Saying goodbye to Colorado’s K-12 spending mandates

Amendment 23 has become synonymous with K-12 education spending in Colorado, which now tops out at $5.7 billion a year and represents 43 percent of the State’s general fund budget. As the State continues to struggle with significant budget decisions and revenue shortfalls, legislative leaders are finally forced to deal with Amendment 23’s spending mandates.

Under this amendment to the School Finance Act, K-12 spending increases are set at inflation plus one percent until 2010, and then by at least inflation thereafter. Amendment 23 is basically an autopilot spending mechanism designed to increase spending every year, no matter what the shape of the State’s budget. The net result is that other budgets (e.g., police, fire, state services, higher education, etc.) must be slashed in order to fulfill the mandates of Amendment 23. Moreover, while state employees forego pay increases for a second straight year and take furloughs, K-12 funding went up nearly 5 percent this year.

When proposed to Colorado voters in 2000, Amendment 23 was heralded as the solution to declining education funding in Colorado. Amendment 23 was expected to address concerns that continued decreases in funding were negatively affecting teacher salaries, class sizes and student funding.

Proponents argued that the most effective way to supply schools with additional resources was to require a portion of state revenues be allocated to public education and in doing so, tax rates would remain unchanged. Yet, they were also advocating for Amendment 23 during a period of economic growth and projected surpluses.

Currently, the General Assembly’s Long-Term Fiscal Stability Commission is tasked with understanding how to unravel Colorado’s budget issues. Fingers are being pointed in a number of directions. Some believe that Taxpayer's Bill of Rights (TABOR), which limits state spending and state and local tax increases, must change, while still others think that blame lies with the Gallagher Amendment, which restrains the taxable values of residential property. However, an increasing number of policy makers are finding that Amendment 23 is likely the primary problem.

Apparently, based on recent comments by members of the Democrat-controlled General Assembly and Governor’s Office, they now agree that Amendment 23 is a key culprit which makes it increasingly likely that Amendment 23’s spending mandates will be necessarily altered.

Unknown to most Coloradans, Amendment 23 includes a “maintenance effort” provision that requires the solvency of the State Education Trust Fund. As a result, during the last legislative session, the Democrat-controlled General Assembly tinkered with Amendment 23 by adding a “fiscal crisis factor” to the School Finance Act (SB 256). This new fiscal crisis factor is intended to keep the State Education Trust Fund solvent.

Approximately $110 million, roughly a 1.9 percent reduction of what would have normally been delivered to Colorado’s schools, was retained in the fund until the General Assembly revisited the budget in January of 2010. With the State now needing the $110 million to balance its books, Amendment 23 spending mandates will be tinkered with even more. The reality has set in for some policy makers. For example, Sen. Chris Romer (D-Denver) contends that “effectively, Amendment 23 is over.” Lisa Well, a policy director for Great Education Colorado which is a known proponent for Amendment 23, recently agreed that with the likely changes to the various allocation factors and ending of the 1 percent bonus, “Amendment 23 is essentially over.”

In school districts across Colorado, teachers unions are pressing for cost of living increases at time when districts are facing tremendous budgetary uncertainty. Consequently, teachers unions will likely make their voices heard in 2010’s legislative session. If as Barry Poulson, an economist and senior fellow at the Independence Institute, recently stated, Amendment 23 is “a slush fund for the education lobby," then the political fallout from changes to Amendment 23 will be particularly strong among teachers unions.

Teachers unions have already expressed concerns about the General Assembly’s so-called “liberal interpretation” of Amendment 23’s spending mandates. Specifically, they argue that Amendment 23 prohibits reductions in K-12 funding. For example, the Aurora Education Association argued that K-12 schools are constitutionally required to receive nearly a 5% growth in funding for 2009-2010, but the fiscal crisis factor slashes this by approximately 35%.

Yet, Governor Bill Ritter has publicly acknowledged that his administration is following the liberal interpretation that all the K-12 allocation factors, except for per-pupil spending, can be modified by the General Assembly. After spending millions of dollars to elect Governor Ritter and Democrat members of the General Assembly, teachers unions can hardly be pleased.

Many Coloradans agree that K-12 schools must be funded appropriately in order to provide educational opportunities for our youth. Yet, I doubt most Coloradans think that offering early parole to prisoners in order to save $19 million is what they expected when they passed Amendment 23 with 52% percent of the vote. In the upcoming session, even more severe cuts are coming which undoubtedly will cause many people to question the sanity of cutting public safety programs in order to meet Amendment 23’s spending mandates.

Among the original arguments by Amendment 23 opponents was that allocating revenues through the State Constitution constrains the General Assembly’s ability to respond to changing needs. In 2009, the General Assembly and Governor Bill Ritter are now confronting these constraints and realizing, while not publicly, that opponents were right.

Six years ago, Colorado faced significant budget wows as well. At the time, Jon Caldera appropriately opined that Amendment 23 would prove to be too rigid in time of falling revenues. Today, Colorado is once again faced with dramatically falling revenues and the simple reality is that Amendment 23 will no longer be spared the budget trimming shears.