In the small mountain town of Cripple Creek, widely known across Colorado for its casinos, donkey herds and mining history, sits a fittingly humble school district faced with rising costs and limited resources to address them.

During the district’s spring break in late March, a high school teacher could be found alone in her classroom preparing for her students’ return the following week.

The need to stay on top of workloads is nothing new in Cripple Creek-Victor District RE-1, which faces challenges with staffing gaps and attrition, aging facilities and long travel distances. But skyrocketing home values, insurance premiums and gas prices, along with new factors affecting state funding, may trickle down to their own shortfalls in future budgets.

“You talk about the struggles in public education, this just feels like a perfect storm right now,” said Superintendent Dan Cummings.

The state legislature currently faces a budget shortfall exceeding $1 billion, and many public educators have feared that K-12 education funding would feel the brunt of significant cuts.

Working in the district as a principal for the past five years, the first-year superintendent is learning firsthand both the fine details of maintaining a school district’s budget while still providing the high-quality education mandated by the state.

In Cummings’ case, meeting these requirements includes busing a handful of students to Colorado Springs, roughly a one-hour drive one way, every day to provide the specialized resources and meet their identified needs.

“Which, I’m not arguing against that,” he said. “I’m just saying there’s not an appropriate way to fund that fairly for rural districts. In a city, it’s a little easier to bus them across town to a different school.”

While cuts to education have been minimal thus far, Cummings said the uncertainty at the state level has various programming up in the air as he and his school board prepare to submit their budget by a June 30 deadline, per Colorado law.

“We know it’s going to be bad, we just don’t know how bad it’s going to be.”

Last year’s School Finance Act was signed into law on May 23, despite districts finalizing their budgets just weeks earlier. With changes to the state’s funding formula potentially having negative impacts on districts in the coming years, paired with declining student enrollment and rising costs throughout the state, Cummings is hoping to get ahead on any potential shortfalls of his own.

To avoid staffing cuts, this could include ending after-school clubs and athletics and the supplemental income tied with these stipends, freezing raises and asking current staff to cover unfilled positions.

“That’s a hard thing for me to bring in my colleagues and tell them that, ‘We want you to do more, we want you to pay more yourself, and we can’t give you any more money,’” he said. “That’s a tough sell.”

Changes coming

After decades of state mechanisms working against public education — which included limited revenue growth through the Taxpayer’s Bill of Rights, a Great Recession-era budget stabilization factor and increased reliance on voter-approved bonds and mill levies — the legislature passed a new formula in 2024 to increase its overall funding.

The formula effectively ends the stabilization factor and increases both overall funding and additional funding for at-risk student populations like English Language Learners, special-education students and districts classified as rural.

Despite the changes, decades of these compounding factors have short-changed overall education funding in Colorado by as much as $10 billion, according to the Colorado Finance Project, a nonpartisan, nonprofit organization that compiles and prepares reports on school finance data.

“We know that the state of Colorado does not fully fund public education. They just don’t,” said Kirk Henwood, president of the Colorado Rural Schools Alliance.

What still has some local educators worried going forward is how exactly new funding will be calculated. Rather than a four-year average to determine the total amount of funding allocated to each student, known as per pupil funding, the new formula will use a three-year average for a more accurate calculation.

Since the announcement of this change, some have argued that this would ultimately result in reduced funding since Colorado schools continue to experience declining student enrollment.

To minimize this and other potentially negative factors, the new formula will gradually phase in over the next seven years and apply a “hold harmless” provision for districts at risk of losing funds in the first year.

Ellicott District 22 in El Paso County is one example of a “hold harmless” district, when accounting for its declining enrollment and higher-than-average percentage of students qualifying for free and reduced lunches. According to state data, D-22’s enrollment is currently just under 1,000 students and has decreased by 13% over the past seven years. Colorado, overall, has also seen its public school enrollment decrease over the past five years.

One proposal from Gov. Jared Polis to bolster the state budget would have reallocated the generated funding from the specific ownership tax, which is generated from vehicle registration fees in Colorado. The tax’s revenue is currently distributed on a county level to its local school districts as an addition to their approved annual budgets. Under the proposal, the revenue would move into the state education fund and get distributed across all districts.

While the intention behind this is more equitable funding, local district leaders argue that this would result in major losses in funding they’ve come to regularly anticipate.

“That doesn’t fix the problem. We already get that money,” said Henwood, also the superintendent of South Routt District RE-3. “So, to start saying that we’re going to reassign it doesn’t make sense.”

In Cripple Creek-Victor RE-1, Cummings said this tax averages out to $350,000 in additional revenue annually for the district.

This year’s School Finance Act, as currently presented, totals $10.2 billion and doesn’t include the change to the specific owner tax, but Henwood said this doesn’t rule it out as an option for future budget shortfalls.

Some of the minor cuts to education already approved this year to address the budget gap include the sunsetting of Colorado’s Teacher Recruitment, Education and Preparation, Academic Accelerator and Science Teacher Professional Development programs.

Another possibility currently being explored is withholding TABOR refunds for the next two fiscal years. Henwood noted that discontinuing the annual refund could serve as another step towards fully funding education.

“I don’t want to pay more taxes. I do not,” he said. “But when we have this artificial constraint of TABOR, it reduces the impact and reduces the tax dollars that the state is already collecting.”

Rural challenges

Colorado’s new funding formula also adds a local factor for districts to provide additional funding based on their designation. Districts designated as “rural remote” or “town remote” will receive $100,000 in additional “cost-of-living funding.”

This additional provision comes as smaller school populations are stacked against rising costs of living and health insurance premiums. Cummings said a recent calculation of his district found health plans increasing by 10.5% or roughly $100 per month. By comparison, they also found the average increase in districts to be about 20%, with some as high as 28%.

Residing in a small affluent community south of Steamboat Springs, Henwood said that the average home sells for $1.6 million, causing incoming teachers to regularly reject their contracts and 25%-30% of staff and faculty leaving the district after one or two years.

Since the district’s high-performing schools consistently attract educators, he added that most of his younger staff and faculty share living spaces or rent rooms out of larger, empty vacation houses.

“I’ve got a first-year teacher this year and she has a couple of friends and so, there are four young ladies living in a single-wide trailer,” Henwood said. “I think it’s three bedrooms and they’re all just crammed in there.”

Despite rising costs of living, public schools also need to prepare for potential population growth. Last year, D-22 was identified as the district missing the most benchmarks for financial health in an audit presented to the state Legislative Audit Committee.

Smith explained that this was the result of investing in new classrooms to accommodate projected population increases, some as high as 12,000 homes and 400 students, within the next two years and tapping into the district’s funding reserves.

“So, they tell us this and we have to be ready to provide those services,” he said. “We don’t want to say that we underdelivered on promises.”

When this growth halted, D-22 found itself still needing to staff bus drivers, custodians, food services and qualified teachers, often while competing with neighboring districts in Colorado Springs offering higher salaries.

One of the most common ways, historically, for districts to increase their local revenue has been to present local voters with tax increases for new bond and mill levy overrides, which is far from a guarantee.

“Absolutely,” Smith said when asked if it’s difficult to pass either ballot measure. “Our tax base is so small, and they’ll scream bloody murder if you try.”

Rural school leaders say these financial hurdles, along with various state requirements, put them at a disadvantage compared to urban districts.

Regarding athletics and after-school activities, Cummings noted increasing costs to remain eligible for the Colorado High School Activities Association (CHSAA). Starting next year, participating basketball teams will be required to have a shot clock in their gymnasiums. The Gazette previously reported that costs for a shot clock can range between $2,000 and $6,000.

Additionally, long travel distances to participate in CHSAA events, which aren’t reimbursed by the state like school bus routes, create additional challenges to provide competitive opportunities for rural students.

“Our kids get on buses every weekend and we’re driving two, three, four hours to go to a track meet that has official timing,” Henwood said. “And we’re paying for that.”

Another resource historically used by rural districts has been grants like Building Excellent Schools Today (BEST), which are distributed annually by the state to offset high costs for capital projects.

In the case of Cripple Creek-Victor RE-1, Cummings said that they have benefited from the state Expelled and At-Risk Student Services grant and a federal 21st Century grant to fill staffing and programming gaps for counselors and after-school programs, respectively.

Because of the finite nature of grants, however, these programs and positions can easily discontinue or go unfilled as their funding is set to expire. In the case of applying for the grants, Henwood added that the process typically falls on the superintendent, whereas a larger district may afford to staff a dedicated grant writer.

With all those factors considered, Henwood maintains that small rural schools can still be among Colorado’s top performers. According to the state’s current performance framework, South Routt RE-3 has achieved the highest ranking, accredited with distinction for five out of the past six school years. Of Colorado’s 178 school districts, only 18 earned this ranking for the 2025-26 school year.

He said that, because of their small population, teachers can develop closer relationships with students and tailor their education to their strengths and interests for optimal results.

“Despite all the challenges for rural schools and rural school districts in Colorado, I still honestly believe that we provide some of the highest quality education in the state,” Henwood said. “Rural does not mean that kids don’t have exposures and opportunities, and I think rural schools go out of their way to provide this.”