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A Deal Decades in the Making: How a New Agreement Finally Addresses Public Education Funding in Colorado

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  Published in House and Home on Friday, August 22nd 2025 at 4:57 GMT by Florida Phoenix
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For generations, Colorado’s public education system has limped along, starved for consistent and adequate funding. The state's unique “negative factor,” a mechanism to cut school district budgets when revenue falls short of projections, became synonymous with instability and deferred maintenance – both literal and figurative. Now, after years of legal battles, political maneuvering, and tireless advocacy from educators and parents alike, a landmark agreement has been reached that promises to fundamentally reshape how Colorado funds its public schools.

The core of the deal, hammered out between legislative leaders and Governor Jared Polis, centers around repealing Gallagher Amendment and replacing it with a new system that provides more predictable and sustainable funding for K-12 education. The Gallagher Amendment, originally passed in 1980, was intended to limit property taxes but inadvertently created a situation where residential properties were taxed at a higher rate than commercial properties. This led to an increasingly skewed distribution of tax revenue, disproportionately impacting school districts reliant on property taxes – particularly those in rural and mountain areas.

The new system, outlined in Senate Bill 267 and House Bill 1053, shifts the burden more equitably between residential and commercial properties. It establishes a statewide assessment rate for residential properties at 0.07% (down from the current 0.074%) and a commercial property rate of 0.105%. This change is projected to generate an additional $360 million annually for public schools, with further increases expected in subsequent years as the system stabilizes.

However, the agreement goes beyond simply adjusting tax rates. It also addresses the infamous negative factor, which has plagued Colorado’s education funding model for over two decades. The negative factor essentially acts as a budget cut when state revenues don't meet projections, forcing schools to make difficult choices – cutting programs, increasing class sizes, and delaying essential maintenance. Under the new agreement, the negative factor will be phased out completely over three years, returning approximately $300 million to school districts. This infusion of funds is expected to alleviate some of the financial pressures facing schools across the state.

The impact of this agreement extends beyond just dollars and cents. For years, Colorado’s education system has struggled with teacher shortages, outdated textbooks, and crumbling infrastructure. The increased funding will allow districts to invest in these critical areas, attracting and retaining qualified teachers through competitive salaries and professional development opportunities. It also provides resources for modernizing classrooms, updating technology, and expanding access to early childhood education programs – a crucial component of ensuring all children have the opportunity to succeed.

The legal battle that paved the way for this agreement was significant. In 2018, a district court ruled that Colorado’s school funding system violated the state constitution's amendment 20, which mandates adequate and equitable funding for public schools. While the ruling was later overturned on appeal, it highlighted the systemic issues within the current model and put immense pressure on lawmakers to find a solution. The new agreement is seen as a compromise that addresses the court’s concerns while also considering the economic realities of the state.

While the deal has been largely welcomed by education advocates, some concerns remain. Some worry that the shift in property tax burden could disproportionately impact homeowners, particularly those on fixed incomes. Others believe that the phased-out negative factor doesn't go far enough and that more immediate relief is needed for struggling districts. Furthermore, ensuring that these funds are distributed equitably across all school districts – both urban and rural – will be crucial to realizing the full potential of this agreement.

Despite these lingering concerns, the consensus is clear: this agreement represents a monumental step forward for Colorado’s public education system. It provides a foundation for stability, predictability, and ultimately, improved outcomes for students across the state. The years of advocacy, legal battles, and political negotiations have finally culminated in a deal that promises to invest in the future – one student, one school, and one community at a time. The true test will lie in the implementation phase, ensuring that these funds are used effectively and efficiently to address the long-standing challenges facing Colorado’s public schools and create a truly equitable and high-quality education system for all children. The agreement also acknowledges the need for ongoing monitoring and adjustments to ensure its effectiveness. A legislative committee will be established to oversee the implementation of the new funding model and make recommendations for future improvements, demonstrating a commitment to continuous improvement in Colorado’s approach to public education financing.