Colorado Coalition Wins Major Victory in School Finance Suit

Last Updated: December 30, 2011

This article appeared in the December 2011 Rural Policy Matters.

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In what has been called “a complete legal victory,” twenty-one Colorado school districts have received a decision that the state’s school funding formula is unconstitutional. The District Court also directed the state legislature to revise the funding system.

Earlier this month, Colorado District Court Judge Sheila Rappaport issued a 189-page ruling that details the failures of the system for rural and poor students across the state. The ruling notes that no Colorado school district is adequately funded under the current system. Rappaport cites extensive evidence to support her ruling that the state’s method for funding schools is not rationally related to the Colorado Constitution’s mandate to provide a “thorough and uniform system of public education.”

Kathleen Gebhardt, lead attorney on the case and Rural School and Community Trust Board Member, said that despite an appeal by the state, she hopes the legislature will follow the court order to create a new school funding system. “We think it’s a great day for the children of Colorado,” she said.

The Lobato v. Colorado lawsuit was initially filed in 2005 and has survived numerous political and legal challenges. (See recent RSFN coverage of the trial, including links to additional articles, here).

The named plaintiffs in the suit are children of the Lobato family who were residents of the San Luis Valley when the lawsuit was filed. Taylor Lobato, who was a 6th grader at the time and is now a Denver University sophomore responded to the ruling by saying, “It may be too late for me, and it may be too late for my sister, but there are so many other students in the public education system.”

Prior Challenges to Lobato

The Lobato plaintiff districts survived two trial court rulings against them. One of the rulings found sufficient evidence of state support for education funding in mandated yearly increases in the budget. The other ruling called the question of school funding a “nonjusticiable” political question, meaning courts lack jurisdiction over the matter.

Legal and media challenges were also mounted by TABOR (Taxpayer Bill of Rights) supporters, who contended that because Colorado law requires any spending increases to be approved by referendum, voters have the final say over issues of school funding.

Plaintiff Evidence, State Response, and Court Ruling

Plaintiffs used a “costing-out study” performed by Augenblick, Palaich and Associates (APA) to quantify the shortfalls in funding. Rappaport cited the study in her ruling. Under various models used by APA, the state needs to spend between $1.35 and $4.15 billion more than it spends now to achieve constitutionally-required educational quality.

Prior to the trial Colorado Governor John Hickenlooper and State Attorney General John Suthers had claimed the lawsuit could bankrupt the state and also cited TABOR concerns. But in pre-trial rulings the judge prohibited TABOR issues from being introduced as evidence.

During trial the state’s defense rested heavily on the argument that money does not matter in securing educational opportunity and success for all students. The state also claimed that district inefficiencies were to blame for poor student outcomes.

Judge Rappaport rejected both claims. “These problems are not attributable to inefficiency or inability at the school district level,” she ruled, and went on to challenge the state’s key witness, Eric Hanushek of the Hoover Institute. “Even Defendants’ lead expert witness, Dr. Eric Hanushek, acknowledges that, ‘money certainly matters,’ ” she wrote, and continued, “Moreover, Dr. Hanushek’s analysis relies on the existence of huge inefficiencies within school districts. However, after over 180 depositions and the production of hundreds of thousands of pages of documents, including budgets from almost every school district in the State, the State has been unable to point to any specific inefficiencies or waste in the school districts involved in this case or in any school district in the State.”

Rappaport described the various education reforms that have been instituted in Colorado without adequate funding for districts to implement them, including standards-based curriculum and testing. She noted that other segments of the Colorado public education system, including “high-quality” pre-k, full-day kindergarten, and gifted and talented programs, are severely underfunded to the point of being unavailable to many students. She also noted the “significant demographic changes, particularly in the number and concentrations of English language learners, ethnic minorities, and children of poverty,” and she observed, “the number of children with severely disabling conditions has also grown.”

Rural Nature of the Plaintiff Coalition

The plaintiff district coalition was notably rural by majority, and those districts’ particular concerns played an important role in the trial and subsequently in the judge’s ruling.

One of the most striking injustices for rural Colorado students has been the lack of safe and adequate facilities. Rappaport noted the “serious health and safety problems in school buildings across Colorado.” She wrote: “The recently adopted BEST program provides limited assistance, but is not sufficient to overcome generations of statutory underfunding. The deplorable conditions of numerous rural schools bears witness to this proposition.” (Editor’s note: BEST stands for Building Excellent Schools Today, which provided some state funding to districts to supplement facility funding that is dependent on local property taxes in Colorado.)

District leaders also testified about personnel cuts, outdated textbooks, and lack of sufficient technology due to budget limitations. Plaintiff’s expert Dr. Linda Darling-Hammond described issues related to the recruitment and retention of teachers in rural school. Darling-Hammond also described a number of teacher supports that, when funded and implemented, have been found to dramatically increase student achievement.


Judge Rappaport’s ruling concludes that Colorado’s public school finance system is “irrational, arbitrary, and severely underfunded,” and must be revised. However, the ruling states that the order will be stayed to give Colorado legislators an opportunity to carry out the ruling during the 2012 session. The judge also accurately predicted in her ruling that the decision would be appealed to the Colorado Supreme Court and said the stay is also meant to provide time for that process.

Just last week, Governor Hickenlooper announced that his office would indeed appeal the decision, but the Colorado State School Board, also a defendant in the case, has delayed a decision about challenging the ruling. A number of public education supporters are petitioning state leaders to withdraw the appeal.

Also this month, the state learned that it realized an additional $148 to $231 million in revenues from an increase in sales taxes and a boost in capital gains taxes. Governor Hickenlooper has proposed using these funds to restore previous cuts to education. The Legislative Joint Budget Committee will make the decision about how to allocate the revenue.

Read more:

Local coverage:

Link to Rappaport’s decision is at the top of this page:

Websites dedicated to detailed coverage of the Lobato case:

Non-profit law firm representing the plaintiffs in the case:

Restoration of cuts:

Read more from the December 2011 Rural Policy Matters.