House Education panel advances School Finance Act to phase in new funding formula, shields districts from cuts

The Colorado House Education Committee on Tuesday advanced House Bill 13‑20, the School Finance Act, setting a phased pathway to implement the new school funding formula that the legislature approved last year. Sponsors said the bill will direct roughly $256 million in new funding to K‑12 schools for the 2025‑26 budget year and will ensure no district receives a cut next year despite a statewide budget shortfall.

Why it matters: HB13‑20 starts the multi‑year transition to the student‑centered funding model created in last year’s HB14‑48. The change shifts more dollars toward students with the greatest needs — those living in poverty, English learners and students with disabilities — and alters how districts’ per‑pupil funding is calculated. Sponsors and district leaders said the bill balances moving toward equity while protecting districts from abrupt funding losses during a period of fiscal uncertainty.

Sponsors and main provisions Representative Lukens, a co‑prime sponsor, told the committee that “13‑20 delivers on constitutional promises to fund public education and adjust base funding to account for inflation,” and described the bill as a measured step that “sets a new statewide base per pupil funding for the 2025‑26 budget year at $8,691.” Lukens and co‑sponsors said the bill funds a $256 million increase overall, with $150 million coming from general fund and the remainder from the State Education Fund; sponsors noted the general‑fund contribution this year is roughly $70 million less than what the state has typically contributed in prior years.

The bill keeps four‑year enrollment averaging for the 2025‑26 year and moves to three‑year averaging in later years only if implementation milestones are met. Sponsors described a seven‑year, phased implementation of the new formula (revising earlier six‑year timelines), and said the bill includes reporting and economic safeguards that would allow the legislature to slow or pause implementation if state revenues fall sharply.

How it affects districts and students Committee testimony from superintendents and district financial officers underscored two themes: districts that concentrate high‑need students will receive more funding under the new formula, and smaller or rural districts remain worried about funding cliffs tied to enrollment declines and operational fixed costs. Deirdre Pilch, superintendent of Greeley‑Evans School District 6, said, “14‑48 is necessary to ensure we have quality educators in every classroom,” and testified that districts with high concentrations of poverty and multilingual learners have long been underfunded. Chuck Carpenter, chief financial officer for Denver Public Schools and chair of last year’s School Finance Task Force, told the committee the old formula “has a lot of issues,” and said the new approach modestly reorients funding toward higher‑need students without adding new administrative burdens.

Averaging, smoothing and the State Education Fund Multiple members pressed sponsors about enrollment averaging and the State Education Fund’s sustainability. Sponsors said the bill preserves four‑year averaging for 2025‑26, then contemplates reducing averaging if the legislature can provide 30% or more of the new formula funding in a subsequent step. They also described a proposed ‘‘smoothing factor’’ that would be developed with district CFOs and superintendents to blunt sharp year‑to‑year funding drops for districts that lose students. The bill includes a statutory trigger that would prompt smoothing or other actions if the State Education Fund were to fall to a defined threshold (sponsors cited a $200 million balance as a trigger point in the committee discussion for the 2027‑28 horizon).

Districts and advocates urged caution and ongoing monitoring. Kevin Vick, president of the Colorado Education Association, said the large teacher rallies in recent weeks made clear educators’ concerns and urged that the state move to the next phase of implementation only if funding is sustainable. Brett Johnson, Aurora Public Schools CFO, said districts want implementation but noted that modeling depends on assumptions about enrollment and revenues and asked for continued transparency.

Amendments adopted in committee Committee members adopted a package of technical and policy amendments the sponsors introduced or accepted in response to stakeholders. Key changes the committee approved include:

- MDOL pupil‑count correction (Amendment L9): fixes a Department of Education (CDE) audit error that had misclassified certain multi‑district online learning (MDOL) students as brick‑and‑mortar enrollees and produced an overcount estimated in committee testimony at about $12.8 million (roughly 1,000 students). The amendment directs CDE to use corrected counts for averaging calculations going forward.

- NCES locale grandfathering (L2): holds harmless five districts that received more urban/less rural classifications in a March National Center for Education Statistics update, per a request from rural stakeholders.

- Charter at‑risk supplement phase‑down (L3): phases out a long‑standing supplemental at‑risk aid paid to certain charter schools that were authorized before July 1, 2004. Sponsors said the at‑risk supplemental (about $7 million statewide) is redundant given HB14‑48’s new student weights; the committee approved a two‑year step‑down to mitigate cliffs for affected schools.

- BEST cap for 2025‑26 (L4): caps Building Excellent Schools Today (BEST) program distributions at $150 million for the 2025‑26 fiscal year to free about $45.6 million that the Joint Budget Committee recommended re‑directing to the School Finance Act this year. L4 passed on a recorded roll call 12–1.

- CDE technical cleanups (L5): miscellaneous Department of Education technical fixes, including clarifications on school bus safety language and administration of certain outreach programs; passed without objection.

- Moral‑obligation bond cap increase (L6): raises the cap on the state’s charter school moral‑obligation bond program from $750 million to $1 billion to accommodate projected demand; the committee approved the change 11–2 after a recorded vote.

- Smoothing‑factor workgroup language (L10): adds language directing an inclusive workgroup — with district CFOs and superintendents from urban, rural, and small rural districts — to help develop any smoothing mechanism and to advise the legislature before implementation decisions; adopted without objection.

Votes at a glance - L9 (MDOL count correction): approved without objection. - L2 (NCES locale grandfathering): approved without objection. - L3 (charter at‑risk supplement phase‑down): approved without objection (two‑year step‑down: full for one year, then 50% the next year, then eliminated). - L4 (BEST cap to $150M for FY2025‑26): recorded roll call, passed 12–1. - L5 (CDE technical cleanups): approved without objection. - L6 (raise moral‑obligation cap to $1B): recorded roll call, passed 11–2. - L10 (smoothing‑factor workgroup language): approved without objection. - Final committee recommendation: HB13‑20 (as amended) advanced to Appropriations with a favorable recommendation on a recorded roll call (unanimous in committee).

What members and witnesses said Supporters representing districts, education associations, child advocacy groups and business leaders uniformly backed turning on the new formula in a phased, safeguarded way. George Welsh, a longtime former superintendent in the San Luis Valley, urged ‘‘intestinal fortitude’’ to pursue a more equitable system. Chuck Carpenter and other district CFOs said HB13‑20 addresses long‑standing formula flaws and targets funding more precisely. Kevin Vick said union members’ demonstrations made clear that educators oppose cuts; he asked that future steps require confirmed, sustainable funding.

Concerns and next steps Members repeatedly asked staff and sponsors for modeling and monitoring tools so the legislature can track whether the State Education Fund and general fund can sustain further steps. Committee members asked for specific, district‑level projections (appendix tables in the fiscal note were pointed to during the hearing) and for the smoothing workgroup to include CFOs and superintendents from urban and rural districts.

Sponsors emphasized that HB13‑20 is intended as a careful, reversible step: it begins implementation while adding reporting, triggers and a process for the legislature and districts to adjust if revenues weaken. The committee directed sponsors and staff to continue stakeholder work during the interim on smoothing mechanics and on verifying the fiscal runs.

Ending With the committee’s passage, HB13‑20 moves to the House Appropriations Committee. Sponsors and stakeholders told the committee they expect further technical refinements and additional modeling to be produced before floor action; members signaled interest in continued oversight of implementation and of the State Education Fund’s trajectory.