Rural Colorado school districts that once served students online could see brunt of major state budget cuts

As Colorado lawmakers try to solve a state budget crisis, Gov. Jared Polis’ office is advocating for a new set of changes to student averaging that would significantly impact a handful of rural school districts and charter schools that found a lifeline for their budgets by enrolling online homeschool students.

Vilas School District RE-5, in far southeastern Colorado, along with Plainview School District Re-2, about 100 miles to the north, and three Colorado Early Colleges campuses in recent years ran online enrichment programs for homeschool students with help from an outside vendor.

Those programs — which the districts and charter schools no longer operate — emerged during the pandemic, when the Colorado Department of Education relaxed rules around modes of learning for students, according to CDE officials.

When they did operate, Vilas, Plainview and the charter schools were allowed to include the online homeschoolers in their overall student counts.

But Polis’ office says they should never have been included and wants them removed from student totals from the past few years, pointing to current school funding rules. Those student counts from recent years factor into enrollment averaging and help calculate how much funding the districts and schools receive. 

In a March 4 memo to the Joint Budget Committee and Craig Harper, the JBC’s nonpartisan staff director, Mark Ferrandino, the governor’s budget director, wrote that those online homeschoolers were “incorrectly classified as brick-and-mortar students” and “improperly included in the averaging process.”

That led to inflated student counts that factored into the enrollment averages used to determine how much school funding to give those districts and schools, according to the memo.

In Vilas School District, for instance, enrollment jumped to 103 in the first year of the program from 44 students in the 2018-19 school year. Enrollment continued to balloon in following years, reaching a peak of 361 during the 2023-24 school year, the last year the district offered the online program. This year, Vilas School District has 54 students.

Folding those online students into enrollment tallies adds up to a sizable funding commitment from the state — an estimated $12.8 million extra went to Vilas School District, Plainview School District and the three charter schools this year, the memo states.

Vilas School District alone received $1.7 million more this year by including the online homeschool students in its enrollment counts in recent years, accounting for 62% of its $2.8 million budget. Plainview School District received an additional $2.3 million — 82% of its $2.8 million budget.

Meanwhile, Colorado Early Colleges Windsor, which counted 588 online homeschool students in addition to the 199 students who take classes on campus, received an extra $6.3 million this year, or about 75% of its nearly $8.5 million budget.

The other charter schools that netted additional funds are Colorado Early Colleges Douglas County and Colorado Early Colleges Fort Collins, though the additional dollars awarded to those schools represented a much smaller percentage of their total budget. The Douglas County school received nearly $1.3 million in extra state funds by including roughly 117 online homeschool students in its student count on top of the 1,047 students it educates in person. The state gave the Fort Collins school an additional $1.1 million for adding 103 online homeschool students to its enrollment along with the 991 kids served at the school.

Striking online students from those districts and schools’ enrollment tallies would translate into much less state funding for them next year but would rightsize their budgets to reflect the actual number of students in their schools, according to the governor’s office.

Bill Kottenstette, executive director of CDE’s Schools of Choice Unit, says the districts and charter schools followed state laws and made a “good faith effort toward compliance” with the state education department.

Polis has repeatedly pushed for Colorado to remove student averaging from its school funding calculations altogether. The state currently funds districts based on an average of their student counts from five years, insulating districts experiencing declining enrollment from sharp funding losses. A new school funding formula slated to go into effect next year would fund districts based on an average of their student enrollments over four years, instead of five. Polis argues that approach to funding schools sends money to districts for kids they no longer serve.

But the governor’s office has also shown a willingness to ease the state away from averaging more gradually. That would ensure that the way districts are funded doesn’t take such an abrupt turn, keeping some level of averaging in place in the coming years.

Regardless of how lawmakers decide to move forward with the state’s averaging mechanism, Polis’ office says the state education department must correct student counts to exclude online homeschool students. That will require a statutory change first, meaning lawmakers will have to pass legislation giving the department the go-ahead to adjust those enrollment numbers from recent years.

What caused so much confusion over online programs for homeschool students?

As Colorado schools weathered rounds of uncertainty during the pandemic, CDE gave districts more flexibility in how they could educate students, with many regularly turning to remote and hybrid learning.

New approaches to education emerged during this chaotic period, filling more niche needs of students, including homeschool students whose families wanted to round out their education with enrichment programs.

“They were operating in a space where policies were not super well defined,” said Kottenstette, of CDE.

The State Board of Education intervened, passing new rules in March 2024 that spelled out how the state should count students in more innovative education programs and what requirements would make a district eligible to receive funding for students enrolled in those programs.

Vilas School District, Plainview School District and the three charter schools stopped offering the online programs this school year. The contractor they partnered with to serve homeschool students — OpenEd, formerly known as My Tech High — chose to leave Colorado after its education model was no longer eligible for funding under new rules adopted by the State Board of Education, Kottenstette said.

In developing online programs for homeschool students, administrators and board leaders in Vilas School District, Plainview School District and the three charter schools were trying to take steps that were in the best interest of their school communities, Kottenstette said.

“I don’t think there was anything unethical because they were doing what they believed was right for their community, and they weren’t hiding anything,” Kottenstette told The Colorado Sun. “I think they were just looking at ways of how could they build a sustainable model and that’s what they came up with.”

He acknowledged the difficulty of running a district with fewer than 100 students enrolled, noting that districts like Vilas School District need more discretionary revenue.

School districts that run online programs in collaboration with an outside contractor are able to pull in more state funding, creating more breathing room in their budgets, said Frank Reeves, interim executive director of the Colorado Rural Schools Alliance and former superintendent of East Grand School District in Granby.

“You don’t necessarily have to staff all of that because a lot of these online programs have their own staff, and you filter money through to them, but you get to keep some,” Reeves said. “And in doing so, that gives you more money so you have literally more flexibility to play with any time but especially when times are tough.” 

Even the prospect of a slight state funding dip stresses a small rural district’s budget.

Vilas School District Superintendent Abby Pettinger previously told The Sun that tiny rural districts battle unique challenges within the state’s per-pupil funding model, which doles out money to districts based on an average of the number of kids they have served over five years. That means that in districts like Vilas, small drops in student counts can dramatically decrease the level of state funding those districts receive.

Small rural districts typically have very little flexibility in their budgets, Reeves noted.

“When you work with smaller budgets and that budget is generally 85% to 90% based on personnel, there’s no flexibility,” he said. “And so any significant change that happens is a direct impact on the limited personnel that you already have because there’s just nowhere else to cut.”

Those struggles raise broader policy questions about whether Colorado’s approach to funding school districts based on the number of kids they educate works for districts, particularly small districts in rural parts of the state, Kottenstette added.

“Is the current per-pupil funding structure providing enough revenue to the district to maintain and sustain a viable program?”