School Finance Bill – HB2445

Posted on March 31, 2018

HB2445

The House committee passed out HB2445 on Thursday.  We expect it to hit the floor of the house Monday or Tuesday.

It solves the three lesser equity violations but does not solve the LOB by protest petition and election equity violation.

Here is the money part of it.

Base

• FY18   $4006
• FY19   $4170
• FY20   $4307
• FY21   $4444
• FY22   $4581
• FY23   $4718

For comparison purposes, the State BOE asked for these bases:

• FY18   $4604
• FY19   $5090

You will note that while they are attempting to get back to the Montoy last adopted base and update it for inflation, which is what the State BOE asked for, this plan comes up $372 short even after five years.

After the five year phase-in, they plan to apply a CPI adjustment annually. Despite having a CPI adjustment in the statute for many years, it has never followed it in the past. They have simply ignored it.

New Money

FY19   $189,428,148 – SB19 $95,606,000 =  $93,822,148
FY20                                                                                                    $105,500,000
FY21                                                                                                    $105,500,000
FY22                                                                                                    $113,100,000
FY23                                                                                                    $115,500,000
Total new money over SB19                                                       $533,422,148

Only one year, FY19, is appropriated.

You will note that this looks like $533M of new money. It is not.

Inflation is not included in the plan until after the five-year phase-in. Inflation in the system at 1.5% amounts to $70M per year. During a five year phase-in, the plan falls $350M behind just due to inflation.

Because inflation is NOT included for five years, the amount of new money is actually only $183.4M.

It is our opinion that the court will not accept this fix. A $183.4M fix for a $1.5B to $2.0B problem is not close. The state will not be able to meet their burden to show that with this new money schools will get ALL kids to the Rose competencies. We now know that the Rose competencies cost $1.5B to $2.0B due to the Taylor study and the Myers-Picus study.

That being said, we do not oppose HB2445, but we are NOT claiming that it fixes the problem. We do not oppose it because, incrementally, it helps the schools. Think of it as fixing the mess in several steps. This is the first step.

HB2445 as an outlier…

The supreme court rejected SB19 last year because all other evidence pointed to much more money being needed. Last year the comparison was $293M on a $893M problem. The court cited the $293M as being an “outlier” and declared SB19 unconstitutional.

This year, HB2445 is also an outlier… a bigger one. See the chart below.