What you need to know about marijuana tax money and Colorado schools

What exactly does marijuana money support when it comes to Colorado schools? Here are the basics.

Students at Aurora Central High School work on an assignment during class during the spring of 2015. (Nicholas Garcia/Chalkbeat)
Students at Aurora Central High School work on an assignment during class during the spring of 2015. (Nicholas Garcia/Chalkbeat)
Students at Aurora Central High School work on an assignment during class during the spring of 2015. (Nicholas Garcia/Chalkbeat)

By Yesenia RoblesChalkbeat 

In 2012, backers of Colorado’s landmark constitutional amendment legalizing recreational marijuana pressed their case by touting the financial benefits to the state’s schools.

Four years later, backers of a record number of school tax measures on this year’s ballot are finding the need to explain to voters — yet again — that the benefits haven’t been many.

The reality is that the bulk of the money goes to a school construction fund that doesn’t come close to meeting the state’s needs. That money can’t be used to pay for things like teacher salaries and books.

“I’ve done a lot of bond presentations, and that is one of the stock questions we get: ‘What about the marijuana money? I thought that was going to support schools,’” said Rico Munn, superintendent of Aurora Public Schools, which has a $300 million bond request on the ballot. “We answer it, explain it. People get it. They’re not thrilled. They hear about it and we move on.”

Some school districts have gone so far as to produce materials setting the record straight.

Denver Public Schools published a video earlier this year — posted on Facebook on the unofficial marijuana holiday 4/20 — explaining that the district isn’t swimming in marijuana money. Several other districts have created fact sheets or question and answer pages that point people to state information on the issue.

So what exactly does marijuana money support when it comes to Colorado schools? Here are the basics.

Do all school districts get money from marijuana taxes?
No. Colorado has several different taxes on marijuana. The one that is specifically collected for “education” is an excise tax — a 15 percent wholesale tax. By law, $40 million of what is collected from the excise tax will go into a grant program called Building Excellent Schools Today, or BEST. The competitive grant program, started in 2008, helps schools or districts pay for construction or maintenance needs.

The BEST program gets most of its money from land trusts, oil and gas and lottery dollars. For a number of reasons, the amount of money available has been decreasing.

The 2015-16 school year was the first year that the marijuana excise tax actually collected $40 million for the BEST program. In previous years, less money rolled in. When more than $40 million is collected from the tax, the rest goes to a general fund for schools.

So how do those grants work and who gets them?
For schools or districts to get a grant from BEST, they must apply and explain their needs. Those applications are reviewed and grants are handed out once a year. Districts must come up with matching funds to receive a BEST grant.

Because the state wants to acknowledge that some districts are better off than others, a formula dictates how much each district must provide in a match. This year, that ranged from 3 percent to 335 percent of the amount.

Aurora Public Schools was awarded a grant this year and must provide a matching amount of 150 percent to receive it. In Brighton, the district last year received a grant of $575,016 and the district provided a match of 45 percent of the project cost, or $470,467.

Often, districts have to ask local voters to approve a bond to raise the money needed to match a BEST grant. Some districts have endured the arduous process of applying for and winning a grant, only to have to turn it down when they can’t come up with their portion of the money.

The state posts the winners of the grants — and how much they get — online.

Is that the only marijuana revenue that goes to help schools?
No. Besides the $40 million from excise taxes, sales taxes that are collected from marijuana sales go into a larger fund. Each year, the legislature decides how to spend that money. In 2016-17, lawmakers approved $900,000 to pay for bullying prevention programs, another $900,000 to programs to prevent students from dropping out and $4.4 million for another competitive grant program helping kids learn to read.

For the last several years, state leaders also have provided about $2.3 million for another grant program to help hire school nurses, psychologists or other social workers that can help with health education, the prevention of substance abuse and other mental or behavioral issues that put kids at risk. Again, districts must apply to get this money.

The state posts the list of schools and districts that receive this grant funding online.

Can any of that grant money help pay for more teachers or new books?
No. All of those grant programs have clear instructions on what the money can be used for and none cover general operational needs.

Well, how many new schools has marijuana money built, then? How much does it cost to build a new school?
Because the BEST program gets money from lots of different sources and it’s all mixed together, it’s not possible to say that marijuana money completely funded one grant or another.

In the last three years that money (a little more than $66.9 million) has gone into the account, there have been five grants given for replacing or building new schools. Another four grants for new schools were awarded in the current 2016-17 year, but marijuana excise taxes are still flowing in for this year. Most of the grants awarded are for smaller amounts to help districts pay for urgent maintenance like replacing leaky roofs, broken boilers, water lines or fire alarms.

New school buildings can be expensive. The Adams 12 Five Star School District is estimating that if its bond passes, a new school serving about 1,000 students from preschool through eighth grade would cost between $31 million and $36.5 million to build. Aurora Public Schools received a BEST grant to help replace Mrachek Middle School, but still needs at least $24 million to pay toward the project. Another new school in Aurora, if voters approve their bond, would cost about $34 million.

The Brighton 27J school district started building a $22 million elementary school after voters approved their bond last year.

The $40 million from marijuana’s excise tax by itself likely wouldn’t cover more than one or two new buildings per year.

Colorado officials last estimated the cost of the construction and maintenance needs of the state’s schools in 2009. At that time, officials said schools needed $13.9 billion to fix, renovate or maintain schools — and estimated the need would grow to $17.8 billion by 2018. State officials have started a process to reassess the condition of school buildings. The needs are expected to have increased. And that doesn’t cover the need for new buildings for overcrowding.

What about the extra money after the $40 million goes to BEST? Does any of that money go to school districts?
That extra money goes to the Public School Fund, where it is mixed in with other government revenue and can become part of the money that is allocated to each district by the state. But having more money in this account doesn’t necessarily mean districts get increases in funding. It hasn’t helped close the gap between what the state constitution says school districts should be getting and what districts actually get. In fact, that gap continues to grow.

My city also taxes marijuana locally. Does that money go to schools?
Each local government that has its own tax on marijuana has guidelines for how to spend it. Many just put the money into a general fund to cover their local expenditures. Local cities or counties aren’t responsible for funding schools, so usually schools aren’t what they cover. But occasionally, some governments might fund joint programs with schools.

A couple of local governments that have decided to allocate local revenue for education include Pueblo, which is funding a scholarship for local students, and Adams County, which will use $500,000 each year to pay for 50 scholarships for low-income students.

Chalkbeat is a nonprofit news site covering educational change in public schools.