D-11 schools fear cash crisis if tax amendment passes

Here’s a radical idea: A school year that runs from say, mid-February to just before Thanksgiving, with a long winter break.

Ski resorts might like that.

But it could be a tough sell for students, families and teachers who are accustomed to the traditional summer break between school years.

The idea was floated last week, albeit “mostly facetiously,” at a Colorado Springs School District 11 board work session as one way of dealing with a proposed amendment to the Colorado Constitution should it be approved by voters in November.

Amendment 61 would prohibit the state government from incurring debt and would limit other government agencies from borrowing money without voter approval. It further would require any loan to be repaid within 10 years, and that tax rates to decline when debt is repaid.

For the state’s 30 to 35 largest school districts, including D-11, the amendment would create a significant cash-flow problem beginning in January.

“If this amendment passes, the sky is falling,” said Glenn Gustafson, D-11 deputy superintendent and chief financial officer. “We don’t have a way to make payroll.

“I don’t imagine a scenario of having to close schools, but we’d buy nothing for months on end until the money rolls in.”

Here’s the issue: Each year, D-11 and other large districts that rely primarily on property taxes borrow money from a special state cash-flow fund to pay expenses until the tax money arrives in late spring.

Smaller districts rely more on state funding, which is paid out in equal monthly installments.

Under Amendment 61, the state wouldn’t be able to lend the money to tide the districts over until the property tax money arrived, even though it’s paid back within a few months.

In the Pikes Peak region, D-11 and Lewis-Palmer School District 38 use the state’s cash-flow fund, Gustafson said. D-11 borrowed $14 million this year but has borrowed as much as $20 million, he said.

D-38 officials could not be reached Friday, but Gustafson said he believes that district borrows about $1.5 million a year from the cash-flow fund.

He said Douglas County schools are in the worst position because the district has few reserves.

Regardless, he said, all the potentially affected districts are seeking a lasting solution.

Among the options Gustafson presented to the D-11 board on Wednesday, along with the modified school year, were:

• Use district reserve funds, including the highly-restricted TABOR reserve and sell assets for cash. He said he’s exploring if the TABOR reserves could be used.

• Seek voter approval for a $20 million bond fund that could be used to create a permanent cash-flow fund.

• Pay staff less from July to February, and more when the property tax comes in.

• Change the property tax collection cycle so that all the money comes in during January.

He also suggested board members “pray for the defeat of Amendment 61” but cautioned them about campaign rules that limit spending money to oppose the measure.

Some districts are taking action now to avoid other limitations of Amendment 61.

The St. Vrain School District plans to sell bonds this spring that it intended to finance in 2011 and 2012 in part to ensure it has 20 years to pay them off instead of being limited to 10 years of debt, according to a report in the Longmont Times-Call. It’s also taking advantage of a special federal bond program.

Districts are worried not only about Amendment 61, but also two accompanying initiatives that will appear on November’s ballot, Amendment 60 and Proposition 101. Together, the three measures would roll back property taxes, lower the state income tax rate and abolish most fees and taxes related to motor vehicles and telecommunication devices such as cell phones, along with prohibiting the state to incur debt.

Officials from the Colorado Union of Taxpayers, which supports the measures, could not be reached Friday.

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Call the writer at 636-0251.