JBC may assist with $476,366 of MSD’s funding shortfall

MEEKER I On Jan. 28, the Colorado State Legislature’s Joint Budget Committee (JBC) refined its decision to cover mid-year shortfalls for three rural school districts in the state, including Meeker, DeBeque and Pawnee.
Under the JBC measure, Meeker would receive $476,366, possibly as soon as June. The measure was passed unanimously by the JBC, but will still have to be approved by the Legislature and the governor.
The shortfalls are the consequences of declining local revenues and changes in class enrollment that resulted in mid-year reductions in the Colorado Department of Education (CDE) funding formulas used to set district budgets. Meeker School District’s ability make up the deficit is limited, as staffing and school budgeting decisions have already been made for most of the school year.
Rural school districts “have little to no capacity to make adjustments,” said Tracie Rainey, head of the Colorado School Finance Project. Meeker already chose to make up deficits using the district year-end (reserve) fund.
During the Jan. 28 meeting, the JBC chose to use a criterion based on a per-pupil funding. Based on this method, the measure will require $940,400 from the general fund with $476,366 distributed to Meeker, $282,505 to DeBeque and $181,530 to Pawnee.
Using the per-pupil criterion is more expensive than it would have been to compensate the districts for their total program funding ($738,684). The per-pupil method was selected because the total program approach would have left DeBeque with significant cuts in per-pupil spending.
The JBC reported to the Joint Educational Committee (JEC) two weeks ago that there will be $5.5 billion of state-wide spending on K-12 educational for FY (fiscal year) 2013-14. Of the K-12 spending, 65 percent, or $3.6 billion, will come from the general fund (mostly state income taxes) and 35 percent, or $1.9 billion, would come from local property and ownership taxes.
K-12 public school funding in Colorado begins with a per-pupil base amount. Categorical factors are added on top of this base level (those programs include support for English language learners, special needs students and student transportation). Per-pupil base and categorical factor amounts change annually based on inflation and enrollment and are used by the CDE to determine a district’s annual budget.
Per-pupil funding in Colorado peaked in FY 2009-10 at $7,077 and will be $6,652 if the supplemental education bill is passed for FY 2013-14. This is an increase of $239 million in total spending over FY 2012-13.
The education fund has been growing at the same time Colorado has been reducing per-pupil funding. The fund had $1.1 billion in it after FY 2012-13 and is expected to grow again in FY 2013-14.
The JBC recently presented five options for using the education fund. These options included eliminating the negative factor and various options for gradually increasing the base per pupil.
The Legislature re-interpreted school finance law in 2008 to address state budget shortfalls. The Legislature introduced two mechanisms to accomplish budget cuts. One is categorical buyouts and the other is the negative factor.
Categorical buyouts have been used to accomplish budget cuts in locally financed districts. Meeker has paid an average of $200,000 per year from 2010-2013, and that is expected to be about the same for 2014.
In the past, the Meeker district was able to set a mill levy to recover the categorical buyout, but because of restrictions in the Taxpayer Bill Of Rights (TABOR), without a public vote, Meeker can no longer set a mill levy to recover this funding.
At the beginning of the fiscal year, the CDE calculates revenue projections to estimate the annual budget for local districts and estimates the local share, which is how much local tax revenue a district can produce. For many districts, Colorado made up the difference between required budget and local revenues; this is called the state share. Meeker is one of a handful of districts that does not have a state share, but meets its budget with local funding.
State-supported districts have experienced up to 15 percent cuts using the negative factor. Until this year, Meeker has not been affected much by the negative factor. A total of $1,213 for FY 2011-12 to FY 2012-13 was paid by Meeker for the negative factor, but this year the negative factor is $123,350. This high negative factor is the result of changes in property assessments and valuations this year.
Now that the recession is over, many districts are looking to reduce or remove the negative factor, and Meeker may benefit from this effort.
The MSD will still have a budget deficit for FY 2013-14 and will need to decrease its budget for FY 2014-15.
The JBC was very clear that this mid-year help is a one-time offer. Meeker will need to use a portion of the district reserves to meet the shortfall, leaving just under six months of funds in reserve.
Recently, taxpayers in Meeker received their annual Rio Blanco County real estate property tax notice. A typical house in Meeker pays more than $100 dollars a year to support the Meeker School District, which collects 9.2 mills. A mill is 0.1 percent (0.001) of the assessed property value in the area that supports the local government taxing district, in this case the Meeker School District.
The Meeker sanitation district got 9.5 mills for 2013, the county got 9.1 mills, the hospital got 7.3 and the recreation district got 7.5, and the town of Meeker got 8.7. All told there are 11 special taxing districts for Meeker for a total mill levy of about 57 mills, which is more than $600 for most homeowners.