Mr.
Bruce Caughey, Deputy Executive Director of CASE,
submitted the following email to the State Board.
I am unable to testify in person
during the public comment section of the special June 12
State Board of Education meeting due to a prior
commitment, but wanted to share in writing some
perspective on the Mill Levy Stabilization from the
Colorado Association of School Executives.
We think that the courts should
have the final say in whether or not the mill levy
stabilization is constitutional. Therefore, we encourage
the State Board to support an appeal to the Colorado
Supreme Court. The district court opinion, essentially
punted the final decision to the Supreme Court; we agree
that this is the proper locus of decision making for
this critical issue.
CASE strongly supported the 2007
effort to stabilize mill levies (in the de-Bruced
districts) by preventing them from declining
automatically as assessed valuations increased over
time. TABOR requirements siphon off local funding for
schools and push an ever increasing burden onto the
state to meet Amendment 23 requirements—that
unsustainable arrangement removes reasonable arguments
for preserving local control of our schools.
Judge Habas specifically says in
her opinion that the “additional property tax revenue
collected as a result of SB 199 undoubtedly provides
valuable assistance throughout the State of Colorado for
important programs, especially in education.” She adds,
“…this Court is not convinced that its conclusion today
will have no significant and negative impact on those
citizens who benefit from educational programs in the
state.”
In fact, the stabilization adds
$117.8 million to state coffers in 2008. This money
provides for an investment in Colorado’s public
education system, including significant new resources to
the Colorado Department of Education, which translates
to greater support for the field.
Importantly, the stabilization has
pushed critical operational and capital funding to
better meet early childhood needs by expanding preschool
and full-day kindergarten slots. The School Finance Act
adds to the base funding for pupils and provides
additional funds for special education students, gifted
and talented students, floor-funded districts and
declining enrollment districts. In addition, the
stabilization provided funding room for other bills
including the Principal Leadership Academy, Regional
Service Areas, School Safety Resource Center as well as
the Teacher Quality and Counselor Corps initiatives.
At CASE we think that substantial
legislative progress was made this session, and we
encourage your support of the appeal in order to get the
final say on the constitutionality of the Mill Levy
Stabilization as laid out in SB 07-199.
Ken DeLay, Executive Director of
CASB, provided the following testimony in reference to
the Mill Levy District Court Decision: I recently
finished an article for CASB’s Prism magazine in which I
reviewed the history of school finance in Colorado and
the development of our Constitutional tax code,
Gallagher, TABOR, and Amendment 23. It is more an
unhappy history than a happy one, and one too lengthy
and torturous to review at length here this morning.
However, in light of the decision this board is
considering, there are a couple of conclusions I reached
that might be useful to this board in its deliberations.
We might start with 1992, the year
TABOR was passed by the voters of this state. In 1992,
as a result of conscious and deliberate decisions made
by the Colorado legislature four years previously in
1988, two goals were attained in Colorado school
finance.
First, the 1988 legislature had
decided to balance evenly the contributions from local
taxes and state revenues to the school finance needs in
the state. By 1992 that legislative goal had been
attained. Roughly 50 percent of school finance was paid
by state revenues, and 50 percent was paid by local
revenues. This had resulted from a conscious decision
by the state to increase its contribution to school
finance and to take some of the burden for financing
education off of the shoulders of local taxpayers.
Secondly, and again as a result of
a conscious and deliberate decision by the state
legislature, the mill levies in every school district in
the state had been equalized. That is, with the
exception of a couple of the resort school districts,
the mill levy and the assessment rate on property was
the same in every school district in the state. Every
school district had a mill levy of approximately 40
mills in 1992. Of course, in the wealthier school
districts with high property values the state
contributed very little to the local school district,
and in the school districts with low assessed property
values the state contributed much more.
If we fast forward 15 years to the
fall of 2007, we find a very different picture. The
mill levy which the legislature had stabilized across
the state varied in 2007 from a high of 40 mills in some
of our least wealthy school districts to a low of
something under 5 mills in school districts with high
property values. Even discounting the resort districts,
the differential in mill levies paid in school districts
across the state was something on the order of 25 mills.
Who decided this? Who decided that
mill levies should vary in inverse relation to property
wealth across the state? No elected official made that
decision. No member of the legislature and no member of
the State Board. The change in mill levies assessed in
school districts in the state is entirely the
consequence of the operation of our Constitutional tax
code, specifically TABOR and Gallagher. In short, as a
result of TABOR and Gallagher, the legislature, the
elected officials of this state, lost control of policy
to set mill levies for local taxpayers.
Similarly, the 50/50 mix in
contribution to school finance between local and state
revenues has changed dramatically. The state’s share of
school finance has risen over the last 15 years to
nearly 70 percent of the total school finance bill.
Conversely, the local share has fallen dramatically to
slightly over 30 percent. Again, no elected official
made this decision. The legislature’s conscious and
deliberate policy of equalizing contributions to school
finance between local and state contributions was undone
by the operation of TABOR and Gallagher. Again, your
Constitutional tax code at work.
Moreover, the consequences of this
shift in funding for school finance has dramatically
impacted other parts of the state’s budget. The
additional 20 percent the state now contributes every
year to school finance amounts to around $800 million
per year, nearly one billion dollars. This is a billion
dollars which could otherwise be spent on other state
needs, such as transportation, higher education or
health care.
The Mill Levy Stabilization Act
which is the subject of the litigation now in the courts
was an effort by the legislature to at least stop the
bleeding. It actually lowered the mill levy in a number
of the least wealthy school districts in the state, from
40 mills to 27 mills, and otherwise brought school
finance into line with the provisions of TABOR. That
is, if local voters voted to de-Bruce revenues, the mill
levies did not need to decline further. They may not,
of course, rise under the Mill Levy Stabilization Act
regardless of the local vote.
Arguably, this is too little too
late. It certainly does not correct the inequities that
have developed across the state over the last 15 years,
and it does not restore the balance between local and
state funding of school finance. It does, however,
stabilize the local tax base.
In closing, let me quote from the
opinion by Judge Habas. Judge Habas, found, and I
quote:
“The court specifically notes that
Plaintiff characterizes Treasurer Kennedy’s view
relating to SB-199 as a ‘revisionist view’. The court
disagrees with this characterization insofar as it
infers a nefarious or dishonest motive. To the
contrary, the court concludes that there is no element
of bad faith or intent to mislead in the positions taken
by the state and CDE. Instead, the disagreements in
this case reflect instead differing views of a very
difficult and complicated analysis that continues in
many areas of government post-TABOR.”
In short, the court found that the
Mill Levy Stabilization Act was a good faith attempt by
the legislature in a very complicated legal environment
to address some of the state’s fiscal problems resulting
from its Constitutional tax code. Ultimately, issues of
this sort and this consequence must be decided by
Colorado’s Supreme Court. This State Board would be
remiss not to be at the table when the Court decides
these issues. Indeed, it is likely that if the State
Board abdicates its obligations to represent the broader
interest of taxpayers and school districts in this
state, there will be political consequences for this
board and this Department with the legislature in
upcoming years.
It is my hope and my recommendation
that this board remain a presence in this case until it
is concluded. If the Court ultimately agrees with the
legislature and the governor, this board is then
postured to participate in discussions about how to
reform our tax code and school finance and to assume a
leadership position with the state’s school districts in
those discussions. If the Court ultimately affirms the
trial court decision, this board will be at the table to
help fashion a remedy that addresses the interests and
the needs and the complexities of school finance and
school districts. One’s public duty is not always the
easy political path.
Dr. Jane Urschel, Deputy Executive
Director of CASB provided the following testimony in
reference to the Mill Levy District Court Decision:
