Governor Targets K-12 Funds to Balance Budget (CO)

October 25, 2010

School districts that heeded the state’s warning against spending a federal windfall that arrived in August will largely be spared the pain of Gov. Bill Ritter’s latest round of budget cuts, announced on Friday.

Those districts that already have spent their share of $156.3 million that came Colorado’s way from the Federal Education Jobs Fund could feel the pinch.

Ritter proposed F riday that $156.3 million in funding to school districts be restored to the state’s general fund as part of the $296.5 million in budget balancing maneuvers for the present fiscal year, which concludes at the end of June 2011. The actions were necessitated by a revenue shortfall projected during the September economic forecast by the Office of State Planning and Budgeting.

Ritter’s plan for the present fiscal year also provides for $34.8 million to meet the statutorily required 2 percent minimum in reserves.

The cuts from K-12 education are backfilled by the Federal Education Jobs Fund, keeping their overall level of funding static.

Together, K-12 education, health care, human services, corrections (including public safety and courts) and higher education constitute 97 percent of the state’s general fund, according to Todd Saliman, director of the Governor’s Office for State Budget and Planning.

Education in grades K-12 alone takes 45 percent of the state’s general fund.

“When you’re dealing with a high budget shortfall, you really can’t touch it without affecting these areas,” Saliman said.

Ritter also proposed to bolster the general fund with $55 million from the local government severance tax fund, which goes to communities in grants aimed at mitigating the impact of natural resource extraction. A Southern Colorado example would be repair of Las Animas County roads affected by truck traffic from natural-gas extraction operations.

About $16 million in severance tax fund grants already have been awarded this year, and those will not be recalled.

The perpetual base account of the severance tax fund, which makes loans available to water users, also was mined for $10 million in Ritter’s budget-balancing plan. That leaves $21 million in the Colorado Water Conservation Board’s pool for the current fiscal year. No loans will be canceled as a result of the transfer.

Payments to Medicaid service providers worth $55.1 million, which already would have been delayed for two weeks at the end of the fiscal year, would be backed up one additional week under Ritter’s proposal.

All of Ritter’s proposals are subject to approval by the Legislature, which convenes in January.

Another revenue estimate is due in December, and further adjustments could be required then.

Saliman said the plan released Friday was necessary heads-up for the affected government agencies such as school districts.

“The people affected by these cuts need predictability as well, so we can’t delay acting,” he said.

On Nov. 1, Ritter expects to announce his proposed budget for fiscal year 2011-12. He said it is likely to include further cuts to higher education and K-12 education.

 “The thing we should be investing in the most, our education system, is still vulnerable to cuts,” Ritter said. “There just aren’t any other places to go.”

The governor defied critics of a series of tax-exemption suspension he supported and the Legislature passed this year to come up with a way of balancing the budget this year and next without them. A tax on energy that impacts Evraz Rocky Mountain Steel in Pueblo was among them.

“It’s easy to spin, but it’s hard to govern responsibly,” Ritter said.

Without federal suppor t from extension of Medicaid funds and the Federal Education Jobs Fund, 5,000 teachers’ jobs would have been lost in Colorado during the school year that’s just under way.

By the time the 2011-12 budget takes effect, Ritter will be a citizen again, and someone else will be governor. So his proposals for the remainder of this fiscal year, and the one he’ll release soon for the next will be out of his hands.

“We think this is a solid plan,” Saliman said. “The next governor and the Legislature will have to decide whether to follow through with it.”

Ritter said regardless of who replaces him, they will be confronted with further cuts because “a significant shortfall in the hundreds of millions of dollars” awaits them.