Letter to the Colorado Department of Education — Reasonable Level of Tolerance (February 14, 2023)

Summary

A letter dated February 14, 2023, from the Department of Education to Commissioner Anthes of the Colorado Department of Education, responding to its written plan for a reasonable level of tolerance under State maintenance of equity requirements. The letter describes the State's definition of small rural LEAs as those with enrollments of 1,000 or fewer students and reports 110 small rural LEAs out of 170 LEAs statewide. It states that the proposed 5 percent tolerance would affect four LEAs for FY 2022 compliance and that the Department determined the approach reasonable. It is signed by Laura Jimenez.

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                             UNITED STATES DEPARTMENT OF EDUCATION


                                                   February 14, 2023

The Honorable Katy Anthes
Commissioner of Education
Colorado Department of Education
201 East Colfax Avenue
Denver, CO 80203-1799

Dear Commissioner Anthes:

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 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-
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 action known as the 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. Accordingly, CDE considers LEAs
with enrollments of 1,000 or fewer students to be “small rural LEAs.” This definition was
established and is periodically reviewed by the Colorado Rural Council, a stakeholder group that
advises CDE on matters pertaining to or impacting rural LEAs.1 Under this proposed threshold,

1
    ruraldefinitionletter12813.pdf (state.co.us)
Colorado has 110 small rural LEAs out of 170 LEAs statewide. CDE asserts that the calculated
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 110 small rural LEAs, CDE proposes to implement a 5 percent tolerance, which would
affect four LEAs for FY 2022 compliance. 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 these small LEAs.

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
                                                  Office of Elementary and Secondary Education
                                                  United States Department of Education


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