Examining the Education State Budget Squeeze

Did you know that nearly half of Colorado’s General Fund money currently goes to funding K-12 education? That’s right, in Fiscal Year 2010-11, General Fund appropriations for K-12 education were $3.0 billion of the total $6.8 billion. State funds appropriated to finance public schools are affected by many factors including the number of students enrolled, the rate of inflation, relative changes in cost-of-living for regions within the state, local property and specific ownership tax revenues, and changes in statutory definitions, procedures, and factors.

The State shares the cost of public education with local governments but over time, the State’s proportion of K-12 education funding has grown disproportionately compared to the burden on local government. This shift is due to interactions between three key provisions of the Colorado Constitution: the Gallagher Amendment, the Taxpayer’s Bill of Rights (TABOR), and Amendment 23. Gallagher, approved in 1982, reduced the residential assessment rate (i.e., the proportion of a property’s value that is taxable) and capped the residential share of property taxes. TABOR, approved in 1992, imposed a property tax revenue limit based on inflation and changes in student enrollment and required voter approval for increases to either the property tax rate (i.e., mill levy) or the assessment rate. Amendment 23 required annual increases in base per pupil funding of inflation plus one percent for FY 2001-02 through FY 2010-11 and at least the rate of inflation for FY 2011-12 and each year thereafter. Taken together, these provisions have limited local funds available for public education and required that real growth, growth beyond inflation, come from the State budget.

The interaction between these three provisions of the Colorado Constitution strained the budget process so much as to cause the State General Assembly to resort to modifying the statutory school finance formula to include a negative State ‘budget stabilization factor’ beginning in FY 2010-11.

Annual appropriations reports from the Joint Budget Committee are an excellent source of information on public school finance in Colorado.

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