The Legislature’s use of the so-called negative factor to determine school funding is at issue in a lawsuit that was argued before the Colorado Supreme Court earlier this month.

The suit, Dwyer v. State of Colorado, alleges the state violated the intent of Amendment 23 by using the negative factor to decrease school funding, effectively rendering the constitutionally mandated increases in per-student funding meaningless.Voters approved Amendment 23 in 2000 as a way to increase the state’s funding for public education. The amendment requires state education funding increase each year by at least the rate of inflation. The state funds public education on a per-student basis for each district according to a formula established in the 1994 Public School Finance Act.

The negative factor was created by the Legislature as a budget stabilization tool. It is a mathematic piece added to the formula to allow for budgetary limitations and is applied equally to each school district as a percentage of funding reduction. Using the negative factor, the state has reduced school funding by around $1 billion per year since the tool was introduced in the 2010-11 fiscal year.

The 2015-16 state budget has a negative factor of $855 million, leaving each district that receives state funding with a 12 percent cut. The Legislature has been adding funds to school finance in an effort to reduce the negative factor since the economy has began to improve.

Attorneys for the group of parents, advocates and school districts that filed the Dwyer lawsuit argue that by using the negative factor, the Legislature has violated the spirit of Amendment 23, which was to increase school funding.

“The state has engaged in an accounting gimmick and they have done so with the sole intent of circumventing the plain language of Amendment 23,” argued Sean Connelly, an attorney for the group, at the Supreme Court hearing on June 3.

When voters passed Amendment 23, he continued, the measure was meant to be a “budgetary game changer.”

“It was a big deal meant to tie the hands of legislators,” Connelly said.

The formula established by Amendment 23 was meant to determine school funding at the state level, he said, and it shouldn’t be based on the lower levels set by the Legislature during lean budget years.

“I’m saying there’s no districts being provided with Amendment 23 funds,” Connelly said. “The base has been rendered meaningless.”

Jonathan Fero, who argued the case for the state, pointed out that there are two components to the school funding formula. First is the statewide base, which is the same for each student in the state. Amendment 23 requires that this be increased according to the inflation rate. The base for 2015-16 is $6,292 per student.

The second component, Fero said, is the factors, based on a variety of local conditions including cost of living and district personnel costs.

“The largest component that districts receive, by far, is this base-funding amount,” he said. “The negative factor reduces the amount of money districts receive by factors.”

Fero argued that the language of Amendment 23 is clear when it requires that the statewide base-per-pupil grow annually by at least the rate of inflation.

“I think what [the plaintiffs] are really arguing in this case is that there can be no reduction whatsoever in the amount of money the General Assembly appropriates for public education,” he said. “Not only does that go far beyond Amendment 23’s plain language, it would be an absurd construction of the amendment as a whole.”

He maintained that the language of the amendment allows for flexibility on the part of the Legislature when it comes to the total amount of school funding.

“Our argument is that Amendment 23 required that per pupil funding increase,” said Timothy McDonald, a second attorney for the group that filed the lawsuit.

He contended that, under the state’s argument, another $50 million could be stripped from school funding.

“At that point we wouldn’t have rural schools,” he said, pointing out that some small rural school districts need up to three times the base amount of funding per student.

“You can’t monkey around with the formula to render the base meaningless,” he said. “They can’t balance the budget on the backs of the kids.”

The lawsuit was filed in June 2014 by a group of parents and education advocates, including the Colorado Rural School Caucus, the East Central Board of Cooperative Education Services, Colorado PTA and several rural school districts. It asks the court to declare the negative factor unconstitutional and bar the state from using it.

A ruling on the lawsuit could be handed down at any time, court officials said.


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