School Finance

State Board approves $1M shift of low-income funding to Dougco

In an attempt to better match federal funds with the students the money is supposed to help, the state is piloting a program that will re-direct more than half a million dollars to the relatively wealthy Douglas County Schools.

The State Board of Education this week voted 6-1 to approve a pilot program under which the suburban school district will receive an additional $547,072 in federal Title I money next year to provide services for poor students.

The two-year pilot is intended to account for students who attend the HOPE Online Learning Academy – Elementary but who live in other districts that now receive the Title I funding for those children. The $547,072 is the estimated shift of funds in 2014-15. A similar amount likely would be allocated in 2015-16.

The plan drew vocal opposition from board member Elaine Gantz Berman at Wednesday’s meeting, and district leaders who stand to lose money aren’t happy either.

“We’re robbing Peter to pay Paul,” Berman said. Dougco “is the ninth wealthiest county in the United States. … I can’t in good conscience vote for this. I can’t take money away from Greeley and Aurora and DPS.”

Charlotte Ciancio, superintendent of the Mapleton Public Schools, told Chalkbeat Colorado that what CDE is doing “is absolutely the right conversation and absolutely the wrong solution.” Mapleton would lose $5,188 from its estimated $1.2 million Title I allocation.

“Five thousand dollars in a district our size is significant,” Ciancio said.

The four districts taking the biggest hits are Denver ($169,733), Aurora ($143,970), Adams 12-Five Star ($45,868) and Westminster ($45,905). See the list of districts that will lose money and the amounts here.

Summing up the dilemma, state school finance director Leanne Emm told the board, “It’s a zero sum game.”

The problem

The problem CDE is trying to address was created because Title I funding allocations are based on geography – primarily poverty rates within U.S. Census tracts and welfare caseloads. But students enrolled in online schools like HOPE live in many different districts, 21 districts in HOPE’s case.

In the bureaucratic words of a document presented to the board Wednesday, “Current methods for allocating Title I, Part A funds do not always accurately reflect where students are receiving services. Given the changing landscape of educational opportunities for students, studying the impacts of revising allocation methods will provide information necessary to make informed decisions moving forward.” (See the full presentation here.)

Although HOPE Online is authorized by the Dougco district, “very few of those kids live in Douglas County,” Keith Owen, deputy commissioner of education, told Chalkbeat Colorado in an interview. About 1,000 HOPE elementary students live outside the district.

“HOPE and Douglas County have been asking the department” for action on the issue for a number of years, Owen said, but no solution seemed workable until the idea for the pilot program came up. Senior Assistant Attorney General Tony Dyl indicated to the board he believes the program meets federal requirements.

The additional funds won’t necessarily go to HOPE but rather will allow Dougco to provide Title I funding for resident students in its own schools.

Owen told the board that Dougco’s current $1.2 million Title I allocation goes to HOPE and to certain set-asides like funding for homeless students. “They [the district] don’t serve other schools currently,” he said.

The bureaucratic backstory

Title I is massively complicated, and a major issue is that while overall district funding is determined by census-determined poverty rates, money is distributed to schools based on different criteria, usually the number of students eligible for free lunch or for both free and reduced-price lunch.

Ciancio, in a letter to the board urging rejection of the pilot project, noted that census-based poverty calculations indicate 1,486 Mapleton children are in poverty, but it has 4,287 free-lunch students. (Read the letter here.)

“We contend that the [Small Area Income and Poverty Estimates are] seriously underestimating the true impact of children in poverty in some districts,” she wrote. (SAIPE is the federal acronym for the census poverty calculation.)

On top of that, Title I funds come in four subcategories, for which districts have different levels of eligibility.

And, beyond a requirement that schools with 75 percent or more at-risk students get Title I funding, districts have latitude in how they spend the money. Some give it just to elementary schools, for instance.

“There’s never enough money to serve every student,” Owen said.

The complexity and the flexibility lead to varying amounts of Title I funding among districts. Owen said Dougco is spending $758 per eligible HOPE student. Berman said the DPS per-student amount is $438. Within a district, some schools may receive no Title I money, even if they serve some poor students.

See the list of all Colorado schools with their 2012-13 Title I status here (link downloads PDF).

The proposed solution

CDE developed criteria for online schools that could be eligible for the pilot, including minimum numbers of students eligible for free and reduced-price lunch, having a significantly higher percentage of such students than the authorizing district and participation in the federal school meal program. Of all the programs considered, only HOPE met all the criteria. It’s the only such school to participate in the meal program at its learning centers.

Owen said CDE will monitor use of the funds, including the strategies implemented for poor students, the impact on districts that lost funding and how to effectively use Title I funds in a multi-district online school. “A pilot gives us the opportunity to look at the impact,” he said.

Commissioner Robert Hammond told the board, “Ultimately the lessons learned could lead to statewide changes.”

In her letter, Ciancio wrote, “In our assessment, taking resources from one severely underfunded, highly impacted school district to support another underfunded school district feels inappropriate and unjust.”

She continued, “We ask you to charge the Colorado Department of Education to go back to the drawing board to find a solution that equitably funds districts and considers each child.”

She suggested that a more uniform way to allocate per-student funding could be developed by the state.

Owen told the board that such a statewide change might be possible but “is a massive undertaking” that CDE doesn’t have the capacity to handle now.

Shifting of Title I funds away from districts isn’t unprecedented. The state-run Colorado School for the Deaf and Blind in Colorado Springs and schools supervised by the Charter School Institute receive Title I funds based on their students’ districts of residence.

HOPE’s elementary program enrolls about 1,750 students, more than 60 percent eligible for free lunch. The school is in its fourth year at the priority improvement rating, Owen said. That’s the second lowest level in the state accountability system, and schools remaining at the level for five years are subject to state interventions including closure. (See the accountability report on all three HOPE schools here).


Colorado schools are getting a major bump in the state’s 2018-19 budget

Students waiting to enter their sixth-grade classroom at Kearney Middle School in Commerce City. (Photo by Craig Walker, The Denver Post)

Colorado’s strong economy has opened the door for state lawmakers to send a major cash infusion to the state’s public schools.

As they finalized the recommended budget for 2018-19, the Joint Budget Committee set aside $150 million, an additional $50 million beyond what Democratic Gov. John Hickenlooper had asked for, to increase funding to schools.

“We believe this is the most significant reduction in what used to be called the negative factor since it was born,” said state Rep. Millie Hamner, the Dillon Democrat who chairs the Joint Budget Committee.

Colorado’s constitution calls for per pupil spending to increase at least by inflation every year, but the state hasn’t been able to meet that obligation since the Great Recession. The amount by which schools get shorted, officially called the budget stabilization factor, is $822 million in 2017-18. Under state law, this number isn’t supposed to get bigger from one year to the next, but in recent years, it hasn’t gotten much smaller either. 

But a booming economy coupled with more capacity in the state budget created by a historic compromise on hospital funding last year means Colorado has a lot more money to spend this year. In their March forecast, legislative economists told lawmakers they have an extra $1.3 billion to spend or save in 2018-19.

The recommended shortfall for next year is now just $672.4 million. That would bring average per-pupil spending above $8,100, compared to $7,662 this year.

Total program spending on K-12 education, after the budget stabilization factor is deducted, should be a little more than $7 billion, with the state picking up about $4.5 billion and the rest coming from local property taxes.

The budget debate this year has featured Republicans pressing for more ongoing money for transportation and Democrats resisting in the interest of spreading more money around to other needs. The positive March forecast reduced much of that tension, as a $500 million allocation for transportation allowed a compromise on roads funding in the Republican-controlled Senate. That compromise still needs the approval of the Democratic-controlled House, but suddenly a lot of things are seeming possible.

“We knew we were going to have more revenue than we’ve ever had to work with,” Hamner said of the status at the beginning of the session. But that presented its own challenges, as so many interest groups and constituencies sought to address long-standing needs.

“The fact that we’ve been able to reach such incredible compromises on transportation and K-12 funding, I think most members will be very pleased with this outcome,” Hamner said. “Where we ended up is a pretty good place.”

The big outstanding issue is proposed reforms to the Public Employees Retirement Association or PERA fund to address unfunded liabilities. A bill that is likely to see significant changes in the House is wending its way through the process. The Joint Budget Committee has set aside $225 million to deal with costs associated with that fix, which has major implications for teachers and school districts budgets.

The Joint Budget Committee has also set aside $30 million for rural schools, $10 million for programs to address teacher shortages, and $7 million for school safety grants.

The budget will be introduced in the House on Monday. Many of the school funding elements will appear in a separate school finance bill.

Going forward, there is a question about how sustainable these higher funding levels will be.

“It does put more pressure on the general fund,” Hamner said. “If we see a downturn in the economy, it’s going to be a challenge.”

What's fair

Colorado’s state-authorized charter schools could get more money next year

Students at The New America School in Thornton during an English class. (Photo by Nic Garcia)

Charter schools authorized at the state level by the Charter School Institute are likely to get more money in the 2018-19 budget year. That’s one year before most other charter schools will see benefits from last year’s charter school funding equity bill.

That bill was a major compromise out of the 2017 session, and it requires school districts to share money from voter-approved tax increases with the charter schools they’ve authorized, starting in 2019-20. The bill also created the mill levy equalization fund to distribute state money to the Charter School Institute’s 41 schools. Because no local school board approved these schools, they wouldn’t otherwise be eligible for revenue from these increases, known as mill levy overrides.

Charter School Institute administrators came calling for their money this year, though, with a request for $5.5 million from the general fund. They arrived at this number by identifying institute schools within the geographic boundaries of districts that already share some extra revenue with their local charters and assuming institute schools got a similar share.

Institute Executive Director Terry Croy Lewis called it a “first step” toward parity that would bring institute and district-authorized charter schools to the same level in advance of the new law going fully into effect in 2019. Lewis said it seemed like a fair approach because the parents at institute-authorized schools often live within the geographic boundary and pay taxes at the same rates as parents whose children go to traditional schools or district-authorized charters.

However, the charter equity bill says that extra money for institute schools has to be distributed on an equal per-pupil basis. The original approach, which created more equity among schools in the same geographic boundary, created more disparities among institute schools in different regions – and the law might not have allowed it.

“I don’t think you can define equity in this conversation because equity cuts a lot of different ways,” said state Sen. Dominick Moreno, a Commerce City Democrat and member of the Joint Budget Committee.

Budget analyst Craig Harper suggested to the Joint Budget Committee that separate legislation might be necessary to allow the distribution proposed by the Charter School Institute, something no lawmakers wanted to see after the bruising fight over the charter school equity bill.

Instead, the Charter School Institute revised its proposal to distribute the money among its schools on a per-pupil basis, regardless of geography and whether the local district already shares money.

What sort of difference does this make?

In the first distribution scenario, Early College of Arvada, located in the Westminster district, would have gotten nothing – because Westminster doesn’t currently share money with its own charters. Under the new proposal, the school would get $131,233 based on its pupil count. Meanwhile, Colorado Early College – Fort Collins, which would have gotten $621,357 because the Poudre district already shares money, would instead get just $374,952

Lingering confusion over the distribution question led JBC members to postpone a decision several times before they voted 4-2 this week to include the $5.5 million request in the 2018-19 budget.

It still has to survive the extended battle over the budget that takes place in the full House and Senate each year.