State lawmakers are looking to tweak how Colorado distributes money to help school districts support their neediest students, fearing that the current definition of “at-risk,” a measure used to determine funding, is no longer accurate.

Tens of millions of dollars could be on the line.

The state uses free and reduced-price lunch sign-ups to help figure out how many students in a district are at risk, which in turn helps determine how much money school districts receive. But universal free lunch programs implemented by many Colorado school districts during the pandemic mean many families aren’t signing up for the program.

State lawmakers plan to vote this week on changes to how the state defines at-risk students, as well as other modifications to how Colorado funds schools.

“It is about time that we modernize the school finance formula, the at-risk factor being a key component of that formula,” said state Rep. Julie McCluskie, a Dillon Democrat and chairwoman of the interim committee on school finance that’s considering the changes this week. “I think we’re going to do a much better job in identifying true need in communities, and then driving more resources to those communities that need the greatest help, to those students who need the greatest help.”

After the onset of the pandemic, the federal government allowed school districts to offer free meals to all students. But that means parents have had much less incentive to formally sign up their children for the free or reduced lunch program through their district.

The number of students signed up for free or reduced price lunch in Colorado this school year dropped by more than 26,000 compared to the 2019-20 school year, the academic year that began before the pandemic. That’s a 9% decrease, large enough to lead staff for the Joint Budget Committee to suspect “that the current system is undercounting at-risk students.”

If at-risk students are being undercounted, that means districts aren’t receiving as much money from the state.

McCluskie, who also is chairwoman of the influential JBC, said the bill the school finance committee will take up this week is still being drafted but will likely call for identifying students as at-risk based on their families’ participation in certain federal support programs, such as the Supplemental Nutritional Assistance Program, which provides food assistance, and the Temporary Assistance for Needy Families program, which provides cash assistance to families with very low income.

The state already uses enrollment in those programs, known as SNAP and TANF, to figure out which students are considered at-risk in combination with free or reduced price lunch sign-ups. But the new measure would also count students whose families are covered by Medicaid or the state’s Child Health Plan Plus, a subsidized public health insurance program for certain children and pregnant people.

According to a report by the Urban Institute commissioned by the school finance committee, adding Medicaid and CHP+ to how the state identifies at-risk students is likely to catch a lot more students than just looking at those who are signed up for other federal support programs.

For example, the study noted that in Denver alone, though a little more than 80,000 Medicaid participants are enrolled in SNAP, an additional 120,000 Medicaid participants appear eligible for SNAP but aren’t signed up for it.

McCluskie said the new definition would also incorporate census data to map out neighborhoods based on socioeconomic status, highlighting areas that have significant indicators that students may be defined as at-risk.

McCluskie is optimistic about the prospects of the bill dealing with at-risk students, telling The Colorado Sun that she feels “very positive about that one moving forward.”

State Rep. Colin Larson, a Republican from Ken Caryl who also sits on the school finance committee, said he believes there’s a solid consensus around the at-risk bill and doesn’t expect much opposition from his party, either on the committee or on the floor.

Larson called it “a must-pass bill, because otherwise, there’s going to be such a drastic undercount for that factor, and it’s just gonna blow a hole in all these districts’ budgets that have really high numbers of at-risk children.”

In the short term Gov. Jared Polis’ office has amended its budget request to ask lawmakers to appropriate $95 million for the current fiscal year to “address artificially low at-risk counts.”

Another bill up for a vote this week would significantly increase funding for special education services. The measure would raise the amount the state funds for special education students from $1,250 per student to $1,750 per student.

According to a report released this month, school districts spent a whopping $742 million on special education services in fiscal year 2019-20 that went unreimbursed by the state, compared to the state’s $243 million in special education spending.

State Sen. Rachel Zenzinger, D-Arvada, who helped draft the measure, said school districts are paying for these special education costs by cannibalizing money from elsewhere in their budgets.

“Every dollar that you put into special education frees up one dollar for general education,” she said, referring to the boost in state funding for special education.

The legislation would also boost funding for students with multiple disabilities or severe disabilities, a category that has never been fully funded by the state. The bill would fund 85% of that higher tier – up from 50%, according to Zenzinger – and would set a timeline for full funding in future years.

“We need to do right by our kids, all kids, regardless of their ability,” Zenzinger said.

Larson, who said he was instrumental in drafting that legislation, lamented that lawmakers have failed to fully fund special education services in past years, and said he is hopeful this measure will put an end to that.

“I’m excited because I think we will finally address one of the greatest moral failings of the legislature if we actually fund this,” he said.

Larson suspects that that bill should easily pass the school finance committee, but that fellow Republicans may balk at the price tag, as may some Democrats hoping to spend that money on other priorities. Legislative staff have not yet conducted a fiscal analysis to determine how much it would cost, but lawmakers estimate it could cost close to $100 million.

The committee is also expected to consider a measure that would allow the state to more aggressively invest money in the state land trust, which supports public education. Though the draft language for that measure is not yet publicly available, Larson expects that measure should be relatively uncontroversial.

However, the legislation that’s likely to garner the most opposition at the Capitol deals with local governments raising property tax rates, which requires voter approval because of the Taxpayer’s Bill of Rights. McCluskie acknowledged “there’s been some back and forth” on that issue.

McCluskie observed that the school funding system, in which local districts can raise extra money through property taxes to support schools (outside of the state’s education funding formula), has resulted in inequities between wealthy and poor areas of the state.

Districts in parts of the state where property values are low must ask voters to raise their property taxes by a greater proportion to raise as much money as districts where real estate is expensive, making it a tougher sell.

McCluskie, who has worked with Republican state Sen. Bob Rankin of Carbondale to pass school-funding legislation for years, said the prospective bill aims to help poorer districts by giving them a state funding match if they choose to raise their rates, setting up a way for the state to sweeten the pot.

“We just want to make it more fair, and certainly make it worth the while of the school district if they’re going to go after those local dollars,” she said.

Larson expects that bill will pass the committee on a party-line vote, with Republicans united against it. He also expects the measure will face similar resistance from Republicans in the House with maybe a couple of more moderate GOP senators, like Rankin, siding with Democrats in the upper chamber.

Larson said the measure tries to tackle “a real problem” in that “there is a vast disparity in the ability to raise funds locally” for poorer rural districts in comparison to wealthier, suburban districts. However, he blasted the proposed solution. He argues that it won’t really result in a really significant amount of additional money for poorer districts and may hamper local economic growth.

“If you have a property-poor district that’s already economically depressed, the idea that convincing them to tax themselves more is somehow going to create more prosperity is, I just think, wrong on face value,” he said.

McCluskie pushed back on that argument, pointing out that voters and local school boards would have to approve any increase.

“It is a local choice to move forward,” she said. “Our bill doesn’t change whether or not a community, a school district, goes to local voters to ask for funding.”

The interim committee hearing this week is the last time it will meet before the end of the legislative session. Larson said he was disappointed the committee has yet to figure out a comprehensive overhaul of the state’s K-12 funding formula.

However, McCluskie said the committee’s work will continue after the session.

“This next interim,” she said, “I hope to now look again at that formula and say, ‘OK, we fixed ‘at risk.’ We’ve done some good work on special education. We’ve taken care of a couple of things outside of the formula and categoricals. Let’s fix the formula … and try to bring forward a formula that is more equitable, and really drives funding to those students and schools with the highest needs.’”

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