Public School Finance Act of 1994

The major allocation of state funds for financing schools comes through the Public School Finance Act of 1994. [C.R.S. § 22-54-101 et seq.] Under this act, state and local general fund revenues are distributed to school districts on a per pupil basis. Each district’s per pupil funding amount includes a base per pupil amount and additional amounts or “factors” based on characteristics unique to the district, such as cost of living and district enrollment. Funding is also provided to districts for at-risk pupils.

The total amount of funding received by a district under the School Finance Act—state aid and local property tax—is frequently referred to as “total program.” The state and local sharing under the Finance Act is intended to offset vast disparities in local school districts’ ability to raise money from local property tax.

Local tax rates against property are always computed in mills. A mill is one-one thousandth of a dollar of taxable value (.001). For example: One mill produces $1 in tax income for every $1,000 of the assessed (taxable) value of the property it is levied against. A mill levy is the rate of taxation based on dollars per thousand of taxable value. About 30 years ago, local taxes actually funded the bulk of total program funding. However, since that time, a complex interplay between several state statutory and constitutional tax and spending laws has significantly limited the amount of revenue generated by residential property taxes.

The state aid provided to a school district is intended to make up the difference between the amount of the total program funding set by the Finance Act and the amount raised by local property taxes. State aid varies from district to district to ensure that each district, regardless of local property values, receives the total program funding set by the formula in the Finance Act.

It is not feasible in this workbook to detail the provisions of the Finance Act. Central concepts from the law include:

  • A procedure to count pupils on Oct. 1 within the school district budget year.
  • An allowance for school districts with declining enrollment to average the last five years of enrollment to permit districts to plan and implement any cuts in staff and facilities.
  • Authority for school districts to collect revenues in addition to the amounts specified in the School Finance Act, if local voters approve. Voter approval is subject to limitations on when the elections may be held, the language that must appear on the ballot and specified caps on the additional amounts that may be raised.

School Finance Act in 2015-16

In fiscal year 2015-16, the School Finance Act is expected to provide $6.2 billion in total program funding to school districts. The state will provide $4.1 billion, while local property and specific ownership taxes are expected to provide $2.1 billion.

Source: Legislative Council Staff