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Colorado's $950 Million Plan to Fix Education

Colorado voters will decide Nov. 5 whether to raise their taxes by $950 million a year to put more money toward early childhood education, high-poverty districts and a host of other initiatives.

States usually tackle the big issues in education—pre-kindergarten programs, equitable funding, teacher development—one by one. On Nov. 5, Colorado will move on a host of the reform movement’s sacred cows all at once, and voters will decide whether to levy a $950 million tax increase to help put those changes in action.

In exchange for an annual tax hike, Colorado residents will get major investments to early childhood education and more money for districts educating kids living in poverty and English-language learners. The change would also overhaul instructional methods and teacher evaluations, backers of the initiative say. The scale of change has drawn praise from think tanks and national education leaders, among them U.S. Secretary of Education Arne Duncan, who said Amendment 66 and the legislation that comes with it would make Colorado a “model for every other state to follow.

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The infusion of more annual funding and a revised model will give more state money to high poverty school districts. But to make the change more politically viable the architects of the overhaul guaranteed the state would match previous years of support for districts that gain less from the new model than others.

Critics focus their aim directly at that redistribution, arguing it’s inherently unfair and economically dangerous. Amendment 66 will raise individual income tax rates from 4.63 percent to 5 percent on the first $75,000 of earnings and to 5.9 percent beyond that. The Independence Institute, a conservative think tank based in Denver, found that 11 counties will shoulder more than 80 percent of the tax increase without seeing nearly the same level of return in new revenue. The D.C.-based Tax Foundation argues the tax hike will hurt the state’s economy because most businesses file their taxes through the individual code. The group points to a 2011 Ernst and Young study that found 95 percent of all Colorado businesses in 2007 fell into this category.

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Democratic state lawmakers, with no Republican support, passed the bill to rewrite the state’s education finance system last spring. Now legislators need Amendment 66 to fund the changes in that legislation, Senate Bill 213. Tax increases have to go before Colorado voters as constitutional amendments per a 1992 referendum called the Taxpayer Bill of Rights. Once funded, SB213 will:

  • Add greater weight in the funding formula for “at-risk” students, which include English-language learners and those receiving free-or-reduced-price lunch, a key poverty measurement.
  • Provide universal pre-kindergarten and full-day kindergarten classes. Pre-K was previously subject to a cap while kindergarten classes went for half of the day.
  • Provide more money for special education as well as gifted and talented students.
  • Provide more funding for professional development, implementation of the Common Core curriculum, teacher evaluation and teacher-performance incentives.
  • Create a  $100 million grant pool to fund proposals to boost graduation rates or combat other persistent problems.
  • Put funding for charter schools more in line with district schools and create a capital fund for new facilities.
  • Require new public financial reporting to justify the spending and compare how it was used across districts.
Trying to account for the economic disparities between school districts isn’t a new idea. Often changes have been forced by lawsuits, which accelerated in the early 1990s. But those lawsuits have come with mixed results and, when successful, often slow implementation.

"I would say it’s not been uniform, but the trend over time has been for states to move toward more centralized kind of funding and a redistributive model,” said Dan Goldhaber, director of the Center for Education Data and Research.

The Center for American Progress, a left-leaning think tank, ranked Colorado’s funding model among the least equitable in the country in a September 2012 report. It noted that per-pupil support generally decreased with the percentage of poor students in a district. Colorado, like most other states, has faced lawsuits challenging the fairness of its system. In 2011 a state district court ruled in favor of a group of parents and students who argued Colorado’s schools were underfunded and systemically unequal. But just this past May the Colorado Supreme Court overturned the lower court, deciding that the previous findings “might not be ideal policy” but changes to the system are better left to the legislature.

That’s increased the urgency for advocates, who argue the Supreme Court case, Lobato v. State of Colorado, laid bare the system’s inequities. The Lobato estimates were that the whole system was underfunded by "$3 billion to $4.7 billion, literally five times what we’re proposing,” said Mike Johnston, the Democratic state senator who took the lead on SB213. Johnston is a former Teach For America member and school principal who also spearheaded the state’s efforts to overhaul teacher evaluation in 2010.

An open question in the testimony of many school-equity court cases is the extent to which spending more money really makes a difference in outcomes. Standford’s Eric Hanushek, who delivered testimony in the Colorado case, has been widely cited by opponents of redistribution policies for his findings that test scores haven’t moved much in decades despite doubling the growth of education spending. Goldhaber argues that conclusion was misunderstood. “I think he says money sometimes doesn’t matter. Money can matter, but it depends on how it’s spent." Goldhaber’s view is backed by more recent research that has found measures such as lowering class sizes and boosting teacher pay directly affect student performance.

Colorado's proposal follows a recent shakeup in California to spend more on low-income districts, but it takes on a laundry list of other reforms at the same time. Taken individually, those changes aren’t new ideas, but Colorado is redirecting its resources in ways that many argue could go a long way toward evening the academic playing field, said Tom Downes, a Tufts University economics professor who focuses on school finance.

"What’s happening in California and Colorado could potentially be a model," Downes said. "It’s not just about redistributing the dollars but redistributing the dollars with both an eye toward closing achievement gaps and to some extent with an eye toward promoting policies that, at least some evidence suggests, could change achievement gaps.”

What little polling exists on the issue suggests an uphill campaign for supporters. A September survey from a right-leaning Colorado market research firm found that a plurarlity of 44 percent of voters opposed a generic tax increase to support education. That number increased to 52 percent when respondents were given details of the Amendment 66 tax increase.

"There are a lot of unanswered questions and a lot of uncertainty, but I think the few basics about how the tax rates will hit families and the small businesses, that hits directly home, that’s pretty clear,” said Ben DeGrow, a policy analyst with the Independence Institute.

Johnston said he and other backers will continue pointing out the many ways that rural and poor districts are disserved, but they'll also emphasize the ways every district gains to help win support.

"Even some of our better-funded school districts are not adequately funded," he said. "And we’re making important services like full-day kindergarten available to every kid."

But Downes encourages them to emphasize the ways in which improving education among poorer residents holds benefits for all--from reduced strain on social services to a more vibrant economy. "The argument has to be, 'Look, we all benefit from closing the achievement gap and not just the kids in that district,'" he said. "That could be a hard sell."

Chris covers health care for GOVERNING. An Ohio native with an interest in education, he set out for New Orleans with Teach For America after finishing a degree at Ohio University’s E.W. Scripps School of Journalism. He later covered government and politics at the Savannah Morning News and its South Carolina paper. He most recently covered North Carolina’s 2013 legislative session for the Associated Press.
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