What is Amendment 23 and why did it pass?

Amendment 23 was passed in 2000 to reverse a decade of budget cuts experienced by Colorado school districts throughout the 1990s. During that decade, Colorado’s education spending did not keep pace with the inflation rate. Per-pupil funding for education was well below the national average. Amendment 23 requires K-12 funding to increase by inflation plus 1% from 2001-2011 and by inflation after that. Notably, even with Amendment 23, by 2007-08, per-pupil funding was almost $1,400 below the national average (consider how this affects a school of 300 or 700 students). If Amendment 23 is honored through 2011, we will finally spend as much per child in real dollars as we did in 1989.

Unfortunately, because of the economic downturn and Colorado’s resulting budget crisis, it appears that Amendment 23 will not be fully implemented through 2011, meaning that our per pupil funding may once again fall below inflation-adjusted 1989 levels.

What impact does Amendment 23 have on Colorado students and schools?

It guarantees minimum per pupil funding increases. Amendment 23 requires that the state legislature annually increase K-12 funding by “inflation +1 percent.” It requires funding for special education and transportation to increase by inflation +1 percent, as well. This is designed to restore the cuts experienced by public schools in the 1990s. It allows additional K-12 spending at the discretion of the legislature. Amendment 23 authorizes additional spending (on top of the “inflation +1″ increases) on other K-12 programs, such as textbooks, class size reduction, early childhood education, and teacher performance incentives. As a result of the current economic and budget crisis, it is virtually certain that school funding levels will go below Amendment 23 minimums in the 2010-11 fiscal year.

Amendment 23 has a finance mechanism. It earmarks .33% of Colorado’s income tax for deposit into the “State Education Fund.” These funds are exempt from all TABOR limits. [See State Education Fund FAQ]  In order to ensure that the Legislature would not simply use the State Education Fund to substitute for funds it has historically spent on education, Amendment 23 requires the Legislature to increase general fund spending on K-12 by at least 5% each year before it can dip into the State Education Fund to meet the inflation +1 requirement. Notably, during both the post 9/11 economic downturn and the current budget crisis (for the coming 2010-11 fiscal year) the Legislature has taken advantage of a provision in Amendment 23 that gives the Legislature some leeway when state revenues drop. As a result, during those years, the State Education Fund has been used to help balance the rest of Colorado’s very tight budget.

How did Colorado education funding fall so far below the national average?

The falling red line on this graph documents how Colorado’s per pupil funding compares to the national average from 1972-2007. With conventional wisdom in and around the Capitol that K-12 funding is “fine” and has been protected – perhaps too protected – by Amendment 23, this graph tells the real story of Colorado’s 30 year history of disinvestment. The downward trend started with the Gallagher Amendment in 1982 and continued to decline with the passage of TABOR in 1992. Even with a slight increase following Amendment 23, Colorado continued dropping to new lows relative to the national average. In 2007, Colorado was $1,397 below the national per pupil funding average.

In the 1980s, Colorado invested more per student than the national average, even during the energy bust. In 1982, we passed the Gallagher Amendment (the vertical green line on the graph) – which started eroding the local property tax base by continually reducing the assessment rate (the percent of the value of a home that is taxed). From 1982-1992, school districts were able to somewhat stabilize local revenues by floating mill rates up.

In 1992, TABOR was passed (the vertical orange line) and took away the ability of districts to float their mill rates without a vote of the people and limited the state’s ability to backfill the hole left by declining property tax rates (because of a 6% spending limit imposed on spending from the State General Fund). The result: Colorado’s tangle of restrictive budget laws prevented the legislature from even keeping up with inflation in per pupil funding.

The good news is that in 2000, Colorado voters passed Amendment 23 to plug hemorrhaging P-12 budgets (the vertical purple line). Estimates indicate that if Colorado did not pass Amendment 23, average spending per student would have dipped down an additional $500-1,000. As the graph indicates, per pupil spending in 2000 was already nearly $700 per pupil below the national average. At the time it passed, Amendment 23 was intended to be a floor and not a ceiling.

The bad news is that since 2000, Amendment 23 has become a ceiling and not the protective floor it was originally intended to be. The other bad news is that the measure of inflation used in Amendment 23’s inflation + 1% for K-12 funding is based on the Consumer Price Index (CPI), and is not weighted to reflect the kinds of things that school districts buy like health care, pensions, and energy.

As you track the red line where Colorado falls relative to the national average, you can see that at one point, Colorado increases relative to the national average.   During the post-9/11 economic downturn in 2003, Amendment 23 protected Colorado’s schools more than those in the rest of the country.  But when the economy recovered, other states took action to remedy temporary cuts made in tough times.  In essence, while other states said: “finally we can invest in our kids again”, Colorado took a different path and funded schools barely above the minimum required by Amendment 23.

Consequently, Colorado’s per pupil funding has fallen off the chart over the past several years — a phenomenon that will only get worse in 2011, unless we work together to prevent “the Cliff.” (In 2011, Amendment 23 and Referendum C sunset, and the federal stimulus dollars that are currently propping up education funding will dry up.)

What can you do right now?  Take the Great Futures pledge to invest in kids, because great futures start with a great education.  Let’s match our resources with smart, sustainable reforms to impact all Colorado students.

How does the “inflation + 1 percent” in Amendment 23 work?

Amendment 23 guarantees K-12 funding by requiring an “inflation + 1″ increase in “base per pupil funding” beginning in 2001 for ten years. The base is run through a complex formula that includes variables such as school district size, local cost-of-living and the number of “at-risk” kids. These variables are called “factors” and they substantially increase average per pupil funding received by school districts. The factors exist to address the increased per pupil costs that result when, for instance, a high percentage of pupils are from at-risk populations or when the necessary costs of running a school and hiring staff are divided among a small student population in a rural district. Each year, the factors increase Colorado’s total school spending by several hundred million dollars.

Historically, the Legislature has protected the factors as part of the Amendment 23 mandate.  However, it appears that the Legislature will adjust the factors for the 2009-10 and 2010-11 fiscal years, in order to reduce school funding by 6.12% so far. Great Education Colorado believes that reduction is a violation of the voters’ intent in passing Amendment 23 in 2000.

Is Amendment 23 sufficient to fund K-12 adequately?

No.  A 2006 study by the School Finance Project found that, in order to meet the requirements of Colorado’s school reforms, including CSAPs, and the federal “No Child Left Behind” Act, Colorado schools would need an infusion of funding far beyond that required by Amendment 23. Amendment 23 was not designed to fund schools “adequately.”  Rather, it was designed to reverse cuts imposed over a decade because of Colorado’s constitutional budget constraints, which are generally recognized as the most restrictive in the nation. (See FAQs regarding TABOR and Gallagher). Amendment 23 requires “inflation + 1” increases, but the base funding levels upon which those increases are based are simply not sufficient to meet the needs of children.

• At-Risk Students: While school finance experts estimate that it generally costs 20-58% more to bring an at-risk child to academic proficiency (as compared to a child who is not at-risk), Colorado gives districts only an additional 12% per at-risk child.
• Special Needs Students: Although experts estimate that it costs as much as twice as much to educate a child with moderate special education needs, the State generally provides districts with less than 20% of the funds necessary to meet those needs.
• English Language Learners: Even with Amendment 23, the State provides districts with less than $300 per year to bring non-English-speaking children to English proficiency.

School Districts have to make up the difference by diverting funding from the rest of their budgets. And with schools facing significantly greater expectations for progress and proficiency, it is simply not enough to meet Amendment 23’s goal of catching up with 1989 inflation-adjusted spending levels.

If Amendment 23 is guaranteeing funding increases, why is my school facing cuts this year?

Amendment 23’s “inflation +1” takes into account the consumer price index (CPI), which consistently underestimates inflation in the things that school districts buy. For instance, the CPI doesn’t give enough weight to increases in health care, energy, transportation and pension costs, which all tend to rise much faster than the CPI. In addition, “declining enrollment” (i.e., a reduction in the number of district students) has made matters much worse for many districts (less students, less money). This is because a district’s costs usually do not decrease as much the loss of funding (for example, a school still needs to keep the same number of teachers, although it may have lost a few kids).

Due to the severity of the current economic downturn and significant decline in state revenue, it appears that the Legislature will almost certainly fund K-12 schools at a level that is significantly below the requirements mandated in Amendment 23. While the legal and moral basis of such cuts is debatable, it is irrefutable that the cuts will negatively affect all of Colorado’s K-12 students.

For the latest on Amendment 23 and the effect of the current economic downturn on K-12 funding, visit our blog: http://blog.greateducation.org/.