What is the ‘Negative Factor’?
Recently, the Denver Post reported on a movement among Colorado’s superintendents to “seek a commitment from lawmakers to bolster basic funding by addressing the so-called “negative factor,” the work-around employed to cut about $1 billion in recent years despite constitutionally required increases in education spending.”
Great Education Colorado shares the goal of “buying down” the negative factor and is proud to stand with these superintendents. Because this will be a central issue in the legislative session, we thought it might be helpful to provide an explanation of what the negative factor is, how it came to be, and what impact it has had on Colorado’s kids.
Amendment 23, the citizen’s ballot initiative passed in 2000, mandates that “base” per pupil funding increase each year by the rate of inflation. To determine how much each district will receive under the School Finance Act, that “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 (eligible for free lunch) in a district.
These variables are called “factors” and they substantially increase average per pupil funding received by school districts to reflect the very different costs districts experience. 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.
In 2009, the legislature reinterpreted Amendment 23 to mean that only the base amount was covered by the mandatory increases — not the factors. Under this interpretation, the legislature could (and did) cut total spending from one year to the next and claim compliance with Amendment 23 — despite voter intent to increase funding.
Starting in 2009, in order to make across-the-board cuts from all districts, the legislature added a new “budget stabilization” or “negative factor” to the School Finance Act formula. In effect, the legislature now decides how much it wants to spend on school finance, and then adjusts the negative factor to meet that funding target.
As seen in the graph below, for the current 2013-14 school year, the negative factor is currently responsible for a $1,276 reduction in per pupil funding, which results in funding for schools that is about $1 billion below what Amendment 23 requires. Because those cuts are all coming from the factors, which are designed to make school funding more fair, equitable, and responsive to actual costs, these cuts exacerbate inequities in Colorado’s school finance structure, making educational opportunities even more dependent upon a student’s zip code.
The $1 billion negative factor has resulted in larger class sizes, narrower curriculum, reduced instruction time, and less support and individual attention for students. Now that the state’s revenue is recovering, it is time for the legislature to create a plan to “buy down” the negative factor and allow students to recover.