Now that Colorado’s 2020 election results have been finalized, we wanted to take a look at how various decisions may impact PK-12 education funding across the state.
But, first, a brief overview of how education funding actually works in Colorado. It is no secret that there is not sufficient funding for PK-12 education. But what is unknown for most people is at what level the government is and isn’t supporting and funding education in Colorado. Below are some of the facts:
- Education is not funded fully by the federal government. The federal government in 2019 requested $59.9B in budget for the Department of Education. That sounds like a lot, but after taking out funding for Pell Grants and higher education, it nets out to just about $500 per elementary and secondary (i.e., high school) student per year. In fact, in 2016-2018, less than 7.5% of the cost of PK-12 education was covered by the federal government, and its investment in education has headed downwards for the past few years.
- States on average shoulder about half the remainder of the cost. But Colorado has been greatly limited in the funding it can provide to education for two reasons: 1) The Gallagher Amendment, which limited property tax revenues from residences, and 2) The Tax Payer Bill of Rights (TABOR), which among other things uses a formula to determine tax revenue as the economy grows instead of a fixed tax percentage. Here’s a great video about TABOR in two minutes, eleven seconds. This means that a lot of the money that other states would allocate to education and other important causes is instead refunded to taxpayers in Colorado. This is good for taxpayers’ bank accounts in the short-run, but it has led to the state chronically underfunding education for the past three decades.
- Most education funding across the country comes from local income taxes. But again, because of the Gallagher Amendment in Colorado, local property tax revenues are also limited by a formula instead of a consistent yearly tax rate, which further reduced funding for schools.
- Revenue from marijuana and tobacco taxes in Colorado helped a bit, but even then the ~$250MM raised by marijuana taxes is a fraction of the total budget (2% of the total state revenue) and only a portion of it goes directly to schools.
- In places like Denver, voters have approved bonds and mill levies (property tax increases) to support schools, but even that hasn’t been sufficient to stem the lack of funding.
Because of these funding challenges, Colorado was 39th out of 50 states in per pupil funding in 2016, according to the US Census Bureau. This may be why Colorado is 45th out 50 states in high school graduation rates and has one of the largest achievement gaps for low-income students in the country.
The November 2020 statewide ballot outcomes both helped raise funds for education and, at the same time, lower them. First, the increases in revenue:
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- Amendment B passed, which deletes the Gallagher Amendment from the Colorado Constitution. The result is that property tax rates will stay at current levels, which is expected to result in higher residential tax revenue over time. The revenues will help pay for schools, as well as other social services.
- Proposition EE passed, which increases taxes on tobacco and adds taxes for vaping and e-cigarettes. These taxes will fund universal free preschool for 4-year-olds statewide starting in the fall of 2023
- Denver and other counties passed new bonds and mill levies to increase funding.
However, two propositions also passed that likely will reduce Colorado’s education funding:
- Proposition 116, which reduces the state income tax rate from 4.63 percent to 4.55 percent. This change is estimated to reduce the state government’s revenue by an estimated $170 million in the next fiscal year, which likely will reduce education funding as well.
- Proposition 117, which makes it harder for “enterprises” and lawmakers to raise new fees to make up for tax revenue shortfalls. Once again, lower tax revenue likely means lower education funding.
The net impact of Colorado’s 2020 election results remains to be seen. But until we can fully fund our education system and provide the support Colorado’s students need, organizations like Minds Matter Colorado and others will continue to be necessary to fill the gap.
