Colorful Commentary

Widespread Funding Inequities Now Plague School Districts Across Colorado

Posted March 14, 2017 by Samantha Curran

By Samantha Curran

CFI Communications Associate 

A child’s chance of getting a quality education in Colorado is becoming more and more dependent upon their zip code as schools across our state are forced to rely more heavily on local tax revenue.

Over the last 25 years, Colorado has cut K-12 funding significantly, causing our schools to fall behind. We currently spend $2,053 less per student than the national average, rank last in the nation for providing teachers a competitive wage, and 49 school districts now operate on four-day school weeks due to financial reasons. In an effort to make up for the shortages in state funds, many school districts are increasing per pupil funding through voter-approved property tax increases.

However, many districts simply do not have the property wealth to raise funding sufficient to make up for diminishing state dollars. As a result, Colorado is beginning to see widespread, gross inequities in the quality of education across the state.

Colorado primarily funds its 178 school districts through a combination of local and state sources. Each legislative session, policy makers decide how much the state will allocate to K-12, and a comprehensive calculation called the School Finance Formula determines how that amount of money gets distributed across all districts. Once a school district’s total program level is calculated, local tax revenue is determined and applied, then state aid makes up for the difference.

The purpose of the School Finance Formula is to compensate for the differences in wealth and needs across Colorado’s diverse school districts. The formula considers a variety of different factors such as a district’s size, number of at-risk students and cost of living to determine how much money it should receive beyond the base amount. This ensures that all districts receive the same proportion of funds. However, as school districts independently raise funds through local property taxes, per pupil funding varies immensely across the state.Per-Pupil

For example, the school finance formula allocates $7,353 per student for Boulder Valley School District RE-2, $7,163 per student for Douglas County School District RE-1, and $7,389 per student for Pueblo City 60. Boulder however, spends $1,737 more per pupil than Douglas County and $2,262 more per pupil than Pueblo City, once local tax increases are accounted for.

The school districts that have the property wealth and appetite to raise local taxes are increasing school funding, but the school districts who cannot raise money locally are being left behind. For example, this past November, Cherry Creek, Boulder and Steamboat Springs all passed tax measures to raise more money for their schools while Greeley, Pueblo and Colorado Springs were not successful.

It’s no coincidence that Cherry Creek, Boulder and Steamboat Springs are also ranked as some of the best schools in Colorado while Greeley, Pueblo and Colorado Springs are ranked toward the bottom according to Niche 2016 school rankings. These local tax measures act as the deciding factor between the school’s ability to offer full five-day school weeks, providing extracurricular programs, updating infrastructure or maintaining small class sizes; all factors that lead to quality education.

Out of Colorado’s 178 school districts, 89 of those operate on four-day school weeks. Half of these schools made the decision to shorten school weeks due to financial reasons, meaning that the number of school districts operating on four-day weeks has doubled since the year 2000. Half of Colorado’s school districts have some or all schools operating on four-day weeks.

As the state continues to make cuts from the state proportion of school finance, it cripples our ability to compensate for disparities across districts and ensure that each child is receiving the education they deserve. We need to urge our policy makers to increase, not cut, state school funding as this is the only viable and fair solution to making our schools a place where all children can flourish.

For more information on school finance, check out our data library.

Federal Budget Watch, March 14

Posted March 14, 2017 by Samantha Curran

binoculars-954021_1280Some of the long-awaited details of the House GOP’s health plan have been released. First, though, we want to call attention to a special report just released from the Center on Budget and Policy Priorities called, “At Risk: Federal Grants to State and local Governments,” by Iris J. Lav and Michael Leachman.

The report, which contains state-by-state data for your use, shows that low- and moderate-income families are likely to bear the brunt if federal funds that go to state and local governments as grants are cut. These grants help finance critical programs and services on which residents of every state rely.

Colorado, for example, receives $9.5 billion in federal grants, comprising 26.3 percent of state spending.

The programs these grants support are at serious risk of being substantially diminished or eliminated, based on past proposals from President Trump and congressional Republicans and the cuts likely in the forthcoming Trump “skinny budget.”

These programs are too important, particularly to low- and moderate-income people, to be considered as available resources that can be cut — either immediately or over time — to reduce the overall budget, to pay for greater defense spending or a wall on the Mexican border, or to finance other administration priorities such as deep tax cuts for high-income people.

Now, here’s the latest budget intel from our friends at the CBPP:

The House Ways & Means and Energy & Commerce Committees considered and approved the legislation before they got a “score” or estimate from the Congressional Budget Office (CBO) on how the bill would impact coverage and federal costs. Even without the CBO estimate, we already knew that the House GOP’s health plan would:

  • Effectively end the Medicaid expansion – which is currently providing 11 million people with coverage and has helped bring the U.S. uninsured rate down to the lowest in history.
  • End Medicaid as we know it by capping federal dollars and shifting billions in costs to states.
  • Make marketplace coverage less affordable and more out of reach for millions of Americans.
    Democrats on the Committees unsuccessfully offered dozens of amendments to the legislation.

Since then, CBO has released their estimates and found that the House Republican health plan would:

  • Cause 24 million people to lose coverage by 2026.
  • Cause the number of uninsured to rise by 14 million in 2018.
  • Cut federal Medicaid spending by $880 billion or 17.6 percent over the next ten years.

To read more on CBO’s findings, read CBPP’s blog, CBO: 24 Million People Would Lose Coverage Under House Republican Health Plan.

House Speaker Paul Ryan is plowing ahead with his plans to hold a House floor vote on the legislation as early as the week of March 20th, despite opposition from some conservative and moderate Republicans. From there, the bill is likely to go right to the Senate floor, bypassing the normal committee process. Senate Majority Leader McConnell has indicated that if the House passes the bill by March 24th, he will likely move to bring the legislation to the Senate floor the following week. The Center had expected that Sen. McConnell would bring a substitute plan to the Senate floor, but that no longer appears to be the case. Instead, McConnell aims to pass the House bill as is – or with only very small changes if necessary. It all depends on whether McConnell will have enough support to move the House bill within his Republican caucus. McConnell is still committed to passing the legislation before the April 10-21 recess, but several Republican senators have expressed misgivings about the bill as drafted.

The next several weeks are critical in our fight to beat the House Republican health plan in the Senate. Here are a few ways you can quickly plug in and lend your voice.

  1. Reach out to our Representatives and Senators. Email or call senators’ health care staff (as well as key state or district staff) to share information on why this bill is bad for Colorado.
  2. Make your voice heard. Tweet at, call, email and comment on the Facebook pages of our Senators and House members with opposition to the bill. The message to deliver in these interactions is:

a. In the House: Urge House members to oppose the House Republican legislation to repeal and replace the Affordable Care Act (ACA).

b. In the Senate: Urge Senators to oppose the House bill or any similar measure in the Senate that would end the Medicaid expansion and the basic Medicaid program as we know it.

Contact info for Colorado congressional delegation:

Sen. Cory Gardner – 303-391-5777 Email here.
Sen. Michael Bennet – 303-455-7600 / 866-455-9866 Email here.
Rep. Diana DeGette (CO District 1) – 303-844-4988 Email here.
Rep. Jared Polis (CO District 2- 303-484-9596 ) Email here.
Rep. Scott Tipton (CO District 3)- 970-241-2499 Email here.
Rep. Ken Buck (CO District 4)- 970-702-2136 Email here.
Rep. Doug Lamborn (CO District 5)- 719-520-0055 Email here.
Rep. Mike Coffman (CO District 6)- 720-748-7514 Email here.
Rep. Ed Perlmutter (CO District 7) – 303-274-7944 Email here.

For more information on how the House GOP’s Medicaid provisions will impact coverage and costs, check out these resources:

Completing FY 17 Appropriations

The House passed a defense appropriations spending bill Wednesday for the current 2017 fiscal year though the bill faces an uncertain vote in the Senate. Congress has only about five working weeks left before April 28, the date when funding for most federal agencies runs out under a continuing resolution appropriations measure adopted in December.

It’s highly unlikely that Congress will complete all the individual appropriations bills, instead extending the CR for the rest of the fiscal year for most agencies. That said, bipartisan negotiations are underway in the Senate to see if they can work out some of the appropriations bills.

To resolve their time crunch, senators of both parties have suggested they may try to pass a single final spending package for fiscal 2017, which would include the House-passed defense bill, all remaining unfinished appropriations measures, and any supplemental funding requested by Trump for the military and the wall/border security, said to be around $30 billion.

President Trump’s FY 18 Budget Request Coming March 16

President Trump’s fiscal 2018 “skinny budget” should arrive on March 16.

Administration officials have said Trump’s proposal would boost planned defense spending next year by $54 billion and offset the cost with deep cuts to domestic and international discretionary programs. Democrats have made clear they would object to any defense spending increase without an equivalent boost for domestic programs, while conservative Republicans are pushing to slash domestic spending to bring down deficits without raising taxes and ending a commitment made in a bipartisan budget deal in 2015 that called for parity between defense and nondefense spending increases.

For more information on what these big cuts in domestic programs would mean, check out CBPP’s blog: Trump Plans Big Cut in Domestic Programs.

Resources on Problems with a SNAP Block Grant

CBPP has three new resources that detail the problems with a SNAP block grant, or other proposals that would cap SNAP funding or merge it with other programs.

  1. A short video featuring Jared Bernstein, a Senior Fellow at CBPP.
  2. A blog post highlighting that Senate Agriculture Chairman Pat Roberts (R-KS) this week said a SNAP block grant “is not the answer.”
  3. A paper detailing the main problems with a SNAP block grant, including state-by-state estimates of the amount of SNAP funding that would not have been available in 2013 had a SNAP block grant been in effect at pre-recession levels.

Property taxes in Colorado nearly the lowest in the nation

Posted March 9, 2017 by Chris Stiffler

property tax rankings by state

By Chris Stiffler

CFI Economist

How do property taxes in Colorado compare to those in other states? Before we answer that, let’s start with the basics.

Your property tax bill is a function of three factors: the market value of your home, the statewide assessment rate (what portion of your home’s value is subject to taxes) and the local tax rate applied to your home (called the millage rate). If you own a $350,000 home in Colorado, you pay on average $2,103 in property taxes.

These tax rates vary across different districts in Colorado. For instance, while the owner of a $350,000 home in Denver pays about $2,293 a year in property taxes, that property tax on that same home in Gunnison would be about $1,722 because of the various millage rates (think tax rates) across counties and schools districts. This also means that as the value of your home increases, as we have seen with steep increases in home values along Colorado’s Front Range, your property tax bill also will increase.

Where do those property taxes go?

About half of the tax revenue goes to fund your local school district, while the other half is split between the county, the city and some special taxing districts set up for specific purposes (such as fire protection districts and sewer/sanitation districts). All property tax revenue stays in the local district, with none of it going to the state.

property tax ranking chartsWhat if you picked up that same $350,000 house and moved it to Texas? Then you’d see your property taxes more than triple. The owner of a $350,000 home in Texas pays $6,635 in annual property taxes. If that $350,000 house were in Kansas, $4,903 would be owed each year in property taxes. In Nebraska, the homeowner would pay $6,482 a year.

When you rank states by effective home property tax rates (basically, total property taxes divided by home value), Colorado ranks 44th  — meaning only six other states have lower property taxes on homes than Colorado. It is also important to remember that a state’s revenue comes from property taxes, income taxes and sales taxes. So while Texas has no income tax, the Lone Star State’s property taxes are among the highest in the country.

Just because Colorado’s property taxes rank as some of the lowest in the country doesn’t mean they are affordable for all homeowners. Retired seniors, who are typically on fixed incomes, can have a hard time paying their property tax bills, particularly if the value of their home (and therefore their property taxes) has increases dramatically. This is why Colorado has a property tax break for seniors called the Senior Property Tax Homestead Exemption.

This property tax break for seniors saves the owner of a $350,000 house on average $600 a year. Local schools and local fire departments don’t lose out on that $600 because the state reimburses local governments for the exemption. This ultimately means that the state pays the tab.

But the homestead exemption is not always available each year. The legislature has the power to change the size of the credit and can even lower it to zero during tough budget years. The homestead exemption costs the state about $140 million each year. It has also been one of the things that might be cut to help bridge the budget shortfall this year.

 

Federal Budget Watch, Mar. 6

Posted March 6, 2017 by Samantha Curran

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House Republicans are poised to roll back expanded Medicaid coverage under the ACA. We’ve got the latest intel, thanks to our colleagues at the Center on Budget and Policy Priorities. Let’s get started with this week’s Federal Budget Watch.

House Republicans and Republican Governors Crafting Health Proposals

House Republicans are crafting a legislative package to repeal and replace the Affordable Care Act (ACA) which is now expected to be marked up this week in the Energy & Commerce and Ways & Means Committees. It’s becoming increasingly apparent, based on press reports and other indications, that the House bill will effectively end the Medicaid expansion within a few years, and will shift significant costs to states in converting the program to a per capita cap or block grant.

As the Center on Budget and Policy Priorities wrote in their report, House Republican Proposals to Radically Overhaul Medicaid Would Shift Costs, Risks to States, the document shows that their starting point remains the ACA “repeal and delay” legislation that President Obama vetoed last year (with modifications) — a bill that would increase the number of uninsured by 32 million people, according to Congressional Budget Office (CBO) estimates. Moreover, the document shows that House Republicans intend to use ACA repeal legislation to fast track their longstanding proposal to convert Medicaid to a per capita cap or block grant. The full report details the enormous impact on states and beneficiaries and includes state-by-state data, showing that in 2019, Colorado’s federal dollars for the expansion group would be reduced by $631.6 million, increasing the state’s expenses by about the same amount.
Last Thursday, House Republicans unveiled to a few Republican members their new ACA repeal legislation. The Center’s newly released blog, House GOP Medicaid Provisions Would Cut Federal Medicaid Spending by $560 Billion Over Next Decade, discusses the impacts of ending the ACA’s enhanced federal funding for Medicaid expansion, which outlines, leaked discussion drafts. The blog reports that the House Republican health plan would shift an estimated $560 billion in Medicaid costs to the states over the next ten years, effectively ending the ACA’s Medicaid expansion for 11 million people.

Meanwhile, a number of Republican governors are also crafting a health plan that would cap federal funding for Medicaid, leaked documents show. The Center posted a blog from Aviva Aron-Dine Sunday that explains how this plan would require states to accept a per capita cap or a block grant in place of current federal funding for the ACA’s Medicaid expansion, and “allow states to opt for a per capita cap or block grant for other groups that Medicaid covers, including parents, children, pregnant women, seniors, and people with disabilities. The plan also proposes other damaging changes in Medicaid, such as letting states cap enrollment and deny coverage to eligible individuals.”

In addition, The Center explains why “a work requirement in Medicaid would penalize those least able to get and hold a job — while keeping others from improving their health and participating in the workforce,” in their blog, A Medicaid Work Requirement Would Block Poor Families From Care. Many conservatives in Congress and among the nation’s governors seek more flexibility in their Medicaid programs, such as the option to impose work requirements.

Finishing up FY 17 Appropriations

The current “continuing resolution” (CR) funding most appropriated or discretionary federal programs expires April 28, so Congress is turning its attention to trying to finish up the appropriations bills for the rest of this fiscal year. It’s unlikely that Congress will complete all of the individual appropriations bills, instead extending the CR for the rest of the fiscal year for most agencies. That said, bipartisan negotiations are underway in the Senate to see if they can work out some of the appropriations bills.

The President has signaled that he will submit a request for additional FY 17 defense spending, funding for greatly increased immigration enforcement and his wall along the border with Mexico. Conservatives may insist on offsetting cuts to pay for immigration enforcement and the wall, and there’s a risk that the cuts could come from nondefense discretionary programs.

President Trump’s FY 18 Budget Request Coming March 16

In his inaugural address to Congress last week, President Donald Trump promised to deliver a budget that would produce “one of the largest increases in national defense spending in American history.”

President Trump’s address focused fiscal priorities on rebuilding the military, improving care for veterans, and launching a $1 trillion infrastructure program. How to pay for it all won’t be made clear until the President submits his fiscal 2018 budget request, a preliminary outline of which is promised to Congress on March 16. While initial budgets submitted by Presidents in their first term often lack certain details, they typically cover all major policy areas. However, this one will reportedly only address discretionary spending, not entitlements, revenues, or deficits. Administration officials have said Trump’s proposal would boost planned defense spending next year by $54 billion and offset the cost with deep cuts to domestic and international discretionary programs.

In a new blog, Trump Plans Big Cut in Domestic Programs, The Center explains that “President Trump’s plans to raise defense funding by $54 billion in 2018 and cut non-defense discretionary (NDD) spending — which funds key priorities like education and job training, clean water, scientific and medical research, veterans’ medical care, and homeland security — by the same amount would lower NDD funding by 11 percent below this year’s level. The additional $54 billion cut would come on top of sequestration cuts that are already scheduled to take full effect in 2018 under the 2011 Budget Control Act.”

Moreover, the cuts in most NDD programs compared to 2017 will likely be significantly larger than 11 percent, as programs in some areas – such as veterans and border security – are expected to receive increases, requiring deeper cuts in other areas.

Tax Cuts

President Trump and Congressional Republican leaders continue to press for action in Congress this year on tax reform and tax cuts. When Congress takes up the Budget Resolution for FY18, these leaders reportedly will include reconciliation “instructions” in the plan to advance tax cuts in the very same procedural manner they are advancing the ACA repeal: a filibuster-proof measure that requires just 51 votes instead of the usual 60 votes. Trump, Speaker Ryan and others are pressing for deep tax cuts for the wealthy. Administration officials have called on Congress to complete action on a tax bill by August, though many observers think that is an unrealistic goal.

This legislation could also include harmful provisions affecting the EITC and the CTC in the name of “program integrity.”

2017 Pies and Charts

Posted February 22, 2017 by Caitlin Schneider

 

Pies and Charts
The Colorado Fiscal Institute’s

Mid-Session Briefing

Pie 2

Thursday, March 30, 2017
5 p.m. – 6:30 p.m.
Mile High United Way
711 Park Ave. W


Get your forks ready for CFI’s third annual Pies and Charts on Thursday, March 30. Join the CFI team and learn the latest on how Colorado is slicing the state budget and hear what we’ve got baking for this year’s 2017 legislative session.

RSVP today to secure your slice of the pie.

 

 

Federal Budget Watch, Feb. 17

Posted February 17, 2017 by Samantha Curran

binoculars-954021_1280

Will we see the end of Medicaid as we know it? Let’s get right to it in this week’s Federal Budget Watch, thanks to our friends at the Center on Budget and Policy Priorities.

ACA/Medicaid

Today, House Republicans circulated a 19-page blueprint to their conference that lays out the contours of the ACA “repeal and replace” legislation they intend to move in early to mid-March. This document, while short on some critical details, confirms their intention to eliminate in the near future the extra federal funding for the Medicaid expansion and convert Medicaid into a block grant or per capita cap — the end of Medicaid as we know it. It also contains no plan to protect people with pre-existing conditions and others who lacked access to affordable coverage before the ACA, while it doubles down on expanding Health Savings Accounts that do little for families struggling to pay for insurance — but provide large tax breaks for the wealthy.

We will have more information on this soon.

Republican leaders have indicated their goal of marking up the Energy and Commerce Committee’s share of a “repeal and replace” bill in the week after the Presidents’ Day recess. The Ways and Means Committee reportedly aims to mark up its share of the bill in March as well. Of course, these dates could slip.

Meanwhile the Trump Administration released an Executive Order on the ACA yesterday. Here is a quick analysis:

Trump Administration’s New Health Rule Would Reduce Tax Credits, Raise Costs, For Millions of Moderate-Income Families – http://www.cbpp.org/research/health/trump-administrations-new-health-rule-would-reduce-tax-credits-raise-costs-for

“The Trump Administration’s new proposed rule on health care would raise premiums, out-of-pocket costs, or both for millions of moderate-income families. If finalized as proposed, the rule would reduce the amount of health care that marketplace plans have to cover. That would allow individual-market insurers to offer plans with higher deductibles and other out-of-pocket costs than they can now sell through the marketplaces. It would also have the hidden impact of reducing the Affordable Care Act’s (ACA) premium tax credits, which help moderate-income marketplace consumers afford health care. As a result, the rule would force millions of families to choose between higher premiums and worse coverage.”

Other Legislative Updates

This week, the House is working on bills related to veterans and labor department rules, including a one resolution (House Joint Resolution 42) that would nullify a rule that limits states’ ability to drug-test applicants for unemployment compensation.

The Senate has been focused on nominations. Last week, they confirmed Betsy DeVos as Education secretary, Jeff Sessions for Attorney General, Tom Price as Secretary of Health and Human Services and Steven Mnuchin for Secretary of the Treasury. The next nominees to be considered are:

  • Mick Mulvaney to be OMB director
  • Scott Pruitt to be EPA administrator
  • Wilbur Ross to be Commerce secretary
  • Ryan Zinke to be Interior secretary
  • Ben Carson to be HUD secretary
  • Rick Perry to be Energy secretary

The Senate will likely be consumed by confirmation battles over President Trump’s Cabinet nominations for the rest of this month.

Appropriations/Tax

Congress now has less than 11 weeks to complete action on the FY 17 appropriations bills (under a current continuing resolution) to keep the government running before funding from the stopgap measure expires April 28, with three of those weeks scheduled to be recess periods: Feb. 20-24 and April 10-21. We understand that the serious discussions and negotiations on this between the Administration and Congressional leaders will begin in earnest after the President’s Day recess.

Uncertainty over military spending threatens to make consideration of a final funding package for the rest of the fiscal year even more complicated, as the Trump administration is expected to request a supplemental appropriation for the Pentagon and to pay for the wall along the border. The Pentagon money will be framed as an emergency. It’s unclear whether the cost of the wall will be declared an emergency and not paid for, or whether we’ll see efforts to cut FY17 nondefense discretionary spending to pay for it. The conservative House Freedom Caucus, is demanding that military increases be paid for by cuts in non-defense appropriations.

After indications that the Trump administration would skip submitting an early budget outline, it appears that it will send a “skinny budget” (preliminary budget) to Congress in March. White House spokesman Sean Spicer recently said a budget request to Congress could be “released in a few weeks.”

President Trump has also promised to unveil a big tax-cutting plan in coming weeks. House Republicans continue to work to put together a tax reform bill including tax cuts for the wealthy.

We should hear more about these proposals when President Trump addresses a joint session of Congress on Feb. 28. Newly inaugurated presidents often deliver this type of speech instead of a formal State of the Union address, giving them a full year instead of a few weeks to fully assess the state of the country.

Tentative Timeline

Below is a tentative timeline of what we could see through the summer and fall.
TENTATIVE Timeline of Threats to Federal Health and Safety Net Programs

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Leaked House Republican Agenda/Timeline

Politico obtained a copy of a leaked legislative timeline of the next year from House Republicans, listing specifics on what they need to do — and by when — in this new Congress. The detailed cheat sheet — distributed by House GOP leadership in a closed-door session — about the 14 key deadlines in 2017. The document provides a skeleton for what needs to happen over the next year.

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AARP Letter to Energy and Commerce on Medicaid

AARP sent this letter to the Committee on Energy and Commerce for a hearing their oversight subcommittee held on Medicaid. The letter contains useful language on who benefits from Medicaid and warns against proposals calling for a block grant or per capita cap. You can read the full letter here.

 

Contact info for Colorado congressional delegation:

Sen. Cory Gardner – 303-391-5777 Email here.
Sen. Michael Bennet – 303-455-7600 / 866-455-9866 Email here.
Rep. Diana DeGette (CO District 1) – 303-844-4988 Email here.
Rep. Jared Polis (CO District 2- 303-484-9596 ) Email here.
Rep. Scott Tipton (CO District 3)- 970-241-2499 Email here.
Rep. Ken Buck (CO District 4)- 970-702-2136 Email here.
Rep. Doug Lamborn (CO District 5)- 719-520-0055 Email here.
Rep. Mike Coffman (CO District 6)- 720-748-7514 Email here.
Rep. Ed Perlmutter (CO District 7) – 303-274-7944 Email here.

Capitol Gains: Duck, Duck, Goose

Posted February 15, 2017 by Ali Mickelson

By Ali Mickelson

Director of Tax and Legislative Policy

Duck_Duck_GooseMost of us remember sitting in our elementary school gymnasium anxiously awaiting that tap on the head. Your classmate moves slowly around the circle, delicately patting hat after pigtailed head, until finally, when the of suspense had nearly engulfed you, he yells “goose!” and breaks into a sprint to secure his spot before getting tagged from behind.

So goes the game “Duck, Duck, Goose,” one we look upon fondly in memories but rarely play beyond the fifth grade. But now the Colorado General Assembly is poised to invent a new, adult version of this childhood favorite disguised as an overhaul of our state college savings plan.

House Bill 17-1007 creates a tax break for employers who contribute to an employee’s 529 CollegeInvest savings plan. This bill allows employers to take a double deduction for contributions to employees’ college savings plans while simultaneously requiring employees to pay state tax.

This policy is kind of like Duck, Duck, Goose, but with a nasty twist. Employers first “duck” their tax liability by deducting their contribution as employee compensation. Then, under the bill, they’d “duck” their tax liability on an authorized 529 contribution. Meanwhile, employees would get “goosed” with the tax on the employer contribution, as it would be considered income to the employee.

Let’s be honest. This game sucks.

Without this bill, employers can still contribute to an employee’s 529 plan. If an employer wants to contribute, they can put money into an employee’s plan and still deduct that cost as employee compensation. This bill simply creates another tax loophole that allows for the state 529 deduction in addition to the compensation deduction.

Higher education is becoming less and less affordable for Colorado families, and college savings is more important than ever. However, Colorado’s 529 program already disproportionately benefits the wealthiest Coloradans. It should be a priority of the General Assembly to help low- and middle-income families find ways to increase savings for college. But this bill is not targeted at families that most need support and instead opens the door for further inequities in our 529 program while reducing state revenue available to fund higher education.

CFI is fighting to make sure the game is fair and Colorado families don’t become a permanent goose.  We will be testifying against HB17-1007 when it goes to the House Education Committee, currently scheduled on Feb. 22. Join our fight by contacting your Legislators and asking them to vote “no” on Duck, Duck, Goose.

EITC Expansion Would Build Prosperity in Uncertain Times

Posted February 14, 2017 by Samantha Curran

By Samantha Curran 

CFI Communications Associate

Despite the current ambiguity with potential changes in federal policies that could leave millions of struggling families with less support to meet basic needs, Colorado can ensure that all working Coloradans are offered a hand up when struggling with low-wages, by expanding the state’s Earned Income Tax Credit (EITC).

The EITC is one of the most effective and sensible tools to help struggling working Americans esScreen Shot 2017-02-08 at 3.45.20 PMcape poverty.

The EITC helps working families make ends meet. Many low-wage jobs fail to provide sufficient income to get by. State EITCs reduce the taxes paid by low-income working families, allowing them to keep more of what they earn. In turn, this also allows these families to spend more of their income on the local economy.

The EITC encourages work. By offsetting income taxes for low-wage workers, this credit encourages parents to seek out employment and rewards hard work. In addition, the EITC keeps families working by helping low-wage working families pay for things like child care and transportation, which are essential to continue work.

The EITC helps working parents better meet their children’s needs. Studies show that when families with low incomes get an income boost, their young children tend to do better and go further in school. The more education a child receives and the more skills they acquire, the greater their earning potential as adults. This leads to a stronger future economy.

Colorado is one of 26 states plus the District of Columbia that have enacted their own version of the federal EITC to help low-wage working families meet basic needs. However, under current law, low-wage workers not raising children in the home and adults under the age of 25 are ineligible to receive the EITC. Former President Obama and House Speaker Paul Ryan proposed nearly identical plans to address this issue. Their proposal would expand the EITC for workers not raising children and lower the eligibility age to 21.

Colorado does not have to wait for federal action however. We can expand our state’s EITC to benefit all workers struggling to get by on low wages.

In addition to the 377,000 Colorado households that benefited from the EITC in 2014, about 12,000 Colorado veteran and military members, 62,000 Colorado workers between the ages of 21 and 24 and 24,000 low-wage workers in rural Colorado would benefit from an EITC expansion.

The EITC has been proven to help lift hard-working Coloradans out of poverty, but has the power to do much more. While we eagerly wait to see what federal policy changes will be made in the near future, Colorado can show its support for all low-wage working Coloradans, by ensuring they get the boost they need to make ends meet.

What happens when Gallagher collides with TABOR? Not good things.

Posted February 13, 2017 by Tim Hoover

We’ve made a short video explaining what has happened to funding for schools and other services in Colorado because of the collision between the Gallagher and TABOR amendments. Please take a look.

What Republican Plans for Repealing and Replacing the ACA Could Mean in Colorado

Posted February 13, 2017 by Chris Stiffler

By Chris Stiffler

CFI Economist

Republicans in Congress have vowed to make a repeal of the Affordable Care Act a top priority in 2017.  To better understand the health care debate coming in 2017, we need to understand how Obamacare changed health care policy in Colorado and just what is at risk if the ACA is repealed.

What did Obamacare do in Colorado?

ACA CoverageAs a result of the major changes from the Affordable Care Act (often referred to as Obamacare) Colorado expanded Medicaid and created a health insurance marketplace. Medicaid, which is jointly funded by state and federal dollars, provides health care to low-income individuals and children, elderly individuals and Coloradans with disabilities. Traditional Medicaid does not cover low-income adults without children. Colorado’s legislature voted to expand Medicaid in 2013 which expanded coverage to low-income adults. The ACA also created a health insurance marketplace for individuals who don’t get insurance through an employer or other means. Many Coloradans buying private insurance through the marketplace get assistance from the federal government in paying monthly premiums.

Most of the Medicaid expansion and much of marketplace is supported by federal dollars

The Medicaid expansion population is mostly funded by federal dollars. In 2017, federal dollars will pick up 95 percent of the expansion costs and the other 5 percent will be funded through a mechanism called the Hospital Provider Fee (a fee paid by Colorado hospitals to the state which then generates federal matching funds). No dollars from Colorado’s General Fund are used to pay for the Medicaid expansion. This means that rolling back the Medicaid expansion would not free up additional state dollars to pay for other important priorities like schools, roads or colleges.

The federal match ratio steps down until the federal government pays for 90 percent of the cost in 2020.[1] This is a significant amount of funding that flows through Colorado health care facilities and local economies.[2] All those federal dollars represent a huge injection of economic activity into Colorado. It is estimated that more than 31,000 jobs in Colorado were created because of the expansion of Medicaid and the large injection of federal dollars into Colorado.

Coloradans buying private health insurance through the marketplace also get a chunk of change from the federal government via the individual subsidies. Currently, the federal government provides subsidies to individuals below 400 percent of the federal poverty line to help offset the cost of their monthly premiums. In 2016, Coloradans who enrolled in the marketplace received an average premium tax credit of $318.[3] Nationwide, statistics show that the federal credit covers 73 percent of the total monthly premiums for comprehensive coverage.

What does this mean for health equity in Colorado?

The marketplace and the Medicaid Expansion could be in jeopardy if federal funding is cut. Last year 324,000 adults enrolled in Medicaid because of the expansion. Many of these adults are working in low-wage jobs that don’t pay enough to boost them above the poverty thresholds for Medicaid. Without the several billion dollars of federal dollars to flow into Colorado to pay for the expansion population, many will lose health insurance. Pulling back the Medicaid expansion and eliminating the federal subsidies in the marketplace would cause the uninsured rate to double in Colorado to more than 1 million people.

That’s almost one in five Coloradans.

It’s projected that the Republican alternative to the ACA would create an insurance market very welcoming to young, healthy and upper-income people while being less welcoming to sicker, older and low-income individuals. For instance, there are currently mandates for insurers to include a standard package of benefits for each health care policy. Eliminating those mandates would allow younger/healthier people to buy cheaper plans while simultaneously making those benefits more expensive for those who need them. There are also limits on how much insurers can charge their oldest enrollees compared to the youngest. If those limits are removed, it would make private insurance more expensive for older enrollees and less expensive for the young.

The bottom line

Years of work by advocates to expand Medicaid to low-income Coloradans and to lower the rate of uninsured are now in jeopardy of being reversed substantially. As the year begins, here are some important things to watch for:

  • Before March, Congress is likely to enact some repeal of Obamacare.
  • A replacement could include block granting Medicaid, reducing the expansion match rate from the current 90 percent to a 50 percent match or completely eliminating federal support for expanded Medicaid.
  • Federal subsidies for moderate-income Coloradans to buy insurance could be rolled back or eliminated.
  • By May, insurers must submit bids to participate in Colorado’s marketplace. Depending on what happens to Obamacare, insurers may choose not to enter the marketplace, potentially driving up premiums due to less competition.

Check out our quarterly publication called Health Divides, to learn more about equity and economics in health care.

[1] See the Colorado Health Institute’s analysis on the Medicaid expansion: http://www.coloradohealthinstitute.org/uploads/downloads/MK_Expansion_Report.pdf

[2] See The Colorado Health Foundation’s report: http://www.coloradofuturescsu.org/wp-content/uploads/2016/08/medicaid-expansion-2016-full-report.pdf

[3] http://www.cbpp.org/sites/default/files/atoms/files/12-7-16health-factsheets-co.pdf

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