Yesterday, the Colorado Supreme Court ruled that the state legislature may allow school districts to recover millions of dollars in lost revenue due to erroneous guidance regarding Colorado’s property tax system.
This ruling is in direct response to HB21-1164, a bill sponsored by Majority Leader Steve Fenberg, Education Committee Chair Rachel Zenzinger, House Speaker Alec Garnett, and House Majority Leader Daneya Esgar, that seeks to rectify incorrect guidance from CDE and bring districts’ mill levy rates in line with what their voters have approved in order to fund their local schools. The bill passed its final hurdle in the Senate this morning on a bipartisan vote of 23-12 after the Supreme Court issued the favorable ruling.
“Today’s groundbreaking announcement from the Supreme Court represents a monumental step toward repairing our state’s broken education funding system,” said Majority Leader Daneya Esgar, D-Pueblo. “Fixing the inequities in our education system has been a top priority of mine for years. The decision handed down today will help us start to make up for years of deeply inequitable funding processes that have hamstrung certain districts like mine in Pueblo and held our schools back. It’s long past time to make fair and robust investments in our children and the future of Colorado.”
“I’m thrilled to see that the Supreme Court has affirmed the legislature’s fix to our unequal, unfair school funding structure,” said Majority Leader Steve Fenberg, D-Boulder. “Today’s decision will have profound impacts on our education system, finally giving Colorado the opportunity to build an equitable revenue system that can provide adequate funding for all students — no matter where they live.”
In Colorado, K-12 education funding consists of a mixture of local and state dollars and is constitutionally directed to be “thorough and uniform.” In 1988, the legislature set a uniform school district mill levy – a property tax applied based on the assessed value of the property – so that theoretically, each district’s taxpayers would contribute the same proportion of local property taxes to school funding.
While TABOR imposes a cap on school district tax revenue, between 1994 and 2002, voters in 174 of 178 school districts in Colorado chose to permanently waive TABOR’s revenue limitations (“De-Bruce”) in order to fill in the gaps caused by its arbitrary restrictions on public school funding. However, contrary to this voter approval, the Colorado Department of Education (CDE) issued guidance directing school districts to continue to reduce their tax rates (total program mill levy) to remain under TABOR’s revenue limits – despite the fact that voters had indicated clear intent for districts to no longer be subject to those limits.
Due to this error, some property owners pay tax rates that are 16 times higher than those of taxpayers in neighboring school districts on properties of the same value, which forces the state to send disproportionately high state funding to our wealthiest districts, subtracting from what would otherwise be distributed to all districts.
“Colorado’s students, educators and parents won today,” said Speaker Alec Garnett, D-Denver. “With today’s Supreme Court decision, we’ll be able to make major progress towards correcting the inequities that pervade our school funding system and providing our kids and our schools with the fair and sufficient funding they need to thrive. I’m glad the Supreme Court reaffirmed the will of the voters today.”
HB21-1164 directs CDE to implement a correction plan for the erroneous reductions in total program mill levies by incrementally phasing out mill levy credits starting in FY 2021-22. This timeline was chosen intentionally to ensure no district is forced to phase out credits faster than 1 mill per year.
Following the Supreme Court’s decision, the Colorado state Senate took up HB21-1164 on Third Reading and final passage – clearing the bill over its final hurdle before heading to the Governor’s desk for signature.
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