Amendment 23 FAQs
What is Amendment 23 and why did it pass?
Amendment 23 was a constitutional change 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 still $1,400 below the national average (consider how this affects a school of 300 or 700 students). If Amendment 23 had been honored through 2011, we would finally be spending as much per child in real dollars as we did in 1989.
Unfortunately, because of the economic downturn and Colorado’s resulting budget crisis, Amendment 23 was not fully implemented through 2011. Seeking ways to cope with falling revenues, the legislature reinterpreted Amendment 23 in a way that “allowed” them to cut education funding for three years through a mechanism called the negative factor (see more below). The funding level approved by the legislature for the 2015-16 school year is fully $855 million ($1,000 per pupil) below what is required under the traditional and, we believe, correct reading of Amendment 23. In the years since the negative factor was implemented, schools have been denied over $5.1 billion in funding.
What does Amendment 23 do?
Amendment 23 requires the state legislature to annually increase K-12 per pupil funding by “inflation +1 percent” through 2011 and inflation thereafter. It requires funding for specific “categorical programs” such as special education and transportation to increase by the same percent. 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 for such K-12 priorities as textbooks, class size reduction, early childhood education, and teacher performance incentives.
Amendment 23 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 had historically spent on education, Amendment 23 required the legislature to increase general fund spending on K-12 by at least 5% each year before it could dip into the State Education Fund to meet the inflation requirement. That protection “sunsetted” in 2010, but even before that, the Legislature took advantage of a trigger allowing the legislature to use the State Education Fund to balance the budget when state revenues drop, as they did between 2001 and 2003 .
Since 2009, the legislature has balanced the budget in a different way, reinterpreting the constitutional provision in a way that allows cuts to per pupil funding while claiming compliance.
What is the “Negative Factor”?
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 they 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. Notably, the legislature did not make the cuts by simply scaling back the factors (e.g., reducing the percentage added for each at-risk student). Instead, as can be seen in this spreadsheet from the Colorado Department of Education, the cuts are made by calculating what is required under Amendment 23 and then cutting each district’s per pupil amount by the percent necessary to get to the desired funding target. (Because of the complexity of the school finance formula, some districts’ funding calculation diverges from this general rule).
As seen in the graph below, for the 2015-16 school year, the negative factor was responsible for a $1,000 reduction in per pupil funding, which results in funding for schools that is about $855 million below what Amendment 23 requires. That 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. Notably, the Governor’s proposed budget for 2016-17 includes an increase in the negative factor to $1046 per pupil.
In 2015, in the Dwyer v. State of Colorado lawsuit, the Supreme Court ruled that the negative factor was constitutional. Nonetheless, it continues to be the mechanism that the legislature uses calculate each district’s per pupil spending levels (and to reduce funding) and public education supporters continue to recognize it as the debt that the state owes students, in light of the intent of voters in passing Amendment 23 – i.e., to invest in Colorado’s children in good times and bad.
Is Amendment 23 sufficient to fund K-12 adequately?
No — not even if it were being honored. 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.
How did Colorado education funding fall so far below the national average in the first place?
The falling red line on this graph documents how Colorado’s per pupil funding compared to the national average from 1972-2007. In the 70s and early 80s, Colorado invested more per student than the national average.
In 1982, we passed the Gallagher Amendment, 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 stabilize local revenues by floating mill rates up.
In 1992, voters passed TABOR, which 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. As a result, per pupil funding didn’t even keep up with inflation during the 90s.
In 2000, Colorado voters passed Amendment 23 to reverse K-12 cuts of the 1990s. As the graph indicates, per pupil spending in 2000 was already nearly $700 per pupil below the national average.
Unfortunately, Amendment 23 became a ceiling and not the protective floor it was originally intended to be. In addition, its measure of inflation is the Consumer Price Index (CPI), which does not reflect the kinds of things that school districts buy like health care and energy. As a result, Colorado schools continued to experience cuts and per pupil funding continued to fall behind the national average.