pebc catalyst gallagher & tabor

Colorado School Finance Project

PEBC Catalyst

2/13/2019

www.cosfp.org 303-860-9136 1

PEBC CatalystPEBC CatalystPEBC CatalystPEBC Catalyst

Gallagher & Gallagher & Gallagher & Gallagher & TABORTABORTABORTABOR

02/13/2019

Tracie Rainey, Executive DirectorColorado School Finance Project

Colorado School

Finance Project (CSFP)

Who are we?

What do we do?

• Non-profit, non-partisan

• Supported by school district contributions

• School finance analysis for local and state policy makers since 1995

Mission: To compile, collect and distribute

research-based, non-partisan information and

data on topics related to school finance for state

and local policymakers.

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PEBC Catalyst

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Gallagher & TABOR

Timeline

• 1982 – Gallagher Amendment passed (Referred to the ballot by the legislature)

• 1992 – TABOR passed

oBetween 1966 - 1990: 6 attempts to pass a tax limitation initiative

• 2005 – Ref C passed (Referred to the ballot by the legislature)

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Gallagher:Intent

• Late 1969 – much of 1970’s market values of properties rising at rate of 1% per month.

• Control for residential and commercial fluctuations in property tax support and create uniform valuations statewide.

• Created formula that could fluctuate mill levies up and down.

• ~45% Residential / Nonresidential ~55%

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Gallagher:Impact on K-12

• Gallagher worked well for 10 years -Floating up and down when valuation changed

• After TABOR: Pressure on state resources for K-12 and reduced funding for other local governments

oReduces local share as residential values grew faster than non-residential

oWhich increases state share

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TABOR:1 of 2

• Operations of state and local governmentso Removed legislative taxing authorityo Created Revenue and Spending caps

for state and local governments

• Election processoAll revenue increases to be voted onoDefined when and what year elections

can be held.oDefined specific language that must be

used when asking voters to raise revenue.

o TABOR prevents RAR from rising as required under Gallagher

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TABOR:2 of 2

• Situations not contemplated:

oAdjustments in revenue and spending limits to state and local budgets

oA change in revenue tax collections or change in economy

o Impact of Gallagher to state and local government budgets in conjunction with TABOR

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What has complicated the funding

issues forColorado?

• Gallagher – 1982

oStabilized local property tax revenue

oBalance between residential and non residential

• TABOR – 1992

oLimited revenue & spending

oUndid balance of Gallagher

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TABOR:Effect

• Created a revenue and a spending cap – puts pressure on state resources by reducing general fund dollars

• Changed when elections could be held – out of sync with school district budget cycle –creates additional fiscal pressures

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-$2,147

-$2,793

-$2,222

-$3,000

-$2,500

-$2,000

-$1,500

-$1,000

-$500

$0

Do

llars

Pe

r P

up

il B

elo

w U

.S.

Ave

rag

e

Trends in Per Pupil Spending - Comparing Colorado to U.S. AverageFY 1991-92 to FY 2015-16

U.S. Census Ed Week Quality Counts National Center Education Statistics

U.S. Average per Pupil Spending (baseline)

Audited data from U.S. Census, Quality Counts, NCES

Chart: Colorado School Finance Project

December 2018

* Budget Stabilization Factor (mechanism to reduce

PK-12 funding) incorporated in School Finance Act

Comparing a variety of sources, the funding gap

between Colorado and the U.S. average has

continued to grow over the past 20+ years.

Colorado spends between

$2,100 to $2,800 less

per pupil than the

U.S. Average.

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Referendum C made changes

– some permanent,

some temporary

• State TABOR Limit = (Previous Fiscal Year Spending) ×(Inflation + Population Growth) + (Voter-Approved Revenue Changes)

• Referred to as the “Five-Year Timeout Period"

• After the Timeout, Ref C allowed the state to retain and spend all excess revenue up to a “Cap”o Cap = Highest total state revenue for a

fiscal year during the timeout period, adjusted by inflation + population growth for each subsequent year

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Ref C:Effect

• Time-out granted between FY 2005-06 and FY 2009-10

oEliminated ratchet-down effect on revenue cap

• Established a new starting point for revenue

• Reduced refunds and state able to retain revenue for rainy day fund

• Recession would have been worse without passage of Ref C

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($381,000,000)

($1,004,000,000)

($595,000,000)

($1,200,000,000)

($1,000,000,000)

($800,000,000)

($600,000,000)

($400,000,000)

($200,000,000)

$0

Budget Stabilization Factor

The Budget Stabilization Factor is a mechanism added to the School Finance Act by the Colorado legislature to help

balance the State’s budget during the Great Recession. The Factor proportionately reduces total program funding

and state aid provided to Colorado’s 178 school districts - ongoing.

Data: CO Legislative Council

Chart: Colorado School Finance Project(p) = proposed

January 2019

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Other impacts to K-12

• Loss of $3 billion to K-12 in local property tax due to interaction of Gallagher and TABOR.

• Puts more pressure on state general fund

• Enrollment grows

• Student need grows

• Academic expectations change

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TotalAssessed

Value FY 2017-18

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20

64

84

5

Assessed Value - FY 2017-18

$6B - $16.6B

(315,165 students)

$1B - $5.9B

(330,060 students)

$103.6M - $999M

(184,220 students)

$10M - $103.5M

(31,705 students)

$5M - $9.9K

(861 students)

Data: CDE


178 School Districts

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Assess ValuePer Pupil

FY2017-18

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13

98

48

14

Assessed Value Per Pupil - FY 2017-18

$1.0M - $3.1M

(3,220 students)

$500,000 - $999,999

(10,127 students)

$100,000 - $499,999

(428,398 students)

$50,000 - $99,999

(373,675 students)

$19,000 - $49,999

(49,591 students)

Data: CDE


178 School Districts

2019: Discussions in the legislature

• TABOR refunds

• Gallagher

• Uniform Mill

• Statewide de-brucing

• Pay back debt owed to K-12

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Questions: Now & Later

• Tracie Rainey

[email protected]

303-860-9136

• Stay connected:

www.cosfp.org

@COSFP

Colorado School Finance Project -Facebook

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pebc catalyst gallagher & tabor

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