Colorado protected school funding without touching TABOR refunds. Now it wants those too.

By Shaina Cole | Contributing Writer, Rocky Mountain Voice

Last session, the Colorado General Assembly passed a bill asking voters to waive their TABOR refunds to fund education. 

The ballot title calls it “without raising taxes.” No rates change. 

But it asks Coloradans to let the state keep money the constitution currently requires it to give back, and it comes one year after the legislature moved more than $200 million into a protected school account without touching anyone’s refund at all.

The two moves address the same problem. They work very differently.

What the legislature did first

In 2025, tucked inside HB25-1320, the School Finance Act, a Senate Appropriations Committee amendment drafted by Sen. Kolker (D) and Sen. Kirkmeyer (R), created something new: the Kids Matter Fund. Governor Polis signed the bill on May 23, 2025.

Starting July 1, 2026, a slice of existing state income tax, specifically 65 percent of one-tenth of one percent of federal taxable income, will flow directly into the fund each year. The money can only be spent on K-12 district funding and state categorical programs. Unspent dollars stay in the fund rather than reverting to the general budget.

Kirkmeyer said the amendment grew out of a shared frustration. “Both Senator Kolker and I are on appropriations, and we had this idea about the Kids Matter Fund, about ensuring that there would be funding for education, and we wouldn’t keep getting requests from the governor and his budget to cut education funding or seeing education funding being cut someplace else,” she said.

“We wanted to make sure that there would be stable funding for education to fund the new formula, because nobody else was finding it. We weren’t getting it done at the Joint Budget Committee, and certainly the Speaker and her bill was not addressing the need for additional funding.”

It draws from an existing tax. No rate changed, no new levy was created. The revenue was already being collected.

What changed was where it went, restricted from competing with other budget priorities and deposited instead into a fund the General Assembly must appropriate each year to spend on K-12.

“There’s also a provision in the statute, and that was in the amendment, that the funds can only go towards the categorical programs and the total program,” Kirkmeyer said. “No grants, no anything else somebody wants to think of that’s related to education. It has to go towards total program and categoricals.”

The Kids Matter Fund is not a permanent fix. The General Assembly must appropriate from it each year. It is a protection, not a guarantee.

When Colorado’s next budget arrived, that protection held.

How it played out

Colorado’s FY2026-27 budget, a $46.8 billion spending plan with $17.4 billion in General Fund expenditures, arrived with what JBC Chair Rep. Emily Sirota described as a $1.2 billion deficit. “It is impossible to close a $1.2 billion budget deficit without making cuts to important programs,” Sirota said in the official signed-budget statement. Medicaid absorbed the major reductions. K-12 education was protected.

The Kids Matter Fund is part of why. The enacted Long Bill built the budget around those anticipated receipts, appropriating an estimated $213.3 million from the fund toward the state’s share of total program funding for school districts. That money was designated for K-12 before the budget fight over everything else began.

What voters are being asked to do now

SB26-135 goes further. It asks voters whether the state should create a new K-12 funding factor that starts at two percent and compounds annually for ten years, paid for not by raising tax rates but by letting the state keep surplus revenue that would otherwise be refunded under TABOR.

The mechanism is the TABOR cap itself. The measure lifts the state’s spending limit by its annual K-12 spending, so surplus up to that higher line stays put rather than coming back as a refund.

Under the SB26-135 fiscal note, which uses the March 2026 LCS revenue forecast, the projected surplus available for retention is $136.1 million in the first year, rising to $969.7 million the year after.

In the first year, $107.4 million would go to K-12 schools through a new per-district funding factor. No homestead property tax reimbursements come from retained funds in the first year.

Beginning in FY2027-28, the spending order shifts: reimbursements to local governments for the homestead property tax exemption that benefits seniors, disabled veterans, and Gold Star spouses come first, then K-12, with any remainder going into the Children’s Account, which can fund programs for children such as child care and preschool.

The retained money goes into a separate account in the General Fund, distinct from the Kids Matter Fund.

The bill’s introduced version called it the “Excess State Revenues Account.” By the time it passed, it had been renamed the “Children’s Account.”

Kirkmeyer has her own view of why the name changed. “They changed it to call it the ‘Children’s Fund,’” she said, “because their campaign slogan is going to be, ‘It’s for the kids.’”

Kirkmeyer said she asked Legislative Council Staff economists for a projection of what the measure would cost taxpayers over ten years. “$37.5 billion in additional taxes on people of the state of Colorado,” she said. “And only $9 billion would go towards education.”

Supporters of the bill have also pointed to teacher pay as a key benefit.

Kirkmeyer said teachers made that case to her in person. “We had teacher after teacher after teacher coming down to the Capitol,” she said. “At one point I think I was surrounded by about 35 teachers and they’re like, we need you to vote for 135 because it’s going to increase teacher pay.”

The legislation does direct that positive-factor distributions to school districts must be used for teacher pay, teacher retention, smaller class sizes, and career and technical programs.

The bill says where the money can go, not how much goes where. “There is no mandate, no obligation to increase teacher pay in that bill or in that referred measure,” Kirkmeyer said. “There’s no mandate that teacher pay is going to get increased. None whatsoever.”

Districts receive the funds with those permitted uses, but the bill does not require them to report to the Department of Education how they allocate among the categories. However, they are required to post information online regarding how the positive factor distributions are spent. 

The question underneath

The “without raising taxes” language in the SB26-135 ballot title is accurate. No rate increases, no new levies. TABOR’s own voter-approval mechanism is exactly what the bill uses. The legislature cannot expand the spending limit on its own, so it’s asking voters directly.

But a TABOR refund is money voters are currently owed when the state collects more than its cap allows. Approving SB26-135 means agreeing to forgo that refund so the state can spend it instead.

“They’re just trying to essentially eliminate your refund and give themselves more money to spend instead of being fiscally responsible,” Kirkmeyer stated.

The Kids Matter Fund avoided this entirely. It redirected existing revenue into a protected account without touching the refund.

SB26-135 asks voters to give up the refund itself, the same check TABOR was built around, in exchange for a permanent expansion of the state’s spending cap.

When asked if voters approve SB26-135 in November, what happens to the role of TABOR as a check on government spending, Kirkmeyer answered without hesitation. “It takes it away, basically.”

Colorado Republicans who voted against the bill made exactly that argument.

The voters’ answer comes November 3.