By Nicole C. Brambila | Denver Gazette
Denver Public Schools transferred ownership of at least 31 schools to a shell corporation, then leased them back for hundreds of millions of dollars
Denver Public Schools has quietly taken on hundreds of millions of dollars in long-term debt without voter approval — money that could otherwise be used to lower class sizes, increase teacher pay or expand student support services, an investigation by The Denver Gazette has found.
The spending comes as contract negotiations between the district and the Denver Classroom Teachers Association (DCTA) have stalled, with union leaders pointing to the district’s failure to fully fund last year’s cost-of-living adjustment.
Educators have repeatedly called for smaller class sizes, better compensation and stronger student support — the very priorities that advocates say are undermined by rising lease payments tied to long-term debt.
To bypass the Colorado Constitution’s ban on assuming public debt without voter approval, DPS officials employed a workaround widely used in public finance circles but little understood by the public: transferring ownership of schools to a corporation, then leasing the buildings back for hundreds of millions of taxpayer dollars.
“This seems to me like a really clever circumvention of the voters,” said Deborah Carroll, director of the Government Finance Research Center and a public administration professor at the University of Illinois at Chicago.
Since at least 1984, the district has employed this tactic — using what is called “certificates of participation” or COPs — to finance off-the-books projects largely out of public view. The maneuver has allowed DPS to accumulate debt that rivals the nearly $1 billion bond voters approved last fall — all without putting a single measure on the ballot.
In some cases, the district borrowed hundreds of millions under these lease agreements but ended up repaying more than twice the borrowed amount once interest and fees were factored in.
The Denver Gazette asked the district for detailed information about its lease-financing arrangements, including the total amount paid to the corporation it created, Denver School Facilities Leasing Corp., how those payments are funded and which properties are being used as collateral. The request also sought clarification on outstanding balances, the use of bond proceeds and whether any entities in addition to the leasing corporation hold ownership or collateral interest in DPS schools.
Bill Good, a district spokesperson, declined to comment, citing an ongoing lawsuit.
The Denver Gazette also reached out to the board of education for comment. No one responded.