Charter policy showdown

Charter revenue-sharing bill advances to Senate floor debate

PHOTO: Marc Piscotty

A bill requiring school districts to uniformly share some local revenues with their charter schools passed the Senate Education Committee on a 6-3 vote Thursday.

A companion measure containing various other law changes sought by charters passed by the same margin. Sen. Mike Johnston, D-Denver, joined all five committee Republicans in supporting both bills.

The two measures, Senate Bill 16-187 and Senate Bill 16-188, have resurfaced district-charter tensions that have flared and subsided since the state’s charter law was passed in 1993.

The nearly five-hour hearing provided the most substantive education policy discussion of the 2016 session, which has been otherwise low-key for education.

More than 30 witnesses spoke on the bills, but all the testimony boiled down to two issues — equity in funding versus local control and flexibility.

“There is not an even playing field across Colorado right now,” said James Cryan, founder of the Rocky Mountain Prep charter.

The key provision of SB 16-188 would require districts to share proceeds from local tax overrides with charters on a per-student basis.

Nora Flood, president of the Colorado League of Charter Schools, said sharing of override revenues is uneven across districts. The league claims that more than 40,000 of the state’s 108,000 charter students are in schools that don’t receive equitable sharing of those revenues.

Overrides explained
  • In addition to the property and vehicle taxes districts impose for basic school operating expenses, state law allows districts to raise additional property taxes – with voter approval.
  • In general, those overrides can total no more than 25 percent of a district’s basic operating budget, called Total Program Funding.
  • Override revenue can be designated for operating expenses, transportation, facilities, technology costs and full-day kindergarten.
  • Overrides can be indefinite or limited to a set number of years.
  • The 118 districts that have overrides collect a combined total of $860 million a year.
  • There’s been growing concern that overrides create inequity between districts because there’s a wide variation in property values among districts. That means some districts can raise significant revenue with only small tax-rate increases while others can raise little money even with large rate hikes.

But Linda Van Matre, a member of the Academy 20 school board called the bill “an unnecessary intrusion into local government.”

And Carrie Warren-Gully, a Littleton board member, said the bill “interferes with carefully negotiated agreements at the local level.” She was representing the Colorado Association of School Boards, the Colorado Association of School Executives and the Colorado Education Association, the state’s largest teachers union.

The bills are expected to pass the Republican-majority Senate, but the prospects are more uncertain in the Democratic-controlled House. Charters aren’t a strictly partisan issue, and education reform groups backing the bills have ties with some Democratic lawmakers.

While groups such as Democrats for Education Reform, Colorado Succeeds and the Colorado Children’s Campaign are promoting the bill, school districts and associated interest groups are lobbying hard against them and are focusing their efforts in the House.

Charter school advocates long have complained about perceived inequities in
sharing of local district override revenues.

The dollars-and-cents impact of the sharing provision in SB 16-188 is hard to determine, given gaps in data about charter funding and the bill’s exceptions to the sharing requirement.

Some of the issues that make it difficult to gauge the bill’s potential impact:

Most districts aren’t affected: Mandatory sharing of overrides would affect only about three-dozen districts that have both charters and overrides. Those do include all of the state’s 10 largest districts and 17 of the 20 biggest districts, including the majority of the state’s students.

There’s already sharing: Based on responses from member schools in 33 districts, the charter league estimates 61 percent of override revenues already are shared with charters. The league puts the “unshared” gap at about $24 million, based on a survey of some member schools.

But sharing policies vary by district, with some districts sharing 100 percent and others much less.

Critics of the bill also note that districts don’t give traditional schools a set per-pupil amount from overrides.

The gap is partly a guess: State law allows districts to collect overrides for a variety of purposes. In addition to general overrides used for operating expenses, revenues can be earmarked for transportation, facilities, technology costs and full-day kindergarten. Senate Bill 16-188 says districts don’t need to share override revenues that charters aren’t otherwise eligible for. For instance, a charter high school wouldn’t receive money from a full-day kindergarten override.

Current Department of Education data doesn’t break out how much money districts collect from different types of overrides, so it isn’t easy to calculate the exact amount of money subject to sharing.

Better data is coming: A 2014 law required the Department of Education to compile a detailed report on sharing of override revenues. The department is in the final stages of compiling that study. But Associate Commissioner Leanne Emm said last week that the document won’t be ready until mid-May. Lawmakers have to adjourn no later than May 11.

Charter School Institute: Schools supervised by the institute receive no share of override revenues because they have no formal ties to local districts. The institute is a state agency with the power to authorize charters independently of districts.

Under SB 16-188, the state would pay those schools what they would receive if they were authorized by districts. Legislative staff estimate the annual cost of that at $12.2 million. But SB 16-188 specifies that this provision won’t be funded right away.

Other provisions sought by charters are contained in SB 16-187 and include:

  • Formal notification from districts when vacant buildings and land are available.
  • Elimination of the current requirement that charters be open for five years before they can apply for state Building Excellent Schools Today, or BEST, funds.
  • Expanding use of funds charters currently receive for building needs so that they also can be used for maintenance.
  • Permitting charters in the state’s highest rating category to submit improvement plans every other year rather than annually.
  • Streamlining of audit requirements for charters with multiple campuses.
  • Requiring districts to provide more detailed accounting of services they provide to charters.

Tennessee Votes 2018

Early voting begins Friday in Tennessee. Here’s where your candidates stand on education.

PHOTO: Creative Commons

Tennesseans begin voting on Friday in dozens of crucial elections that will culminate on Aug. 2.

Democrats and Republicans will decide who will be their party’s gubernatorial nominee. Those two individuals will face off in November to replace outgoing Republican Gov. Bill Haslam. Tennessee’s next governor will significantly shape public education, and voters have told pollsters that they are looking for an education-minded leader to follow Haslam.

In Memphis, voters will have a chance to influence schools in two elections, one for school board and the other for county commission, the top local funder for schools, which holds the purse strings for schools.

To help you make more informed decisions, Chalkbeat asked candidates in these four races critical questions about public education.

Here’s where Tennessee’s Democratic candidates for governor stand on education

Former Nashville Mayor Karl Dean and state Rep. Craig Fitzhugh of Ripley hope to become the state’s first Democratic governor in eight years.

Tennessee’s Republican candidates for governor answer the big questions on education

U.S. Rep. Diane Black, businessman Randy Boyd, Speaker of the House Beth Harwell, and businessman Bill Lee are campaigning to succeed fellow Republican Haslam as governor, but first they must defeat each other in the 2018 primary election.

Memphis school board candidates speak out on what they want to change

Fifteen people are vying for four seats on the Shelby County Schools board this year. That’s much higher stakes compared to two years ago when five seats were up for election with only one contested race.

Aspiring county leaders in charge of money for Memphis schools share their views

The Shelby County Board of Commissioners and county mayor are responsible for most school funding in Memphis. Chalkbeat sent a survey to candidates asking their thoughts on what that should look like.

Early voting runs Mondays through Saturdays until Saturday, July 28. Election Day is Thursday, Aug. 2.

finish line

A $1.6 billion tax increase for Colorado education just got a lot closer to the ballot

Joi Lin, a Boulder Valley Education Association employee, checks notary pages on petitions for Great Schools, Thriving communities. (Erica Meltzer/Chalkbeat)

Supporters of more funding for Colorado schools turned in more than 170,000 signatures Wednesday to place a $1.6 billion tax measure on the November ballot.

If approved, the measure would increase the corporate tax rate and the income tax rate on individuals earning $150,000 or more, with the additional revenue going to increase base per-student funding, to pay for full-day kindergarten, and to put more money toward students with special needs, such as those learning English, those with disabilities, and those who are gifted and talented.

Organizers said volunteers collected more than 111,000 signatures, with paid canvassers collecting the rest to build up a substantial cushion and make approval more certain.  The measure needs 98,492 valid signatures to get in front of voters. Inevitably, some signatures are rejected for a variety of reasons. The day before the Wednesday deadline, volunteers were going over petition packets a third time to check for mistakes before turning them in.

The Colorado Secretary of State’s Office still needs to verify the signatures. Under tougher requirements approved in 2016, those signatures need to represent 2 percent of the registered voters in each of the state’s 35 senate districts – and to pass, the measure will need support from 55 percent of voters.

Getting that support will be no easy task, considering that the last attempt to raise taxes for schools, Amendment 66 in 2013, was defeated 2 to 1. Colorado’s Taxpayer’s Bill of Rights requires all tax increases to be approved by voters, and they’ve been loathe to approve statewide taxes for any cause, even as local school districts have been more successful.

Cathy Kipp, a school board member from the Fort Collins-based Poudre district, personally collected more than 4,000 signatures around the state, and she said she was pleased to see support from ordinary people even in many conservative communities. That decisions about how to spend the money would be made locally is key to winning over voters, she said.

“The money will be spent however the local school district wants to spend it,” she said. “I knew teachers last time who didn’t want to vote for (Amendment 66) because it was so proscriptive.”

Kipp said Poudre likely would use the money to improve mental health services for students and raise teacher salaries.

Supporters believe the more challenging petition process, which required them to fan out across the state, will ultimately be to their advantage in the campaign to come.

“We have education supporters having conversations around the state about what additional revenue could mean for them,” said Susan Meek, a spokeswoman for Great Education Colorado, a key organization backing the tax increase. “The money will be spent locally. Every school district can go out and say what it would mean for them. Perhaps it is vocational-technical education. Perhaps it’s having school five days a week. Perhaps it is having a counselor in every school.”

And to make the case that a statewide tax on businesses and those with higher incomes is a better way to raise money than local taxes, supporters have broken down how much money each district would get and how large a property tax increase it would take to raise that money locally. Often, it’s a very big number.

Colorado ranks 28th among the states in per-student funding, according to the most recent report from the National Education Association, which includes local, state, and federal funding in its comparison. However, Colorado spends much less than other states of comparable wealth and generally gets poor marks for equity. School districts vary enormously in how much they spend on each student, and half the districts in the state are operating on four-day weeks because they can’t afford to be open more than that.

Since the Great Recession, state lawmakers have withheld roughly $7.5 billion that would have gone to K-12 education under a constitutionally mandated formula. The 2018-19 state budget includes a 6.95 percent increase for education, roughly $475 more per student, but supporters of more money for schools say that the increase doesn’t begin to address years of underfunding.

“It’s hard for people to understand how you can have one of the fastest growing economies in the nation and can’t fund schools at the level you did before the Great Recession,” said Tracie Rainey, executive director of the Colorado School Finance Project, another backer of the initiative.

The only way to really address the issue is a major source of new revenue, they say. And that’s what Initiative 93 would provide.

The tax measure calls for:

  • Raising the corporate income tax rate from 4.63 percent to 6 percent.
  • Raising the income tax rate from a flat 4.63 percent to between 5 percent and 8.25 percent for people earning more than $150,000. The highest tax rate would be paid by people earning $500,000 or more.
  • Setting the residential property assessment rate at 7 percent for schools. That’s lower than it is now but higher than it is predicted to be in 2019 because current law has the unintended effect of gradually reducing the residential assessment rate.
  • Setting the non-residential property assessment rate at 24 percent, less than the current 29 percent.

According to a fiscal analysis by the state, the average taxpayer earning more than $150,000 would pay an additional $519 a year, while those earning less would be unaffected. The average corporate taxpayer would pay an additional $11,085 a year. The change in property taxes would vary considerably around the state, but based on the average statewide school levy, many property owners would pay $28 more on each $100,000 of market value in 2019 than they otherwise would. Commercial property owners will see a decrease.

Total property tax revenue collected by school districts is expected to go down statewide, but the measure would partly stabilize property assessments, whose volatility has complicated school finance in Colorado.

A 1982 provision called the Gallagher Amendment sets a formula for the share of property taxes paid by residential and commercial owners, with the effect that skyrocketing values along the Front Range have ratcheted down residential assessment rates across the state. But in poorer rural communities without the tax base of cities like Denver or Boulder, that’s had devastating consequences for school districts, fire districts, and other small taxing entities, even as business owners, ranchers, and farmers have faced a heavier burden.

The state has had to make up much of the difference, and lawmakers are meeting during the off-season to try to come up with a fix. Any change would require voter approval – and could be a tough sell in part because it would be hard to explain.

Initiative 93 only deals with the assessment rate for schools in order to comply with Colorado’s single-subject rule for ballot measures, but it does represent a partial Gallagher fix. This provision was included for several reasons. One, it means that new revenue will actually increase school funding, rather than simply backfilling ever declining local taxes, and two, it provides some tax relief to ranchers and farmers, a selling point in rural communities that have been more reluctant to approve tax increases. And there’s a third argument, that stabilizing property tax revenue will free up more money in the state budget for other needs beyond education.

There are other things that make this effort different from past attempts, supporters say. Amendment 66 was widely perceived as a top-down effort that came from Denver. It raised taxes on everyone, and it made changes to the school finance formula that created winners and losers among districts, making it hard for many school board members and superintendents to support it.

Supporters of Initiative 93 describe it as being built from the ground up over a two-year process that included lots of input from school districts across the state, as well as from advocacy organizations like the NAACP and Padres y Jóvenes Unidos. It raises taxes only on businesses and higher-income earners, who represent less than 8 percent of individual income tax returns, and while it encourages the legislature to adopt a new school finance formula, it ensures that every district will see an increase.

Skeptics see just another attempt to throw money at the problem.

“Things are different this time, and it’s that they’re asking for more money,” said Luke Ragland of the conservative education reform group Ready Colorado.

A better approach, Ragland said, would be to tie increased funding to policies that could be expected to improve educational outcomes. There’s no guarantee that this money will make it into the classroom or into teachers’ paychecks, he said.

“There are places in terms of human capital, in terms of attracting talent and keeping it in the classroom, where more money would make a difference, but not just pouring more money into the current system,” he said.

Supporters of the measure will be campaigning in a complicated political environment, possibly sharing the ballot with a major tax increase for transportation, as well as a governor’s race and legislative contests that will determine control of the state Senate, where Republicans currently hold a one-seat majority.

Candidates up and down the ballot likely will be asked to take a position on the ballot measure, layering partisan politics over a measure that supporters hope will have broad appeal.

“You start this analysis with the assumption that it’s an uphill battle because we don’t really pass statewide tax increases, while schools pass lots of local taxes and bond measures,” said political consultant and pollster Floyd Ciruli. “The difference is trust. At the statewide level, people don’t trust that the money will go to benefit their local schools.”

Ciruli sees advantages, though, to asking voters in a mid-term election. Turnout will be higher than in an off-year, when older, more conservative voters tend to dominate, and even-year voters are more likely to have Democratic tendencies and be more open to taxes.

The contentious Democratic primary, which focused on education, also “primed” voters to see low funding as a key problem for schools, he said.

“The environment is pro-education,” Ciruli said. That places the tax measure “in the ballpark, but it’s still a challenge to do a statewide tax increase.”

Lisa Weil, executive director of Great Education Colorado, said the organizations working on the measure decided not to worry too much about “conventional wisdom” and move forward until they saw a compelling reason not to put something on the ballot.

“We’re not naive about the fact that we’re in a political environment, but we’re also creating that political environment,” she said. “Our entire state has a hunger to do right by kids.”