Proposed changes to state school funding model could lose Aspen School District millions
State task force recommendations would change school district's total program funding limit
The Aspen School District could lose $5.4 million per year under a state task force’s recommended overhaul of the state’s public school funding model.
A legislature-appointed Public School Finance Task Force released a 60-page report in early February, making recommendations that would change the way the state funds public schools and taking into account student need-based funding and district profile adjustments. The report came after the task force was charged with updating the current school finance formula to be more equitable.
The initial recommendation is far from reaching any formal passage through the legislature, but it could make a significant cut into the school district’s annual budget if it is adopted.
“It’s significant enough that we would have a really hard time figuring out how to operate without $5.4 million,” Aspen School District Assistant Superintendent of Business Mary Rodino said.
The current formula, which was last updated in 1994, is based on the amount of students and the state’s set cost of per-pupil funding. But the new model would add several need-based allocations, adding extra weight to a district’s amount of English language learners, special education students, and at-risk students. It would also add district adjustments based on cost of living, size, and remoteness.
The formula would give 93% of districts in the state a boost of funding. Aspen is one of only 13 districts that would lose money — and it stands to lose the most of all of them.
The proposed funding model prioritizes higher-needs students, lower property wealth districts, and small rural districts. Aspen could collect an additional $1.3 million for remoteness, $936,000 for special education students, $259,000 for English-language learners, and $43,000 for at-risk students, according to an analysis of the task force’s final recommendations, which The Aspen Times reviewed. But according to the task force’s findings, Aspen would lose the bulk of its funding (about $6.8 million) due to the cost-of-living factor, where it ranks first out of 189 districts in the state.
Roaring Fork School District ranks second in cost of living, but it will get about a 7% funding increase. Although Roaring Fork will lose about $12 million due to size and cost of living, it will get a $5 million increase, largely due to its percentage of special-education students, English-language learners, and at-risk students. Summit School District ranks third in cost of living, Steamboat Springs School District ranks fourth, and Eagle County School District ranks fifth.
Basing funding on Aspen’s cost of living could impact the district’s ability to build and acquire affordable housing for its staff, many of whom rely on the district’s affordable housing options to live in Aspen, Rodino said.
A majority of the 13 districts set to lose funding would also lose the lion’s share of it based on the district’s cost of living. While some districts would lose much larger dollar amounts — Douglas County School District would lose $26 million and Academy District 20 would lose $11 million per year — Aspen would lose the largest percentage by far. Of the districts on pace to lose funding, 12 of them would lose between less than 1% and 9%. Aspen stands to lose 24%.
Local funding
In 2023, the Aspen School District switched to 100% local funding, meaning it no longer receives any money from the state. School districts in Colorado switch to 100% local funding when local sources of school funding — including higher property taxes and funding partners like the Aspen Education Foundation, in Aspen’s case — exceed the state’s allocation for the district.
But the state still determines the maximum amount of funding districts can receive by setting total program costs for districts. It’s why the district could not increase its mill levy by 58% even though assessed values increased by 58% in 2023.
The district’s total program costs make up a majority of the total budget, Rodino said.
Aspen is one of only about 15 other districts in the state that are fully locally-funded. Other locally-funded districts, most of which depend on the oil and gas industry, will see an increase in funding under the new model.
If the state adopts the task force’s recommendations, the district would likely need to lean on its funding partners and look into cutting expenses in the budget.
“I don’t know that our partners in education funding would have the capacity to help us in that respect. That would be my first hope, but I would never want to put that all on those organizations specifically,” Rodino said. “To be honest, I think then you start looking at having to cut expenses, and that ($5 million) is a huge amount for us.”
It’s unclear where the district would have to make cuts because the details of the formula implementation at the state level are still in early stages. But if the formula was adopted by the state, district leaders would have to determine how business, curriculum, and staff funding cuts would affect the overall operation of the district.
“You can’t just figure out how to do without $5 million,” she said.
The school board would need to approve any budget adjustments when they approve the district budget, typically in June.
Hold harmless
The task force recommended using a hold harmless provision to ensure no districts are negatively impacted by the formula changes.
The hold harmless provision would allow districts to receive the amount of money it is set to lose under the formula change each year. But the hold harmless amount, $5.4 million for Aspen, would be a set amount that would not increase year over year to account for inflation.
“If there was a hold harmless provision forever, that $5 million would be great, it would put us back to where we would be if the legislation hadn’t been in effect,” Rodino said. “But eventually, that $5 million is worth a lot less, and it doesn’t grow like the rest of the total program funding calculation as costs increase.
“Hold harmless is better than nothing, but it’s an expensive provision for the state to agree to,” she added.
The task force estimated the implementation of the new formula would cost the state $474 million. Implementing a hold harmless provision would cost an additional $64.1 million. It would be up to lawmakers to determine how to get the money to fund it.
It is unclear when the report will be presented to the legislature.
