The Optimist: Education is the heart of community
Aspen resident
Courtesy photo
The financial plight of our schools is an important, yet relatively quiet, issue facing our community today. We spill much ink about the Entrance, the airport, the Armory, and other visible or contentious capital projects. But nothing touches all of us who live here like our public schools.
I do not believe we have fully processed what happened to the finances of our schools or how easy it is to help the school district solve them. This column is the first of three columns that will explore the financial vise our school district faces through no fault of its own.
While the financial plight of our school district should concern all of us, improving the financial health of the district and setting up a bright future is a much easier problem than divisive problems like the Entrance. It costs much less to solve, especially for a community whose three local governments combine for approximately $700 million in total annual budget. We can also draw from a much more diverse pool of financing sources to solve this problem. And the beneficiaries are literally all of us — this is not about visitors or second homeowners; it is for our residents. Whether we are retirees, singles in our 20s, or families, we all benefit from vibrant schools at the heart of our community. It’s a problem that we can tackle together, as a true community.
So, what happened and how did we get here?
In 2020 and 2021, the state of Colorado introduced changes to its school funding formula to place greater emphasis on at-risk and small, rural districts. While we are rural, the Aspen School District is one of 23 Colorado districts adversely impacted by these changes, as the new funding rules took money from districts with high property values and shifted it to districts deemed to have greater need. In fact, the state took all of its contribution from our district, leaving us solely responsible for funding our schools locally. As a result, our district will lose $11 million in annual operating funding from the state over a period of a few years. We already lost $6 million of this funding between the 22/23 and 23/24 school years. We will lose another $5 million in state funding over the next several school years.
To put this loss in context, the district’s entire operating budget for the 2024-2025 school year is just under $38 million, so we have already lost 16% of our annual budget, and we will eventually lose just under 30%. In essence, to paraphrase one of our local district leaders at a March 19 school board meeting, the “state has abandoned this district.” In Colorado’s mind, we are wealthy enough to pay our state taxes and to independently support the school district, without state revenue coming back to us. It’s not Taxation Without Representation; it’s Taxation Without Education.
We have encountered three revenue problems with self-financing:
- First, our property tax rates were not fully prepared for the state changes. Even with rising property values, we still faced a hole. Our voters had previously authorized a mill levy override for schools, but it was insufficient to close the full $11 million budget hole left by the state. Additionally, in a Catch-22 worthy of Joseph Heller, while the state has left us on our own, it also places a cap on our ability to increase property taxes to fund schools.
- Second, several incremental funding sources from the city of Aspen via sales taxes and from Snowmass Village via a small property tax have sunset provisions and will disappear unless renewed soon.
- Third, our community has always sought to invest in our schools at a somewhat higher level than the state’s formula. From experiential education to college counseling to aviation programs, we have built an exceptional set of programs that reflects our community’s values and priorities. Key community organizations like Aspen Education Foundation and smaller organizations like Aspen Flight Academy have supplemented tax dollars with grants to support these programs.
The other side of the financial vise our schools face is cost. Inflation, particularly in real estate costs, hits us uniquely hard. Inflation hits the budget directly in rising costs and indirectly in teacher recruitment and retention. Our teachers, coaches, and school administrators must afford to live here. We do not fund district housing through the district’s operating budget, but we do fund all compensation through the operating budget. This compensation must acknowledge our local cost of living and inflationary pressures.
As an aside, our district has been creative in using bond funds to build a district employee housing supply, but this effort is incomplete and can only partly offset the insidious effects of our area’s real estate prices. Significant deferred maintenance and rising real estate prices ate into the 2020 bond that local voters authorized.
The net result of the state’s abandonment of our district is that our schools have eaten deeply into their reserves, operating at a deficit in four of the past five years. Reserves have fallen to less than $2 million when they should be closer to $10 million. The financial rating service, Moody’s, downgraded the district’s credit rating.
To its credit, the Aspen School District has undergone an effort to scrutinize all aspects of the school budget to find $750,000 to $1 million in cost savings, but our district is not notably inefficient. The state formula allows Aspen to fund its schools via property taxes at $14,821 per pupil. For context, it allows Montrose, Kit Carson, Creede, Mesa, and other rural districts to fund at higher levels, despite Aspen’s much higher cost of living. Any incremental programs that our community values must be funded from sources other than property taxes, though we do have some limited ability to vote for property tax overrides.
In summary, our community took it on the chin from the state. But, we absolutely can solve this problem. We do not have to rely on a single funding source. We have three local governments with ample firepower. We have community support from Aspen Education Foundation. We have sales taxes on visitors. We have property taxes. For bigger capital projects that we may wish to see take shape, like an indoor fieldhouse for sports or an improved theater, we can likely form partnerships with local organizations and organize a capital campaign to enlist incremental community support.
But for the most essential items, like the annual operating budget and fixing our depleted operating reserves, the dollars are relatively small. We simply need to sustain our current financing sources and find another $5 million to $7 million per year, which will need to grow with inflation, to fill the gap. $10 million in capital reserves would put our schools on a solid footing.
For relatively small dollars, we can clear the beating heart of our community of major blockage and give it the fitness of a Tour de France cyclist. In the next column, I will explain how our leaders and citizens can support the district’s efforts to solve the problem that the state created for us.
Greg Goldfarb lives in Aspen.
