6 Takeaways from the 2024-2025 Long Bill
1. No BS: Colorado is Fully Funding K-12 Education for the First Time in 15 Years
For the past 15 years, Colorado has funded our schools below the levels that voters mandated in 2000 when passing Amendment 23. That annual shortfall has been known as the Budget Stabilization (BS) Factor. At its peak, it has shortchanged schools annually by more than one billion dollars. In total, the BS Factor has held back over $10 billion from K-12.
The FY 2024-25 Budget finally takes the BS Factor to zero. This is the same as saying Colorado is fully funding schools at Amendment 23 levels. Rising property values and the accompanying rising local share funding for schools has been a big reason for this. In 2018, local property taxes were $2.11 billion with local revenue covering 36% of school program funding. In 2024, local property taxes contributed $3.86 billion allowing local revenue to cover 45% of school funding statewide.
But just because Colorado can fully fund K-12 education this year, doesn’t mean it will in the future. Property tax cuts or caps would threaten local funding for schools, which could bring the shortfall — BS Factor — right back.
2. Accounting for New Immigrant Children in Schools
Between the October 2023 public school pupil count and February 2024, Colorado experienced an influx of new students from other countries. Because the school finance formula (used to allocate state funding to each district) uses the pupil count from October, the new students aren’t accounted for in the funding formula. The budget takes $24 million from the State Education Fund to serve these new students.
3. Higher Education Funding Goes Higher
Colleges and universities will be permitted to increase in-state tuition by 3% and nonresident tuition by 4%. The budget increases General Fund spending on higher education by about 10%.
4. Help for Healthcare Workers
There’s also more funding directed to increasing pay for home health care workers paid by Medicaid. The Department of Health Care Policy and Financing (think Medicaid) was responsible for close to half of the General Fund budget growth ($512 million). The Human Services budget went up by $204 million. The budget also appropriates $5 million in General Fund dollars to Denver Health to help with uncompensated healthcare.
5. Getting Creative to Cover General Fund Obligations
It takes about one billion extra dollars each year in the state budget just to keep up with inflation, caseload growth, reserve requirements, and capital projects. After the March Revenue Forecast, we learned there was a $170 million budget shortfall from keeping up. Basically, it meant there was no money for new programs and budget writers needed to find $170 million to prevent cuts, otherwise they’d have to tap into their General Fund Reserve.
Instead, budget writers for FY 2024-25 relied on a few creative moves like transferring some Severance Taxes to the General Fund and paying more of the state’s portion for schools from the State Education Fund. This budget keeps the General Fund contribution to schools the same as last year ($4.2 billion) and takes an extra $332 million from the State Education Fund to add additional school funding. With these maneuvers, the General Fund Reserve stays at 15%.
6. Federal Pandemic Relief Ends
The budget committee in this year’s Long Bill was attuned to the end of federal pandemic relief funds. They made adjustments to spend those funds by the end of 2024 federal deadlines.
What’s Missing?
One thing conspicuously absent from the Long Bill is money set aside for property tax relief. If property taxpayers are to get a break next year, local governments who lose that revenue will likely need state money to avoid cuts. That debate is set to begin with only a few weeks left in the session.
