State and local funding for public education in Colorado is principally provided through the Public School Finance Act (PSFA) of 1994. Neither the PSFA funding formula nor the funding levels it establishes and enforces provide school districts with sufficient funding to meet the actual and foreseeable costs of educating their students in accordance with the requirements of the Education Clause of the Colorado Constitution, education reform legislation, or the Colorado Consolidated State Plan (mandated by the No Child Left Behind Act). The PSFA formula and spending levels are not based upon a valid determination of the actual costs to provide every student with an opportunity for a constitutionally adequate, quality education, or to an education that meets the standards and goals mandated by education reform legislation and the Consolidated State Plan.


The PSFA sets a financial base of support for each school district by a formula with two basic components, the district “funded pupil count” and the district “per pupil funding amount,” which when multiplied together produce the district’s “total program funding.” A district’s “funded pupil count” is the number of pupils in membership as of the school day nearest October 1 (the official count day), or the average of its last two, three, or four years’ fall pupil counts, whichever is greater, adjusted to account for on-line pupil funding, the Colorado Preschool Program (CPP) pupil count, expelled students, half-day kindergarten programs, and certain pupils with disabilities. “Per pupil funding” is a statewide base per pupil funding amount, stated as a specific number of dollars per pupil (e.g., $5,507.68 for the 2009-10 budget year), adjusted to recognize district-by-district variances due to cost of living, personnel costs, enrollment size, and the number of students “at-risk” of performing poorly in or dropping out of school.

A school district with a percentage of at-risk pupils less than or equal to the statewide average (roughly 32.61%) is entitled to add an at-risk factor of twelve percent for each at-risk pupil to its total per pupil funding amount. A school district with a percentage of at-risk pupils greater than the statewide average is entitled to add an at-risk factor of between twelve and thirty percent, however, no school district actually receives over 25 percent.

Each school district’s total program is funded by a combination of state and local tax revenues. The school district or local share consists of the proceeds from a mill levy upon the assessed valuation of the taxable property within the school district’s boundaries. A school district’s authority to obtain funding by local property taxation is limited to the lowest of: (a) the number of mills it levied in the preceding year, (b) the number of mills necessary to pay its entire total program, less specific ownership taxes and the minimum state share funding received, or (c) the maximum number of mills allowed by the “Taxpayer’s Bill of Rights” (TABOR). The state share, funded primarily from state income (personal and corporate) tax and sales and use tax, equals the difference between the school district’s total program and the school district’s local share, except that every district is entitled to receive a minimum level of state funding.

In addition to total program funding provided through the PSFA, school districts may receive state funding for specific programs designed to serve particular groups of students or particular student needs that are known to require substantial additional financial resources beyond the total program. These programs are referred to as “categorical” programs and include English language proficiency education, special education, gifted and talented education, small attendance centers, transportation, and vocational education. In limited instances, an individual school district may not receive state funding for categorical programs. Instead, it may be required to use local property tax revenue to fund these programs.

The PSFA permits school districts a limited option to supplement their total program with additional local revenues to provide services above those required to meet the fundamental requirements of the Education Clause of the Colorado Constitution. In order for a school district to raise and expend property tax revenues in excess of the local share of its total program, the local board of education must submit an initiative to its electorate seeking approval to raise such revenues and authorizing an additional mill levy for that purpose. The total additional local revenues that may be authorized pursuant to such an “override election” cannot exceed twenty-five percent of the district’s total program for the budget year, as adjusted in 2001-02 for cost of living, or $200,000, whichever is greater.

Due to under-funding of the PSFA total program, school districts must use override revenues to assist in providing basic education services. Additional revenues approved by this process are funded exclusively by increasing the local tax levy. The state share is neither reduced nor increased by the approval of local override revenues. Due to the variations in local property tax bases, the override option fails to provide “property-poor” school districts with an effective opportunity to meet their obligations under the Education Clause, education reform legislation, and the Consolidated State Plan, much less to enhance the educational opportunities of their students.

What’s Wrong with Colorado’s Public School Finance System

The initial statewide base per pupil funding amount established in the PSFA of 1994 and the subsequent annual increases in the base funding amount were determined by historical spending levels and political compromise, and not based on a valid analysis of the actual costs of providing a constitutionally adequate, quality education in Colorado. The PSFA funding formula has never been adjusted to provide sufficient funding or a method of allocating funds that is rationally related to the goals and objectives of the education reform legislation or related to student achievement as measured by the state’s systems of school district accountability and accreditation. The state has never conducted a study to determine if the levels of funding provided by the PSFA are sufficient to maintain a public school system that meets the qualitative standards of the Education Clause or the mandates of state education reform legislation and the Consolidated State Plan.

Additional Resources on Colorado’s Public School Finance System