Editorial: Colorado will renege on school funding promise. Here’s how lawmakers should make the cuts.

Colorado’s budget woes continue with a dire warning last month from the non-partisan budget staff at the state Capitol: “The budget appears to be on an unsustainable path.”

The hole Colorado lawmakers are trying to fill is about $1 billion and isn’t the result of reductions in revenue – the state’s economy has been strong the last four years – but rather is due to rising costs, new programs and the somewhat arbitrary cap on state spending imposed by voters in 1992.

Our general philosophy to plugging this hole is that cuts have got to be across the board — no department should be sacrosanct so that everyone faces a little pain.

This brings us to the tricky situation with education funding.

Collectively, school districts will see state funding increase from $9.8 billion this year to around $10 billion next year under two competing proposals to balance the budget.

That $200 million increase, however, represents a cut from anticipated revenue under a bipartisan and long-overdue deal reached in 2024 to update and improve the school funding formula. School districts are distraught that the deal they reached with the state is now being broken just as the funding formula is implemented for the first time.

“We had a deal last year that, for a whole host of reasons and probably others that I don’t understand, is not going to be honored,” Scott Smith, CFO of Cherry Creek Public Schools, said during a public meeting about the cuts that was covered by The Colorado Sun. “Why should we trust that any deal we reach now will be honored in the future?”

Smith summed up the anger and frustrations from school district officials nicely. Colorado has struggled for years to fix its broken funding formula precisely because changing the formula would create winners, districts that received more money under the change, and losers, districts that would face cuts.

The compromise used additional state money – about $500 million over several years of implementation — to backfill the changes and hold schools harmless from reductions they would have faced under the new formula. In other words, there would be winners, and everyone else would tie.

Two competing budget proposals to balance the budget would cut how much schools get from that $500 million pot next year. Speaker of the House Julie McCluskie proposed funding 10% of the promised increase and Gov. Jared Polis proposed funding 18%.

Polis’ 18% proposal would actually be the larger cut, however, as it also reduces funding to schools with declining enrollment by doing away with a 5-year-average of student attendance that gets plugged into the finance formula and instead basing the formal on every year’s actual hard-number attendance count. McCluskie’s 10% proposal would reduce the average to a 4-year time period.

We agree that the money should go where students are, but we also recognize that students move around frequently during a school year and many are sick or absent on count days. Some averaging over time is essential to protect schools from arbitrary cuts for students they are serving. Lawmakers might have to break their deal with school leaders, but at least they can listen to superintendents about how best to make cuts.

A two- or three-year average of student population counts for the funding formula with about 10% funding level would strike the right balance between cutting state funds as needed but not harming districts with more erratic budgeting.

Every department should share in the budget cuts needed to put the state back on a sustainable spending path. That includes K-12 education but also higher education, Medicaid, law enforcement, human services and more.

These cuts will hopefully remain temporary if the economy remains strong. We have concerns, however, that federal cuts to spending could hit Colorado hard. We urge lawmakers to consider long-term solutions.

McCluskie suggested last month that a long-term solution to Colorado’s budget woes could be asking voters to increase the amount of revenue the state can spend every year, thus reducing the amount Coloradans get every year in TABOR tax refunds.

If Democrats want Coloradans to consider letting the state keep more of their tax dollars, then the first good-faith step is to stop eroding our TABOR refunds with tax expenditures for pet projects like the proposed tax credit for Sundance Film Festival. The Taxpayer’s Bill of Rights does not consider tax expenditures — credits and deductions that reduce the amount of tax someone owes — as spending.

Polis’ budget suggests phasing out about $83 million in tax credits over time, which is the direction we’d like to see the General Assembly go rather than continuing to add tax expenditures during tough fiscal times. Sadly, the savings realized by eliminating tax credits can’t be used to fill the K-12 education funding gap, instead it will go out in TABOR refund checks, but eliminating ineffective and sometimes rediculous tax credits is the right thing to do.

If McCluskie is serious about asking voters to forego refunds in support of K-12 spending, she’s got to start by protecting the refunds from more raiding tax expenditures this legislative session.

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