The Crested Butte News Serving the Gunnison Valley since 1999
Consolation comes in form of increased PPR and total program funding
by Olivia Lueckemeyer
The state’s so-called negative factor continues to hinder funding for the Gunnison Watershed School District, business manager Stephanie Juneau relayed to the board of education and a packed room of concerned citizens on Monday, March 14. The negative factor is a budget stabilization tool that limits funding for Colorado schools and exacerbates inequities in the state’s school finance structure.
To introduce her proposed budget summary for fiscal year 2016-2017, Juneau provided a brief history lesson to inform the public and the board as to why school funding has taken such a drastic hit in recent years. She also demonstrated that, in some ways, the RE1J district is better off than others.
A decline in school funding
As far back as 1982 with the passing of the Gallagher Amendment—which shields residential property owners from large increases on property tax—actions of the state legislature have prevented public school funding from keeping up with inflation and costs. To neutralize the blow, in 2011 the state created the negative factor to balance its budget. The purpose of the negative factor is to reduce each district’s per pupil revenue (PPR) by an equal percentage to reduce the state’s share of total program cost.
“When you don’t have enough revenue and you have these statutory requirements, sometimes you don’t have enough money to go around,” Juneau explained. “So the state came up with the negative factor, which reduced funding for schools.”
Contrary to historical norms, today the state picks up a far more significant portion of the school-funding tab versus local contributions. To compare, in 1988 the local population provided 57 percent of funding, and the state share amounted to 43 percent. However, once a cap was placed on property tax revenue, the local share began to decrease, and today equates to 34 percent, versus the state share of 66 percent, which is derived from its general and state education funds.
“It is very challenging for the state of Colorado to figure out the huge conundrum of school finance,” Juneau said. “The reason why we can’t keep up with cost is because we are not being funded at the level of cost increases. The state education fund balance is very close to depleted.”
The effect on RE1J has been substantial. Of the four factors used to calculate funding for each Colorado school district—size, personnel cost, at-risk students and cost of living—only cost of living has a positive impact on RE1J’s PPR funding from the state. Out of 178 Colorado school districts, Juneau says, RE1J ranks 136th in PPR funding for fiscal year 2016.
The negative factor
When it comes to funding, nothing hurts Colorado school districts more than the negative factor. In fiscal year 2014, RE1J took its biggest PPR funding hit of $2.19 million. Since then the situation has slightly improved due to superintendents and board of education members statewide confronting their legislators about the issue. This year’s negative factor is at 11.8 percent, or $830 million statewide, which translates to a local PPR hit of $1.8 million.
“Even though PPR is back to pre-recession levels, inflation adjustment funding still lacks,” Juneau said. “Cost continues to go up, and funding from the state can’t keep up.”
According to PPR history, the adverse impact of the negative factor on RE1J has remained steady since its creation. For fiscal year 2015-2016, the calculated per pupil revenue should be approximately $8,250; however, due to the negative factor, the actual PPR equates to $7,294.
The impact of the negative factor on RE1J’s total program funding has also been significant. While actual funding has increased, the calculated amount the district should be receiving without the negative factor has also increased, meaning RE1J is still far under-funded proportional to cost. In fiscal year 2013, total program funding should have amounted to approximately $13 million; however, due to the negative factor, funding equated to roughly $11 million. This year, calculated total program funding is approximately $16 million, but actual funding amounts to approximately $14 million.
A slight advantage
Though the situation appears bleak, Juneau said RE1J is at a slight advantage compared to other districts based on a few variables. First, population growth continues its upward trend. As more students move to the district and enroll in school, state funding increases.
“We are fortunate people continue to move here and our teachers are great,” Juneau said. “Growth is not consistent. It bounces around, but overall we are growing in population.”
Perhaps RE1J’s greatest monetary advantage is derived from mill levy override funds. Of the district’s total revenues, mill levy funds make up 19 percent, the second largest contributor after total program and specific ownership tax revenues. Due to the slight decrease in last year’s negative factor, the mill levy override committee chose not to assess the full amount of mills.
“The general override mill levy maximum is 25 percent of the calculated total program cost,” Juneau explained. “RE1J is at 24 percent for total program costs in fiscal year 2016.”
According to Juneau, RE1J is financed by two funds: Fund 10, the general fund, and Fund 26, the mill levy override fund. Whatever is left after revenue minus expenses makes up the fund balance, which Juneau said has remained solid due to the board of education’s long-term planning efforts to remain fiscally sound. Since fiscal year 2010, the fund balance has grown by $477,700. The estimated fund balance for fiscal year 2016 is approximately $3.25 million.
“The fund balance has bounced over the years, and we use it to bounce around because we allow expenses to increase every year so we can support services provided to students, even when revenue has not increased,” Juneau said.
Next year’s budget
Based on past information and projections for the coming year, Juneau was able to present to the board revenue assumptions for fiscal year 2016-2017, but she said these could change based on the results of upcoming legislative sessions. She was pleased to report that the district’s funded pupils were projected to increase by 34.5 students, which increases PPR by $107.73 from the previous year or $7,379.69 per student. Total program funding will also increase from approximately $13.6 million to $14.1 million.
The district will save on transfers to other funds since Juneau is not proposing a transfer to the health insurance fund, as it is currently operating under-budget. This saving amounts to $693,486.
“Our funding for health insurance next year is based on our claims this year, and we are currently far under-budget, which is great news for next year,” Juneau said. “Based on this, I feel comfortable assuming health insurance costs will remain stable.”
Based on Juneau’s projections, the year over year revenue available to fund expenses will increase by $913,431. Based on her expense assumptions, year over year expenses will increase by $403,589. For the general fund, total revenues after transfers will amount to $16,951,468, while total expenses will sit at $16,902,563, leaving $48,905 in the general fund balance.
“We are pretty close to a balanced budget to start with for fiscal year 2016-2017,” Juneau said.
For Fund 26, the beginning fund balance for fiscal year 2016-2017 is projected at $1,165,095. Of that, $1,034,988 will be set aside for future inflation, per the original ballot language citizens agreed to when they passed the override in 2014. The difference of $130,107 will be used to launch the Pathways Program.
Juneau explained that beyond fiscal year 2016-2017, the Pathways Program would be sustainable via PPR from the retention of at least 18 full-time students.
“This is a one-time investment to get people through the door, then PPR will support to keep the program going forward,” Juneau said.
Following Juneau’s presentation, board treasurer Dr. Dale Orth expressed his dismay about the state of Colorado school funding.
“It’s very depressing to go over to the legislature,” Orth said. “Regardless of people trying to change things on the ballot, there is not a lot of confidence anything will happen quickly. We are going to continue to be squeezed in K-12, and we are actually fortunate compared to other places. We are really in a bad place as a state. On both sides of the aisle, people are starting to figure out that there is no way this can work, but it’s going to take a little while before they can convince everyone else to actually do something, and it will take us as voters to do something about it too.”
