The goal of protecting K-12 education funding was forced to fall by the wayside Tuesday as the Joint Budget Committee continued to search for massive cuts to the 2020-21 general fund budget.
In a presentation Tuesday, JBC staff director Carolyn Kampman, at times in tears, said they had cut or transferred from cash funds enough to cover $1.5 billion, "unprecedented in my 25 years here," she said. "The problem is that it's a $3.5 billion problem and we still have $2 billion to go."
With such a large gap, JBC staff analyst Craig Harper told the committee that their efforts to protect K-12 education from the biggest budget cuts to date are probably not possible. That could mean an increase to the debt to K-12 education so large that it exceeds the obligation after the Great Recession of a decade ago.
Tuesday's hearing focused on three options for K-12 funding, which will be covered in the School Finance Act. It will follow the state budget bill and be sponsored by the chairs of the House and Senate education committees.
The options cover the shortfall and protect rural schools, which Harper said are most vulnerable to big budget cuts since they don't have the economies of scale that large districts have.
The BS factor
The primary target: the budget stabilization factor. The BS factor, as it is called, is the debt to K-12 education that began after the Great Recession and reached about $1.15 billion in 2010. Since then, the General Assembly and governors have paid it down to $572.4 million.
A review of the upcoming school finance bill showed that even with the cuts taken and other actions, the state would still need $277 million more in 2020-21 than in 2019-20. Most of that is due to increased costs, about $220 million, to cover full-day kindergarten.
With that large of an increase, the first option raised by Harper included increasing the BS factor by nearly $600 million, to $1.17 billion.
"My heart skips a beat when I see a $1.17 billion BS factor," said Rep. Julie McCluskie, a Dillon Democrat and JBC member. "The BS factor is an anchor around our neck."
Harper turned down the idea of canceling the additional state funding for full-day kindergarten. He has two small children, and said "maintaining a 5-year-old's attention through remote learning is a stretch." In addition, reducing the funding for full-day kindergarten "would only reduce costs for schools and districts that either shift away from full-day kindergarten or return to charging tuition."
Harper believed if school districts went back to charging tuition that parents would likely not enroll their students, and that would mean less revenue for the districts.
A second budget cut option: canceling preschool slots for 2020-21, for a savings of $124 million. The third option: cutting slots for the Accelerating College through Concurrent Enrollment program, which allows high school seniors to take a fifth year of high school as college prep. Harper didn't set a target but noted that the state pays for 500 slots per year at $7,793 each, for a total cost of $3.9 million.
But these are not decisions that will be made solely by the JBC; that's up to legislative leaders and the sponsors of the School Finance Act.
Out of the $12.2 billion in general fund spending (paid for with income and sales taxes) from 2019-20, K-12 education received $4.4 billion. About 50% of property taxes also go to school districts, and that's raising another problem.
In a presentation last week, State Property Tax Administrator JoAnn Groff warned that property taxes would decline in 2020-21, and that will put more pressure on the state to cover the difference, given that the state is required to cover K-12 education, even when property taxes come up short.
The committee also discussed an executive order Monday night from Gov. Jared Polis on how he intends to spend $1.67 billion from the federal Coronavirus Aid, Relief and Economic Security Act. Both Harper and Sen. Bob Rankin, a Carbondale Republican and JBC member, noted the governor did not alert the committee or its staff about the executive order or the spending, much of it going to K-12 education. Polis directed $510 million to the Colorado Department of Education to pay for spending associated with COVID-19-related public health measures, "including facilitating distance learning and social distancing for in-person contact hours, mitigating lost learning, and the provision of economic support in connection with the COVID-19 emergency to stimulate the economy by supporting Colorado’s workforce through increasing free instructional hours" in K-12.
In the executive order, Polis said all funds would be distributed on a per-pupil basis to local school districts, and proportionally by student population to the Charter School Institute and the Colorado School for the Deaf and the Blind, and $25,000 to each Board of Cooperative Educational Services, which provide a variety of services and programs to mostly rural school districts.
All that largesse helps school districts cover the costs related to the pandemic, and federal guidelines have been clear that CARES Act funding cannot be used to offset budget cuts due to revenue losses.
Rankin suggested that if there were truly a need for spending due to the pandemic in K-12, that the committee should consider cutting general fund support for the staff, given that they would be working on pandemic efforts and not their usual jobs. "If you assume the money gets spent in the time frame of the virus, a large portion of the K-12 workforce will be doing this work and unavailable to do other work," Rankin said.
Under the CARES Act, money to cover pandemic costs must be spent by Dec. 31, 2020.