Colorado lawmakers have hit on a funding source to help struggling school districts cover up to $25 million in startup costs as they expand full-day kindergarten this fall: marijuana taxes.
The money is expected to aid districts in rural areas, as well as others short on cash. It would help buy new desks and furniture, fixtures for bathrooms and classrooms, and other equipment schools need as they expand their full-day kindergarten offerings.
To assist with those one-time expenses, lawmakers hit on tapping the Building Excellent Schools Today (BEST) fund, which already draws from marijuana tax money to issue local grants for school construction projects. The proposal is part of a bipartisan bill that also would deliver a $125 million boost in direct school construction assistance across the state in the next two years.
The state recently has put $40 million a year from retail marijuana excise taxes into the BEST fund, fulfilling a requirement of Colorado’s 2012 vote to legalize the sale and possession of recreational marijuana. The fund also includes revenue from other sources, including the lottery and state land leases and royalties.
The proposed increases fit with “the will of the voters when they voted for Amendment 64 — to put these dollars towards public education,” said Rep. Shannon Bird, D-Westminster, during an Appropriations Committee hearing last week on House Bill 1055.
But public confusion has reigned over the use of the marijuana tax money, which has exceeded projections.
As The Denver Post reported in “State of Marijuana,” a three-day series published in late December, the state collected upward of $740 million from marijuana-related taxes in the first five years of legal sales, putting it to a variety of uses — only some of which were related to education. Besides excise taxes on wholesale transactions, the state and local governments also have drawn big money from sales taxes.
So in recent sessions, lawmakers have discussed ways to shift more marijuana money into the BEST program. Bird’s bill does that by requiring that all excise tax revenue go into BEST, not just the first $40 million — or even 90 percent of it, as new legislation stipulated a year ago.
Bird credited The Post’s series with raising awareness of schools’ unmet building needs and the varying ways the state has spent its marijuana tax revenue.
HB-1055 won House approval 56-8 on Friday and now awaits action by the Senate, where Sen. Rachel Zenzinger, D-Arvada, is the lead sponsor.
Full-day kindergarten costs
The proposed grant program for kindergarten expansion costs would require districts to apply, with a formula set for distribution.
The legislature separately is advancing Gov. Jared Polis’ full-day kindergarten initiative, which carries its own $175 million cost in the next fiscal year for an increase in per-pupil funding to districts, according to the legislature’s latest fiscal analysis. That annual expense could grow to $213 million if all eligible students enroll.
The rollout assistance grants, though, will come from the BEST fund’s reserve, which amounted to $370 million at the end of the last fiscal year. Much of that money secures loans taken out for some of the larger BEST awards to districts as matching grants to build new schools and other large projects, but Bird says there is excess reserve money to tap.
“The $25 million, we know we had this money,” Bird said in an interview. “We’re excited about full-day kindergarten, but there will be some school districts that cannot afford the cost. We did not want this to be a burden on the schools that are in need of assistance.”
More for school construction grants
If approved, the bill would increase the money available for the annual BEST grant program in three ways:
- The requirement that all marijuana excise tax revenue go into the fund will result in an extra $5.8 million in the 2019-2020 fiscal year, a fiscal analyst estimates. Previously, anything over the threshold had gone to an education investment fund.
- The state would draw $50 million extra from the BEST reserve for the next fiscal year and $75 million in 2020-2021, though budget-writers will need to approve the latter amount next year. The result in both years would be about $135 million available for direct grants, Bird said.
- A $100 million cap for annual repayment of certificates of participation — a form of debt to cover matching grants for larger projects — would increase to $105 million in the next fiscal year and then permanently to $110 million starting in 2020-2021, Bird said, allowing for more borrowing.
Another provision of the bill would increase project grants available for charter schools by nearly $4.3 million next year because of a change that bases their share of the funding on how many students they have.
The bill has been opposed by a small number of legislators in part because of the BEST fund’s continuing use of COPs, which are like construction bonds but don’t require voter approval.