Challenges to Funding School Facilities in Colorado

• Publication year: 2021
• Citation: Vol. 83

83 Nebraska L. Rev. 856. Challenges to Funding School Facilities in Colorado

856

Kathleen J. Gebhardt*

Challenges to Funding School Facilities in Colorado

TABLE OF CONTENTS

I. Introduction ..................................................... 856
II. Background ...................................................... 857
III. Litigating Giardino .......................................... 859
IV. Postlitigation: Funding the Settlement .......................... 866
V. Conclusion ....................................................... 867

I. INTRODUCTION

Imagine attending school in a building where sewage runs down the halls, and in the middle of winter there is no hot water for showers in the gyms. The locker rooms are so dismal that opposing teams refuse to use them. There is no heat in the middle of winter, nor air conditioning in rooms where the temperatures exceed ninety degrees. Imagine teaching in such a facility, compounded by the fact that you cannot plug in both the copier and the coffee pot at the same time, because the electrical system cannot handle the load. The conditions inside the school physically make you sick.

These conditions, amongst many other appalling conditions, have existed in Colorado schools for many years. Yet, Colorado, like many other states, has shifted its priority from adequately funding schools (as well as other social services) to tax refunds. Over the past fourteen years, despite overwhelming evidence that its school facilities are crumbling, unsafe, and unhealthy, Colorado's political leaders have chosen tax refunds over providing a safe and healthy environment for the state's children. Further, while outside the scope of this Article, it is clear that this attitude has permeated not only school facilities but also the provision of services to many of Colorado's neediest children. This Article will give an overview of Colorado facilities-funding challenges, followed by an account of the Giardino(fn1) litigation, my involvement in it, and the aftermath of the settlement reached.

857

II. BACKGROUND

In the early 1980s, Colorado passed significant property tax reform/reductions known as the Gallagher Amendment.(fn2) Gallagher has resulted in dramatic reductions in residential property taxes, most noticeably in the 1990s. From 1991 to 2001, the average home value in Denver increased 179%, while the residential assessment rate fell 36%. This resulted in average property taxes as a percent of personal income declining by 20%.(fn3) In 1992, Colorado passed and incorporated into its constitution the Taxpayer's Bill of Rights ("TABOR").(fn4) TA-BOR's stated purpose was to limit growth in government and to require voter approval for any new or increased taxes. TABOR is the strictest tax and expenditure law in the country.(fn5) It requires that any surplus over the constitutional limit of growth and inflation be refunded to taxpayers. Because growth and inflation are not accurate limits on growth of government, TABOR has resulted in enormous refunds, tax reductions, and reductions in services to citizens. As in other parts of the country, during the 1990s, many areas in Colorado experienced times of unprecedented growth and prosperity. From 1996 to 2000, the combination of this prosperity and the TABOR amendment resulted in the State generating approximately $3.25 billion in TABOR surplus revenue, which was refunded to taxpayers and businesses.(fn6) Rather than seek approval to invest in Colorado's future by asking the voters to keep surplus revenue, Colorado's legislature chose to pass permanent tax and fee reductions, totaling at least $450 million in 1999 and 2000 alone.(fn7)

At the same time, Colorado's spending on public education fell precipitously. In fact, in 1999, the report Quality Counts,(fn8) gave Colorado an "F" in adequacy of resources. During this time of unprecedented prosperity and tax refunds and reductions, aside from a small

858

amount distributed through the School Finance Act,(fn9) Colorado spent no general fund dollars on K-12 capital construction. A study in the mid-1990s estimated the outstanding capital construction need for K-12 at approximately $2.1 billion.(fn10) The Colorado State Auditor recently updated that number to $4.7 billion.(fn11) A group of school districts and professional organizations in Colorado undertook a study of their own to examine the decline in school funding in Colorado during the 1990s. They hired school finance experts John Augenblick and John Myers to study how much school funding had declined in Colorado, using 1988 as a base year. There was no magic to choosing 1988 as the base year, other than that Augenblick and Myers felt that they had reasonable data in that year from which to compare subsequent years. Their report, which is still being published annually, is known as the "gap analysis." This study measured funding against increases in inflation and student enrollment. The largest gap found during the study was the 1995-1996 period, during which Colorado underfunded its schools by at least $543 per pupil. This amounted to a $341 million minimum shortfall for public education for one year alone, and that did not even include the lack of support for capital construction.(fn12)

The Colorado Constitution's Education Clause requires that "the general assembly provide for the establishment and maintenance of a thorough and uniform system of free public schools throughout the state, wherein all residents of the state, between the ages of six and twenty-one years, may be educated gratuitously . . ."(fn13)

Colorado was one of the first states to have its school finance system challenged as unconstitutional, basing the analysis on the equity of the school finance system. Lujan v. State Board of Education(fn14) is a critical piece of background, because after the decision it provided a sense of protection to Colorado's government representatives--they felt they did not need to take steps to provide equitable or adequate financial resources to Colorado's children. In Lujan, the plaintiffs challenged the system of financing as violative of the state constitutional provisions ensuring thorough and uniform, equal protection and due process. The plaintiffs essentially argued that equal expenditures were required under the constitution. In finding for the State, the Colorado Supreme Court held that

859

[a] heartfelt recognition and endorsement of the importance of an education does not elevate a public education to a fundamental interest. . . . The constitutional mandate which requires the General Assembly to establish a "thorough and uniform system of free public schools," is not a mandate for absolute equality in educational services or expenditures. Rather, it mandates the General Assembly to provide to each school age child the opportunity to receive a free education, and to establish guidelines for a thorough and uniform system of public schools.(fn15)

Since the school finance system in Lujan was found to be constitutional, lawmakers came to believe that any system of finance that the State implemented was beyond review or criticism.

III. LITIGATING GIARDINO

Against this backdrop, the decision was made to begin exploring what could be done in the area of school capital construction finance. Steve Kaufmann, an attorney at Morrison and Foerrester, had been thinking about and researching the issue of school finance in Colorado...