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My personal musings about anything that gets on my radar screen--heavily dominated by politics.

2004-03-09

Let's Task Our Collective Brains To This One

I know it's easy for conservatives to write off the "sky is falling" attitude of the educational establishment in Colorado. But there is a confluence of constitutional events at play that deserves serious consideration. The following is a notice from the Deputy Executive Director of the Colorado Association of School Executives. It is notable in its lack of hysteria, but pointedness about reality.

The following is complicated, complex, and a tad confusing; so if you get a
little lost blame the writer's ability to articulate, not the reader's
ability to comprehend. Even I occasionally get lost in this constitutional
briar patch.

School finance in Colorado is in a helluva pickle! Here’s the situation as
near as I can understand it and explain it:

1. Last week the U.S. Bureau of Labor Statistics revealed that the
Denver/Boulder CPI for the next budget year will be 1.1%. That’s final and
official. This is considerably less than the earlier estimates, which ranged
from 1.7% to 2.1%. This percentage factor affects virtually everything in
Colorado, from TABOR to Amendment 23.

2. Under this revised determination of inflation (1.1%), the amount of “new
money” the State of Colorado may collect and spend under the Taxpayer Bill
of Rights (TABOR) is limited to $87M.

3. As readers will recall, Amendment 23 requires that school districts are
to receive inflation (1.1%) plus 1% for 10 years (since 2000). That means
Amendment 23 requires that school districts receive 2.1% in “new money” for
the next budget year beginning July 1, 2004. So, after one scrapes thru all
the charts, graphs, and tables, the bottom line is that to comply with
Amendment 23, the state must spend an additional $110M on K-12 alone! This
figure also includes new student growth.

4. Now, to add insult to injury, the federal government requires every state
to pay a share of Medicaid cost. The increase for next budget year is
projected to be $55M.

5. So here’s the wart on the pickle. Amendment 23 "requires" $110M of new
money; Medicaid "requires" $55M of new money, but TABOR says the state shall
"only spend" $87M of new money!! And the $87M is intended to cover all
other state functions such as corrections and higher education.

6. Still with me? See the pickle? See the dilemma? Does the state violate
Amendment 23, TABOR, or federal Medicaid law? Which one of the above?
Which two of the above? By how much?

7. There does exist another alternative: The state could easily lop off
another $100M or so from higher education, which is being seriously
contemplated. Higher education current appropriation is over $500M, which
is about 25% less than it was about three years ago. And, to be sure, the
JBC is busily looking for other rabbits to pull out of its hat.

8. I’ll reiterate: School funding for the 2004-05 budget year is in a major
predicament. If school districts think that you will receive a 2.1% increase
from last year's funding, then you still believe in the tooth fairy! I don’t
know which constitutional amendment may be trampled, if any, but it is
highly likely that one, if not two, will be “tested” legally, fiscally, and
politically.

9. Moreover, the current school finance law requires that every other year
(now this year) a “cost of living” survey shall be conducted and that
results be included in school finance. Historically that has added an
additional $15M-$20M to K-12 funding. Kiss it goodbye. Ain’t gonna happen.
Forget about it!

10. The legislative Joint Budget Committee is still considering some of the
following actions within K-12 to address this awful predicament:

a. Mandating the “entry date” for kindergarten and first grade to September
1. Likely to happen. Total state savings for both years -- undetermined.
Likely reaction from parents whose kids missed the dates -- pure hell.

b. Reducing funding for the number of kids “retained in grade.” Apparently,
a few years ago, Colorado districts “held back” or “retained in grade” over
16,000 kids, “costing” the state over $70M! There are proposals to cut the
per pupil funding for these kids ranging from 10% per kid to 50% to 100%!
God, I love this job.

11. Just to keep things in perspective, all predictions suggest (and that’s
being diplomatic) that next year's budget will be far worse in terms of what
will be limited by TABOR but required by Amendment 23.

12. If you’re still with me, you’re a “junkie.” But wait, there is more.

13. PERA. PERA is requesting that the legislature increase the employer
contribution rate by 3% over the next six years (.5% yearly from the current
10.15% to 13.15%). That’s .5% annually. So there exists the likelihood
that whatever new money K-12 may receive next year will be consumed by
employer contributions to PERA.

14. The PERA situation is further muddied by State Treasurer Mike Coffman’s
regular press releases that PERA is in some sort of fiscal jeopardy. (Mikie,
Mikie. Are you listening here? You’re a good guy. You’re a smart guy. I
like you. But to seek higher office by criticizing the Rock of Gibraltar as
being unstable is sheer folly. It is self-destructive. But you go, guy.)
PERA is about as stable and secure as Mt. Evans. Period.

Summary -- We're all in a pickle. K-12 is in a pickle. The State of
Colorado is in a pickle. We’ve all been hoisted on our own petards by
voting into the Colorado Constitution the Gallagher Amendment (1982), TABOR
(1992) and Amendment 23 (2000). I wish I had some sage guidance for
districts but as of this writing, I do not. WHAT DO YOU THINK? What would
you do if you were on the Joint Budget Committee? What should CASE do?

Phil Fox
Deputy Executive Director
Colorado Association of School Executives

Now, I know the obvious response from conservatives is to abandon Amendment 23--unfortunately, that was decided on by a vote of the public. So the knife's edge is: support the rights of the governed to decide their governance, or support fiscal responsibility (and at the same time stick it to public education)?

Personally, if I were on the JBC I would be looking at shorting higher education, while also looking at scaling back many of the federally mandated programs that aren't fully funded (though I don't know the particulars of the savings available here). I would also tell PERA that they're just going to have to wait; surely, a political hornet's nest, but since PERA is already vastly better than social security or almost any private retirement plan, that just doesn't get a priority status.

Unfortunately, however much success comes from these maneuvers would be, at best, a band aid--next year looks just as grim, only there are fewer options on the table.

I look for help from the smarter economic minds out there. First, any disputes of the assumptions of the author would help sharpen the lens of the "reality." Second, what smart economic maneuvers are being overlooked? Certainly, somebody with a better idea about macroecon can see another option (I'm a big fan of "finding a different solution")
Posted by: Michael / 3/09/2004 12:19:00 AM

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