Letter to the Colorado Department of Education — Reasonable Level of Tolerance (January 25, 2024)

Summary

Colorado Commissioner of Education Susana Córdova is told in a January 25, 2024 letter from Laura Jimenez that the Department accepts the Colorado Department of Education's FY 2023 tolerance plan for maintenance of equity, which applies to a subset of LEAs. Colorado treats LEAs with 250 or fewer students as small rural LEAs, citing the Budget Stabilization Factor and tax-base swings tied to natural resource extraction, and proposes tolerating up to a five percent reduction in per-pupil funding for its 52 such LEAs. The tolerance would affect two high-need or highest-poverty LEAs serving 0.03 percent of students, and the Department finds it reasonable and consistent with the FY 2022 request.

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Full text

                      UNITED STATES DEPARTMENT OF EDUCATION
                          OFFICE OF ELEMENTARY AND SECONDARY EDUCATION




                                        January 25, 2024

The Honorable Susana Córdova
Commissioner of Education
Colorado Department of Education
201 East Colfax Ave.
Denver, CO 80203

Dear Commissioner Córdova:

The U.S. Department of Education (Department) received your written plan for a reasonable
level of tolerance when calculating whether the Colorado Department of Education (CDE)
has met State maintenance of equity requirements in fiscal year (FY) 2023 under the American
Rescue Plan Act of 2021 (ARP Act). This written plan applies only to a subset of Colorado’s
local educational agencies (LEAs).

The ARP Act State maintenance of equity requirements help ensure that State funding supports
LEAs with high concentrations of poverty and the students who have been subject to
longstanding opportunity gaps in our education system and experienced the greatest impact from
the COVID-19 pandemic. These requirements are vital for ensuring that States maintain funding
to address the impact of the pandemic on students’ education, and for protecting students in high-
need and highest-poverty LEAs from disproportionate cuts if reductions in State effort do occur.

The Department determined that it is consistent with the State maintenance of equity
requirements to allow a State educational agency (SEA) to calculate whether it has maintained
funding equity with respect to its very small high-need and highest-poverty LEAs within a
reasonable “tolerance level.” The Department’s determination is based on the possibility of
significant volatility in the calculated per-pupil funding amounts for very small LEAs caused by
small changes in student enrollment, which may be unrelated to whether an SEA has achieved
the intent of the requirements. (See Frequently Asked Questions, American Rescue Plan
Elementary and Secondary School Emergency Relief Program, Maintenance of Equity
Requirements, July 26, 2022, Question 21(a).)

According to materials provided by CDE, LEAs in Colorado are funded through a mix of State
and local funding depending on the composition of the local tax base. When an LEA shifts from
being entirely locally funded to receiving both State and local funds, the district incurs the
impact of a budget balancing Budget Stabilization Factor (BSF). Small rural LEAs are
particularly impacted by the BSF, which can reduce overall per-pupil revenue given local tax
base fluctuations tied to natural resource extraction. CDE considers LEAs with enrollments of
250 or fewer students to be “small rural LEAs.” CDE asserts that calculated annual per-pupil
funding amounts for small rural LEAs are significantly affected by small changes in student
enrollment, which makes these data an unreliable indicator of whether the SEA has achieved the
intent of maintaining equity in funding across LEAs.
For its 52 small rural LEAs, CDE proposes to implement a tolerance of up to a five percent
reduction in per-pupil funding from year to year. This tolerance would impact two LEAs
identified by the State as meeting the definition of high-need or highest-poverty that served 0.03
percent of Colorado’s students in FY 2023.

After reviewing CDE’s tolerance proposal and accompanying data, the unique circumstances in
the State, and our further State-specific analysis, we have determined that this approach includes
a reasonable level of tolerance when calculating whether Colorado has maintained equity for
small rural LEAs in FY 2023 and is consistent with CDE’s FY 2022 tolerance request.

We appreciate your diligence in developing this proposal. If you have any questions, please
contact your program officer at: Colorado.OESE@ed.gov.

                                                   Sincerely,
aura Jimenez
                                                   Laura Jimenez

                                                   Laura Jimenez
                                                   Director, Office of State and Grantee Relations


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