Mounting a challenge to a legislative mechanism similar to New York’s “Gap Elimination Adjustment,” a group of parents, school districts and  statewide organizations filed suit in Denver District Court on June 26, 2014, arguing that Colorado’s so-called “negative factor” a device used by the legislature to reduce annual K-12 spending, is unconstitutional. Dwyer vs. State of Colorado. 

Plaintiffs  claim that the” negative factor” violates Amendment 23 of the state constitution,  a provision that requires school funding to increase by inflation and enrollment growth every year. It is estimated that use of the negative factor has cut about $1 billion a year from what school districts otherwise would have received for basic operating costs. The plaintiffs ask that the negative factor section be stricken from the state’s school funding law and that the legislature be barred from reinstating the factor in another form.

Amendment 23 requires annual minimum increases in education funding, with the goal of returning funding to 1988 levels and then keeping pace with inflation. The state instituted the negative factor in 2010, claiming that following the 2008 recession, it lacked sufficient funds to continue to provide the annual inflation increases against the full amount of the K-12 budget. The state’s legal position is that Amendment 23 applies only to base education funding, but not to varying additional per-student amounts that are allocated in accordance with district characteristics such as the number of at-risk students, low enrollment and cost of living for staff.

Lead lawyers in the case are Timothy Macdonald of Arnold and Porter and Kathleen Gebhardt of Children’s Voices, a Boulder public interest law firm. Gebhardt was the lead lawyer in the long-running Lobato v. State school funding suit, which was dismissed by the Colorado Supreme Court in 2013. Although plaintiffs’ constitutional argument would apply whatever the state’s fiscal condition,  Gebhardt notes that recent state revenue forecasts indicate continued improvement in state finances.