DENVER | Located in the San Luis Valley, the Center school district serves nearly 600 students, most from families that don’t earn much money. The valley’s farmland doesn’t generate much in the way of property tax revenue, either.
Center struggles to pay for extras like band instruments and essentials like a secondary math teacher or a teacher trained to support the more than 40% of students who are learning English. Key staff positions sit open for years.
Colorado school districts with more property wealth often get voters to approve extra taxes to raise teacher pay, support art and music programs, or hire more counselors and nurses. But a property tax increase known as a mill levy override that would generate $235 per student in Denver would raise just $58 per student in property-poor Center.
A bill in the Colorado legislature seeks to address one of the most vexing inequalities in school finance by creating a state matching program to boost local tax efforts in districts with low assessed values and low median incomes. Supporters compare it to the popular and successful BEST program that provides matching grants for school construction in districts that couldn’t raise enough money on their own.
Aurora Public Schools is considered a “low-property wealth” district and has for decades asked voters to pass property tax increases for funding, often successfully.
“A student’s ZIP Code should not determine their educational opportunity, and right now, because of the mill levy override opportunity, funding really depends on the local property tax wealth,” said state Sen. Bob Rankin, a Carbondale Republican and member of the Joint Budget Committee who has called for reforms for years.
Colorado actually seeks to prevent this kind of inequality by setting a minimum per-pupil funding level and backfilling whatever base property taxes don’t cover.
The mill levy override or MLO system exists outside the main school finance system — that’s why they’re called overrides — providing extra dollars on top of base funding. School districts can raise as much as 25% more than their base funding — 30% more in rural districts.
More districts passing overrides
The use of overrides has grown over the last decade as Colorado lawmakers have withheld school funding to pay for other budget priorities, from $580 million in 2010 to $1.4 billion in 2021. But the override money isn’t distributed evenly.
One mill — $1 for every $1,000 of assessed value — might generate anywhere from $21 per student to more than $5,000 depending on the property wealth in a given community. Districts with a lot of commercial or industrial property or a lot of oil and gas activity have higher assessed value.
Districts that are primarily agricultural or residential — including some suburban districts that have relatively high incomes — have lower assessed values. Colorado taxes a much smaller portion of the market value of residential and agricultural properties.
In turn, school districts tend to have an easier time selling voters on small tax increases that generate a lot of money than on large tax increases that generate little money. The state’s matching fund proposal seeks to change that calculation.
If voters in low property wealth districts agree to a tax increase, the state would match a portion of the money based on a formula that takes into account assessed value and median income.
If Center voters raised taxes by 1 mill, the state would provide more than $2 for every $1 in local taxes.
In District 49 outside Colorado Springs, where the median income is nearly twice as high but the dominance of residential property keeps total assessed value low, the state would provide about 50 cents for every dollar in local taxes.
A plan to help districts with less taxable wealth
The formula was developed by a working group of school district financial officers. District 49 Chief Business Officer Brett Ridgway said it was important to create a model that accounted for how much communities could reasonably afford to contribute to their own schools. The model neither penalizes districts where voters have opted for higher taxes nor rewards ones where voters simply aren’t politically inclined to support taxes.
These 30 districts have relatively low property wealth and have already passed mill levy overrides:
Adams 12 Five Star Schools
Westminster Public Schools
Deer Trail 26J
Aurora Public Schools
Peyton 23 JT
Mesa County District 51
West End Re-2
Revere School District
Greeley-Evans Weld 6
A special committee on school finance declined to endorse the bill earlier this year in a party-line split, but two Democratic members, state Sen. Rachel Zenzinger of Arvada and committee Chair Julie McCluskie of Dillon, joined Rankin to sponsor the legislation late in the session.
“I could have cast a tie-breaking vote, but I thought the more prudent approach was to continue the conversation,” McCluskie said. “We have been talking about the mill levy problems for years. This solution comes from school leaders. That’s really important.”
Republicans have raised questions about whether state dollars should incentivize local tax increases and whether this is a sustainable solution to small districts with high costs.
“I’m not bought into the idea that creating a state match so that if an economically impoverished area taxes themselves more and we take that money out of the economy, it will help students,” said state Rep. Colin Larson, a Littleton Republican who serves on the special committee, in an interview.
And state Sen. Paul Lundeen, a Monument Republican, asked backers during the committee hearing whether this would become another Band-Aid on a broken school finance system.
“How many programs have we created?” he asked. “How many are fully funded? How many are partially funded? How many are unfunded?”
Leslie Colwell of the Colorado Children’s Campaign has pushed for mill levy reform for years. She said the bill represents a meaningful change.
“This is really one of the most glaring inequities that we have in our school system, and it’s grown over time,” she said. “In terms of targeted investments that would make a real difference for students, this would be my top priority.”
Funding remains in doubt
Rankin said the status quo is immoral and should be unconstitutional in a state that promises a “thorough and uniform” education to its students.
Emotional supporters congratulated each other in the hallway after the Senate Education Committee voted 5-2 Thursday to advance the proposal, but it still needs to be funded. If all 72 eligible school district took full advantage, it would cost about $165 million a year. Funding 30 eligible districts that have already passed extra taxes would cost $65 million, according to an analysis developed by the school district working group.
But despite the co-sponsors all sitting on the Joint Budget Committee, funding for the plan was not included in the budget. The appropriations committee agree to allocate $20 million for a pilot program. McCluskie said it would be worthwhile to write the program into law even if it doesn’t get funded until later.
Ridgway said districts would gain more from the mill levy match than they would from lawmakers fully funding K-12 education.
“The districts that are affected by this are affected by it more than they are by the negative factor,” he said, referring to the state’s annual budget withholding. “That’s the mathematically true answer. They could use this to go to their community and say, we’ll get a good match from the state if you help us out.”
Center Superintendent Carrie Zimmerman said if the bill passes, she would urge her school board to ask voters for a tax increase to take advantage of the match.
She would use extra money to hire and keep more highly qualified teachers, including by supporting a local effort to build teacher housing. She’s used a combination of long-term substitutes, retired teachers, and online programs to fill her staffing gaps, but those aren’t permanent solutions or, in the case of the online programs, even effective, she said.
“The funding would allow us to do things like offer housing or pay travel stipends or provide some of those perks that would attract people to wanting to work in the profession,” she said.
Zimmerman supports the bill and thinks a mill levy override would stand a decent chance, but she still wishes the state would increase funding without requiring cash-strapped households to dig deeper.
“The community was very supportive of our bond, and that was because we received BEST funds and they saw the value of those dollars,” she said. “It’s just frustrating that the burden is always placed on our community, which is already working so hard.”
Bureau Chief Erica Meltzer covers education policy and politics and oversees Chalkbeat Colorado’s education coverage. Contact Erica at [email protected]