Signing the Bill
On May 25, Governor Jared Polis signed Senate Bill 22-202 that will provide state-matching funds to school districts that are considered “property-poor” when it comes to local tax efforts and mill levy overrides based on assessed property values.
The short version of this means that District 49 will get an extra $1.3 million from the state of Colorado for the 2023-24 budget without an increase in local taxes.
D49 Chief Business Officer Brett Ridgway played a major role in this legislative process.
A late addition to the 2022 regular session, The bi-partisan bill was introduced by Senators Rachel Zenzinger D-Arvada, Bob Rankin R-Carbondale, and Representative Julie McCluskie D-Dillon. Although each had used their allotted 10 bills for the session, leadership allowed them to add this bill due to its importance. The bill passed both the house and senate in May.
At the May bill signing, Zenzinger said, “We have some essentially genius minds in this room that helped bring this bill forward. I want to give a shout out to Brett Ridgway. This is a very complicated piece of legislation because it deals with taxes, mill levy overrides, and match programs. What you need to know, at the end of the day it is going to cut down on the inequities we have here and that is a good thing for students.”
Just like most drawn-out legislation efforts, progress is fueled by determination. Taking a small, yet significant, step forward in statewide school finance reform is the result of a journey that began in the early days of Ridgway’s tenure at School District 49.
Identifying The Problem
When Ridgway was hired in 2009, he saw significant gaps among the comparative results of mill levy override funding for all school districts.
“I was still pretty new to education finance,” he said. “I called the Colorado Department of Education and asked, ‘why is it this way,’ and I got a response that was somewhat flippant, saying ‘your community needs to step up.’”
Ridgway didn’t think that was the case and decided to look at the objective data.
Local property values are a major component in the equation for how the mill levy override outcomes are figured. Higher property values mean more money per mill. Lower property values mean less money per mill. The examples below depict the wide disparity between school districts.
Aspen
Assessed Property Value $3.2 Billion
APV Per Student $1.9 Million
1 Mill Generates $3.2 Million
$ Per Mill Per Student $1,940
D11
Assessed Property Value* $3.5 Billion
APV Per Student $120,000
1 Mill Generates $3.5 Million
$ Per Mill Per Student $120
*One reason D11’s property values are greater than D49 is the higher number of business and commercial properties in its area, which are valued higher than residential properties.
D49
Assessed Property Value $1.2 Billion
APV Per Student $62,000
1 Mill Generates $1.2 Million
$ Per Mill Per Student $62
Property-poor districts could decrease the disparity by raising taxes. In the case outlined above, taxes would have to be twice as high in D49 than D11 to bring in the same amount of money.
“It’s amazing how the math reveals this,” Ridgway said. “What this bill does, it says, ‘we’re going to help you with this disparity and bring that gap down.’”
The pursuit of an equalization solution that did not require a tax increase, in a literal sense, began on I-25. For more than six years Ridgway traveled the north south corridor, working his way around the capitol to find supporters to help move a legislative compromise forward.
Between 2015 and the signing of the bill, he had more than 65 meetings with more than 25 individual senators and representatives. He presented at, sat on panels, and attended more than a dozen meetings of the Legislative Interim Committee on School Finance. He presented to the House Committee for Transportation and Local Government.
“Yes they represent specific areas of the state in their own legislative districts, but they have a responsibility and accountability to every district,” Ridgway said of the Colorado legislators. “I was there to paint the picture and show them these disparities, show them the graphs of the information. To show them how broken the system has become. And then to challenge them with the question, ‘do you think that is OK?’”
Ridgway recalls senators and representatives were unaware. “Most of them were surprised, very few of them even had an idea there was a disparity. Those that did know, they didn’t know how big that disparity was,” Ridgway said.
The budget wizardry Ridgway implemented in his role at District 49 could now assist districts around the state of Colorado. “Here is a solution I have for it. Are you willing to consider this?,” he told the legislators.
Over the years, legislators began to see the disparity and the solution. Discussions grew.
“We have to build this, to get a group of legislators to understand the problem and are willing to carry it. Meaning, they are the legislative faces of it,” Ridgway said.
A Statewide Opportunity
To meet the state match eligibility, school districts must have a local MLO, and fit into a formula that takes into account median household income and assessed property value per student. The formula puts emphasis on low assessed value.
“That is what it is all about, moderating that investment from the community and making sure they don’t have to be disparate as they were before this bill,” Ridgway said.
Twenty-five school districts are currently eligible for the state MLO match. Forty-seven other school districts could meet the requirements, if they passed a local MLO.
The original bill called for full funding which would have been $65 million. To reach a compromise, legislators agreed to whittle down the ask to $10 million, creating a pilot program divided among those 25 schools.
Two perfect examples of districts that would benefit from the state-wide opportunity serve students in portions of rural El Paso and Pueblo Counties. Edison, south of the town of Truckton, and Rocky Ford, east of Pueblo, do not have MLOs. If passed by its community, Rocky Ford would receive $3 from the state for every $1 generated locally with an MLO. Edison would see $6.45 for every local dollar.
“When other districts see how this plays out, that could give them more opportunities and encouragement to go do their own MLO,” Ridgway said. “It could be very impactful for them.”
Ridgway and legislators will watch closely how the 47 districts without an MLO respond. Any district that passes an MLO, will be eligible for a portion of the $10 million, diluting those funds and decreasing D49’s share.
Ridgway hopes that if that does happen, the state will come back next year and add funds to the program. He believes when those 47 school districts see the benefit of the MLO match opportunity, communities like Edison and Rocky Ford may be willing to consider even a modest investment in their schools.
A Future in Flux
As the pool of match-eligible districts is poised to expand, increased funding is not guaranteed. The state could increase the funding or leave it as is, or possibly lower it in the years to come. Another possibility is, if the state has the opportunity to put more money toward education, it could increase funding to the match program, or simply add it to the general education budget.
Ridgway said it would be better for D49 and other eligible districts to put additional funding toward the state-matching program instead of the general education budget.
“It has a greater impact to us, which means it improves the equity between us and D20 and D11. They don’t need it according to the formula,” Ridgway said.
Hypothetically, if the state could add $10 million to the general education budget, that money would be spread out to all 178 school districts. The current 25 property-poor districts would get a larger share of those funds if that same $10 million was put into the matching program.
“If it was $10 million, D49’s share would be $300,000, if it were part of the state education budget,” Ridgway said. “Instead, if they put it toward mill levy matching, we could get $1.3 million. The reason we get a million dollars more is because, some of our neighbors like D20 or the Cherry Creeks of the world, don’t get anything when it goes to mill levy matching because their household income is higher and their assessed value is higher.”
Looking toward the future, Ridgway said, “The priority for D49, and the other eligible districts, would be to protect the program and build it, grow it toward full funding.”
If the program was fully funded, based on current figures, D49 would receive $9 million annually.
“That would be a game changer for us,” Ridgway said. “It would be a big piece of revenue equalization that would help us with the compensation problem we’ve always had.”
If the community would have passed the D49 MLO increase in November, the fully-funded state match would be around $15 million.
Maximizing Initial Momentum
For now, D49 has to decide what to do with the $1.3 million it will receive. The board of education will get the final say when it passes the budget for the 2023-24 school year. D49 operated schools and charter schools will share the funds. Ridgway believes the district should follow suit with current MLO priorities.
“We already have a process with the breakout between capital and operation priorities,” he said. “I would support that this money go into the operational pot. We already have the capital priorities well funded. We have operational priorities, which include teacher compensation, school programs, safety and security, and technology. It should follow those priorities.”
Ridgway has a specific idea for the funding. “My hope is that it goes to compensation. We don’t pay as much because of the revenue disparity. When this program helps our revenue disparity, we should follow through and improve compensation.”
Ridgway will soon step into a leadership role at Lewis-Palmer School District 38, which is not eligible for the program. That doesn’t mean his work on this topic is over. “I’m going to stay engaged in this topic,” he said. “This is something I’ve been too deep into for too long to walk away from it.”
Looking back at the years of work, the number crunching, the political meetings, and the miles traveled back and forth to Denver, Ridgway feels validated.
“I wrote the financial projection model that the bill was based on,” Ridgway said. “I brought an issue to the surface. It was a problem worth talking about. It was a problem worth fixing. I explained the issue. I provided a solution. And all of this has come to pass. The completion of the process validates those steps. That validation of that patch traveled, and that work contributed, is satisfying.”
More information on D49’s current MLO and the future of the district is on the website at www.d49.org/Page/4633.
