The 2025 School Finance Act: How we can increase school funding in a $1.2 billion budget shortfall

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• Colorado legislators, leaders and educators worked together across the aisle in 2024 to make two landmark improvements to how Colorado funds education and supports Colorado kids.
• First, the state eliminated the Budget Stabilization Factor, a recession-era budgeting mechanism that resulted in the state directing $10 billion away from public education.
• Second, the state updated the school funding formula for the first time in 30 years.

  

  When fully implemented, the new funding formula promises to deliver an additional $500 million to public schools each year. School districts serving students living in poverty, students learning English, and students with special learning needs should see the largest increases.

• Just a few months later, in the August 2024 special session, the state re-set the property tax rate, causing revenue projections to fall and forcing the state to cut $1.2 billion dollars from the state budget in the 2025 session.
• The Governor, legislators, and educators have been working since then to find a way to fund increases in K-12 education inside a statewide budget shortfall. In his 2025 budget draft, the Governor suggested that the state eliminate enrollment averaging (an accounting practice that helps districts contend with declining enrollment) and use the savings ($190 million) to pay for the funding increases needed in K-12.
• Hearing school district concerns that eliminating enrollment averaging would result in sudden and variable changes to districts’ budgets and ability to staff schools appropriately, Speaker McCluskie negotiated a compromise.
• The compromise proposal, described below, would begin implementation of the new formula, delivers increased funding to Colorado school districts in July 2025, and ensures predictability and sustainability in the state’s work to increase funding for public schools.
• Under this proposal, total K-12 appropriation for FY 2025-26 would be $10,035,615,918, or a $256 million increase over FY 2024-25.
  • 21 school districts will be held harmless (no cuts) and the remaining 157 will see an average 2.9% funding increase.
  • Per-pupil revenue will increase by an average of $380.

The new school funding formula enacted in 2024 is our best and only chance at sustainably and predictably increasing investment in Colorado’s public education system. Support the school finance compromise proposal to support increased funding for public education.