personnel costs factor and how it interacts with the cost-of-living factor in response to a question from Senator Spence. Senator Hudak asked for further clarification around how the cost-of-living factor is applied.
Next Mr. Porter talked about the at-risk factor, explaining how the incremental funding is calculated. Senator King asked for clarification around the calculation of funding under the at-risk factor. Conversation on this topic continued between Senator King and Mr. Carey.
Mr. Carey continued the presentation providing examples of how the size factor impacts small and large districts and high and low cost-of-living districts. He also provided examples related to the at-risk factor.
Senator King asked for further clarification of the calculation of the at-risk factor. Representative Middleton asked Vody Herrmann, Assistant Commissioner, Colorado Department of Education, and Julie Pelegrin, Office of Legislative Legal Services, to come to the table to respond to committee questions, including the question from Senator King about the at-risk factor. Committee discussion about the at-risk factor and size factor ensued.
Senator King asked whether the items in the cost-of-living basket have ever been codified in statute, or whether the items have always been chosen by Legislative Council Staff. Ms. Pelegrin responded and conversation with Senator King ensued. Ms. Herrmann noted that it may be time to re-base the study.
Senator Steadman asked how much of the school finance formula the at-risk factor comprises. Mr. Porter said the factor is 4.3 percent of the formula.
Senator Hudak commented on the "J curve" that previously existed with the size factor, which, she said allowed large districts to get more funding under the size factor. She asked Ms. Herrmann to comment on why the "J curve" was no longer used.
Senator Johnston asked for clarification on the personnel and nonpersonnel cost factors, which Ms. Herrmann provided. Committee discussion ensued.