Determining – and meeting – school financial needs |

Determining – and meeting – school financial needs

Total program funding is a yearly calculation districts use to determine how much money they need to run their schools. The state, specific ownership taxes such as licensing taxes and property taxes pay for it.Among other things, total program funding pays for teacher salaries, supplies and operational costs.The total program funding formula is calculated by multiplying the total number of students in the district by per-pupil funding. The state does its official student count on Oct. 1Per-pupil funding is exactly what it sounds like – a set amount of money allocated for each student in a district. Per-pupil funding isn’t a random number, it’s determined by a very particular formula:Cost of living times personnel costs times district size plus risk pupil funding plus online funding.Cost of living is the increase of cost of living above household income, not inflation. This is calculated every two years.Personnel costs are the costs of benefits, salaries and other costs to keep teachers, administrators, custodians and all other personnel employed. These costs vary by the number of students in the district. Larger districts need more employees so their personnel factor is generally larger than small districts. Size factor is determined by the number of students in the district, and it affects purchasing power. Larger districts should need less per pupil to operate than smaller districts because larger districts have a greater economy of scale. At-risk funding is determined by the number of students who receive free and reduced lunch. Districts with a higher poverty level are more affected by at-risk funding than other districts. Re-1 has 1,000 at-risk students and Re-2 has 1,045 at-risk students, according to the Colorado Department of Education.Online funding is for students who are taking online classes. Re-1 and Re-2 don’t have students taking online classes. Per-pupil spending differs from district to district and state to state, but every state has a minimum amount. For 2004-05, Colorado’s base minimum funding amount is $5,627 per student, according to the Colorado Department of Education. Base minimum funding is calculated using all components of the per-pupil spending formula. In a perfect world, the minimum amount would be enough, but in districts with higher poverty levels, increased English Language Learner students and special education programs, additional funding is necessary.Items school districts put on ballotsMill levy: A mill is one-tenth of a cent (.001 dollars) and is used to compute property tax. A common misperception among tax payers is that property tax applies to the actual value of the property, but property tax can only be applied to a portion of a property’s actual value. If the actual value of a home is $100,000 the current residential property tax assessment rate, which is 7.96 percent, allows for an assessed valuation of $7,960. The assessed valuation, or portion of actual valuation, is taxed. Since only $7,960 of the $100,000 home is taxed, the homeowner pays $7.96 per year on a one mill increase (0.001 times $7,960).Taxes collected from school district mill levy overrides can help fund teacher salaries and operational costs such as opening a new school like Coal Ridge High School. They also can repay interest and principal on bonded debts. Mill levy override: School districts ask for mill levy overrides as a means to provide additional operating funds as a supplement to the amount of allocated mills computed under the state’s school finance act.Mill levy overrides require voter approval and can’t exceed 20 percent of total program funding or $200,000, whichever is greater.Bond: School districts use bonds to finance one-time projects such as constructing new buildings. The bond itself isn’t levied as property tax, but the bonded debt is levied as property tax. Voters must approve bonds. Interest on the bond and principal payments are generally levied as a property tax and paid back within 20-25 years.State lawsThe Gallagher Amendment was enacted in 1982 and protects homeowners from large increases in property taxes as value increases by shifting the majority of the property tax burden to commercial property owners. Businesses pay 55 percent of total statewide property taxes, and homeowners pay 45 percent. When Gallagher was enacted in 1988, property tax assessment rates were locked at 29 percent for commercial property and initially set at 21 percent for homeowners. Since then, residential value has increased drastically. In order to maintain the 55/45 ratio, residential property tax assessment rates have been reduced to 7.96 percent of assessed value, while business assessed property tax remains at 29 percent. Businesses pay 3.64 times as much as homeowners for every dollar of property owned.The School Finance Act was initially passed in 1988 to establish a financial base to support public education and create equal funding between districts. Prior to that time, local funding made up the bulk of school finance. So in wealthier districts with higher assessed property value, students received more funding, and in poorer districts with lower assessed property value, students received less money. To equalize poor and wealthy districts, a standard formula was adopted to determine funding for all districts. Mill levies were also equalized in the districts, and with the state making up the difference in funding.Amendment 23 was passed in 2000 to increase K-12 education funding and ensure some kind of stability in Colorado’s school financing. This law was passed because in the ’90s, Colorado per-pupil funding was far below the national average and had not kept pace with inflation. To get Colorado on track with the rest of the nation and to recoup dollars lost through inflation, Amendment 23 was passed, stating that increases in K-12 spending must be inflation plus student growth plus 1 percent from 2001-2011.TABORThe Taxpayers Bill of Rights Amendment passed in 1992 affects the government’s ability to raise and spend revenue. It requires voters to approve all tax and debt increase. In a given year, the state can’t collect revenues that exceed inflation and population growth combined.Amounts collected in excess of allowed tax revenues must be returned to taxpayers.These limits are in direct conflict with the spending mandate of Amendment 23, especially in a recession economy.Coming out of a recession, economy revenues increase, but TABOR prohibits the state from increasing revenues to pre-recession levels so no matter how much the economy improves, the amount of revenue the state can generate is still limited to the amount of the previous year plus inflation and growth.For example, if the state’s revenue started at $20 million and Colorado hit a recession, bringing it to $17 million, even if Colorado’s economy doubled, the maximum revenues the state could collect in the next year would remain at $17 million plus inflation plus growth. Because the state funds almost 60 percent of school finance and schools are restricted by how they can affect local taxes, the state will be required to bear a continually larger burden of funding for K-12.By the Numbers Total program funding, Re-1 $29.25 million, Re-2 $21.54 millionState share, Re-1 $10.22 million, Re-2 $15.85 millionProperty tax, Re-1 $17.44 million, Re-2 $5.12 millionSpecific ownership tax, Re-1 $1.59 million, Re-2 $570,878- Colorado Department of Education.Who pays for public education?State: 53-60 percentLocal: 40 percentFederal contribution to public school funding is generally less than 7 percent.- Colorado Department of Education.For clarification or more information about school finance, visit the Colorado Department of Education at you have any questions about school finance, e-mail Ivy Vogel. We will do a question-and-answer session with Shannon Pelland, finance director for Re-1 and Christine Hamrick, director of finance for Re-2, and publish the results.If you have any questions about school finance, e-mail Ivy Vogel. We will do a question-and-answer session with Shannon Pelland, finance director for Re-1 and Christine Hamrick, director of finance for Re-2, and publish the results.

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