The annual School Finance Act is being reviewed Thursday by the Senate Education Committee  — and there’s good news for rural schools.

An announcement last week that the state’s residential assessment rate for property taxes would not drop as precipitously as feared meant $107.6 million more is available, and at least $55 million of that showed up in the School Finance Act this week.

Sources tell Colorado Politics those numbers are almost a sure bet to change before the bill gets to the Senate floor. What’s available for public education is about $99 million. The other $8.6 million will be devoted to covering senior and veteran property tax homestead exemptions.

The School Finance Act, Senate Bill 246, sets aside $25 million in one-time-only money, split 55/45 between large rural and small rural school districts. Large rural school districts are defined by the Department of Education as those with between 1,000 and 6,500 students; small rural districts have less than 1,000 students. 

The Rural School Alliance, which advocates on behalf of rural schools, had hoped for $30 million, the same amount rural school districts got in both the 2017 and 2018 budget. Instead, another $5 million is reserved for behavioral health services for all schools, at about $20,000 per school district.

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“We think it’s a solid funding package,” said Michelle Murphy of the Rural School Alliance. She said she is especially grateful to the bill’s sponsors, as well as Republican Sens. Bob Rankin of Carbondale and Jerry Sonnenberg of Sterling. “With the full-day kindergarten money” and a larger buydown of the budget stabilization factor, it will be a good boost for rural schools, Murphy said.

The budget stabilization factor — formerly called the negative factor — is a budget-balancing formula adopted during the Great Recession that reduced state school funding based on how much tax revenue was available each year. The reduced funding is carried on the books as a debt to public schools.

Under the bill, all school districts will receive an increase of $182.76 per pupil, for a total base per-pupil funding, on average, of $6,951.53. 

There’s more good news for districts, thanks to the change in property tax assessments, and that’s another reduction in the budget stabilization factor debt.

The 2019-20 state budget, which was sent to Gov. Jared Polis this week, included a $77 million reduction in the debt, to just under $600 million. The debt started out in 2010 at $1 billion and lawmakers have been chipping away at it for the past three years.

The School Finance Act reduces that debt by another $25 million, but that’s raising concerns for some lawmakers because that’s not one-time money; it’s a permanent change to the funding base for K-12 public education.

Amie Baca-Ohlert, president of the Colorado Education Association, welcomed the buydown of the debt in a statement Wednesday. 

“Our 38,000 members are pleased that the Public School Finance Act includes an additional $25 million reduction to the budget stabilization factor,” Baca-Ohlert said. She noted the $25 million in one-time funds for rural schools and $5 million for behavioral health needs also included “are desperately needed.”

But she said students would also benefit “from additional Special Education funding should more revenue become available. We now call on lawmakers to pass the proposed legislation as a first step toward reversing the chronic underfunding of Colorado public schools over the last decade.”

One thing may slow the bill down a bit: the General Assembly, by law, has to adopt a bill setting the new residential assessment rate. That bill — Senate Bill 255, was introduced late Wednesday nad is headed for Senate Finance. The $107.6 million available from the new residential assessment rate isn’t actually there yet until that bill is passed.