Funding FAQ

Updated on Wed, 03/08/2017 - 12:56pm

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Frequently Asked Questions about Education Funding          

  1. How Do Schools Receive Money?
  2. How Do I Make Sense of All These Legislative Issues?
  3. Isn’t Our Economy Growing?
  4. Doesn’t the district have reserves?
  5. How has the lack of funding affected my school?
  6. Can’t We Cut Administration Costs?
  7. What is the Hospital Provider Fee?
  8. Isn't all spending for the state down?
  9. What happens if we do nothing?
  10. What about all that marijuana money?

How Do Schools Receive Money?

Public school districts receive the majority of funding from the State and from local property taxes, with a small amount from federal sources. Funding for districts is provided first by local sources of revenue (property and ownership taxes). The State covers the rest based on a per-pupil equation called the School Finance Formula. The formula starts with a base amount for each district and adds factors that reflect district characteristics and demographics, attempting to make adjustments for equity. Recent legislation has added a new factor called the Negative Factor, which allows legislators to reduce education funding to stabilize the state budget. The Negative Factor has severely reduced education funding for every district in Colorado.

Colorado also allows districts to ask voters to approve funding that goes beyond the state distribution through voter-approved tax revenue funding.

  • Bonds can only be used for capital expenditures, including major repairs, renovations, additions to schools and new schools. Bonds are not included in the district general fund and cannot be used for operating costs such as salaries and benefits. Think "bonds = buildings".
  • Overrides are additions to the general fund and used for operating expenses such as salaries and benefits, instructional programs, and classroom technology. Think "overrides = operations".

How Do I Make Sense of All These Legislative Issues?

From TABOR and Negative Factor to Amendment 23 and the School Finance Act, legislative issues that affect public education funding can be complicated. Check out this PDF that helps show the progression of legal actions that have led to our current situation - and how it funds K-12. 

You can also get updates on the various bills currently with the state legislature with the Chalkbeat Bill Tracker.

Isn’t Our Economy Growing?

Even though the economy is growing, several factors limit the amount of spending growth for education, the “Negative Factor” being one of them. The Governor’s proposed budget for 2016-17 provides K-12 a one percent increase, which does not cover cost increases to health insurance, PERA contributions, competitive salaries, instructional upgrades and other expenses. So while the state is not cutting K-12, we are getting a lower increase than normal which will not cover our normal rising costs.

Doesn’t the district have reserves?

Over the past six years, we have intentionally spent down one-time funds in our discretionary reserves to cover some of the pain from the Great Recession and the state’s reduced funding. Like a personal savings account, those funds are now all used up.

How has the lack of funding affected my school?

Since 2009, the Negative Factor has cut over $250 million from our district. This year alone, the total is $40 million, equaling $959 per student. The lack of funding from the State will likely force the district to make $10-15 million in operational cuts for 2016-17. Due to cuts, schools have not had the capital needed for building repairs, facility upgrades or innovative programming.

Can’t We Cut Administration Costs?

While 91 percent of the Five Star Schools’ General Fund budget is spent on employee salaries and benefits, including teachers and principals, just 6.1 percent of salaries and benefits are assigned to administration positions. That makes the Five Star District the second leanest school district in the front range and the fifth leanest in the state of Colorado. 

The Colorado Department of Education tracks administration costs for districts. You can view their report here (click on "Comparison of Salaries and Benefits by Job Classification"). 

What is the Hospital Provider Fee?

The Hospital Provider Fee (HPF) is a state program requiring hospitals to pay a fee each year based on the amount of patients they serve. The revenue from the fund is then used to earn a matching federal grant to help cover the cost of uninsured patients and to help the state pay for people who are on Medicaid. The amount paid per hospital varies based on size, but the fee is expected to earn $750 million statewide in 2016.

Revenue earned from the HPF, however, is put into the state budget which is subject to TABOR limits. When state revenue goes over the TABOR limit, the law requires the state to issue taxpayer refunds and reduce spending in key areas. Governor Hickenlooper has proposed pulling the HPF revenues out of the state budget so it does not contribute to the pool of money under TABOR’s limits. This means the state would have more money to use toward priority areas such as education and roads before TABOR limits hit.

Recently, two bills (HB 1420 and HB 1450) that considered shifting how HPF revenue is earned and potentially redistributed to education failed in the senate.

Isn't all spending for the state down?

According to a new U.S. Department of Education report, Colorado’s spending on prisons rose five times faster than spending on education since 1990. 

What happens if we do nothing?

If state and local funding continues to decline for K-12 education in Colorado, the Five Star District may have to make further sacrifices by considering split schedules or boundary changes to address overcrowding; minimizing instructional time due to aging buildings and facility repairs; and decreasing educational innovation and programming through curriculum funding cuts or salary freezes for staff, administration and teachers.

What about all that marijuana money?

School districts do not get a percentage of marijuana sales tax to contribute to district operational costs. Of the tax revenue collected, $40 million is set aside into a statewide grant fund, the BEST program, to be used only for building construction. All 178 school districts in Colorado must apply for funding, with awards typically going to lower funded or rural districts. 

Retail marijuana sales are subject to the normal 2.9% sales tax, an additional 10% sales tax and a 15% excise tax to fund the BEST grant. The additional sales tax revenue goes into the state general fund (see below).

UPDATE: The Colorado Board of Education recently approved $60 million in funding through the Building Excellent Schools Today (BEST) grant program. The BEST program uses a variety of sources, of which marijuana tax revenue is one of them with a cap of $40 million. The BEST grant requires schools to match funds for projects. This year, the grant will issue $60 million while districts will provide $101.5 million in matching contributions. A full list of approved BEST Grants can be found here.

Adams 12 Five Star Schools applied for a BEST grant and won funding in 2014 to replace a section of the roof at STEM Launch. The work was completed Summer 2016. The grant covered more than half of the cost, while the district funded the remaining portion. However, funding for that year's grants was prior to the inclusion of marijuana money. 

Read a Marijuana Funding Fact Sheet from the Colorado Department of Education.