Modernizing a 30-year-old School Funding Formula
Colorado’s School Finance Formula is Decades Older than the Students it Affects.
HB24-1448 is the Latest Attempt to Rewrite It
The formula Colorado uses to calculate how much each of its 178 school districts can spend every year is from 1994 — the same year the movie Dumb and Dumber came to theaters. Think about what has changed in those three decades since Lloyd and Harry came to Aspen. The students, the teachers and the technology they rely on are completely different today than they were in 1994. Yet, Colorado still uses the same, outdated formula to determine what schools need. HB24-1448 is the latest attempt to update the formula, while adding another $500 million to schools when fully implemented.
A major reason Colorado has failed to update the school finance formula since the year Friends debuted on NBC is because the most well-funded school districts now can’t afford to receive less later. “Sure, we’ll agree to update the formula,” said the school districts for years, “as long as we don’t lose funding compared to the current formula.”
Since 1994, Colorado has tried rewriting the formula, but hasn’t been able to find additional funding for those districts that would see smaller allocations. So, we stick with a formula that’s older than Windows 95 (which, after a quick fact check, actually came out a year after the 1994 formula). Or will we?
Under HB24-1448, some school districts in Colorado would get bigger increases than others, but no district would see a drop in funding due to these changes. HB24-1448 also phases in changes over six years, thus preventing the state from taking on unrealistic new funding responsibilities all at once.
Below we break down some of the many operations, adjustments, and considerations in the school finance formula — and give a little overview for those of you who, like ourselves, have never dived into the inner workings of the current formula.
Here’s what we learned:
How does the 1994 School Finance Formula work?
The current formula calculates a district’s per pupil funding first, starting with a constitutionally required statewide minimum: the base per pupil funding set by Amendment 23. The state then adjusts district per pupil funding accounting for various factors like the district’s cost-of-living, personnel, and enrollment size. That unique amount is multiplied by the number of students in the district. At the end, the formula takes into account at-risk students (students who qualify for the Federal Free Lunch Program) and English Language Learner (ELL) students.
Under the 1994 school finance formula, districts with high cost of living and a low pupil count receive more money per student than districts with low cost of living and more at-risk students. The resulting inequity is one reason advocates and lawmakers have toyed with changing the formula.
What’s the difference between the HB24-1448 formula and the old one?
Currently, different districts get more or less money per student. The proposed formula starts by allocating equal funding for every student across the state; per pupil funding in all districts is the constitutionally required (Amendment 23) minimum. Then, they receive additional funds according to their specific needs, starting with the number of at-risk, ELL, and special education students they serve. HB24-1448 would move the cost of living adjustment toward the end of the formula.
The proposed 2024 formula adds 25 percent of the statewide base per pupil funding to a district’s total funding for each at-risk, ELL, or special education student. Adjustments for at-risk students are made at the end of the 1994 formula. They are also much smaller, at eight percent of the statewide base per pupil funding per ELL student and 12 percent for each at-risk student. Adjustments for special education students are new in HB24-1448.
This needs-based re-working of the formula could have big implications for districts across the state. In 2025, at 18 percent of the full implementation of the new formula, Denver Public Schools would receive $165 more per student. Douglas County schools, a wealthy, suburban district, would see $85 more per student. Adams 14 would be funded at $463 more per student under the new proposal.
HB24-1448 still doesn’t solve the problem of new revenue.
Opponents of the bill argue there are better ways to fix school funding. After 15 years failing to fund schools to Amendment 23 levels (via the Budget Stabilization Factor), district administrators and K-12 advocates are leery of a new formula that promises greater funding without a new source of revenue. Potential property tax caps/cuts that would impact local funding for schools add extra uncertainty.
Colorado’s constitution (TABOR Amendment) also restricts year-over-year revenue growth and does not allow state funding to keep up with inflation, caseload growth, and reserve requirements. As a result, Colorado lags behind other states in K-12 funding. The proposed formula in HB24-1448 makes no attempt to address these core problems.
Regardless of these long-term challenges wrought by TABOR, for the first time in 30 years, HB24-1448 would make some sensible changes to the way Colorado allocates resources to schools. The Dumb and Dumber-era formula means today, too many students and districts lack the resources they need to succeed. A new formula, centered around today’s students, is a smart first step.
