Colorado Bill SB26-135: K-12 Funding and Excess Revenue Retention

Detected March 13th, 2026

Summary

Colorado bill SB26-135 proposes to increase state public K-12 education funding by up to 2% for ten years, contingent on voter approval in November 2026. The bill would allow the state to retain excess revenues above the fiscal year spending limitation to fund this increase and other educational initiatives.

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What changed

Colorado bill SB26-135, introduced for the 2026 Regular Session, proposes a significant change to K-12 education funding by allowing the state to retain revenue exceeding the fiscal year spending limitation. This retained revenue, if approved by voters via a ballot question in November 2026, would be used to increase state public K-12 education funding by up to 2% annually for ten years. The bill outlines specific uses for this additional funding, including increasing teacher pay, improving retention, lowering class sizes, and expanding career and technical courses. It also establishes an 'excess state revenues account' to manage these funds and requires the state auditor to report on their expenditure.

For educational institutions and related state agencies, the primary implication is the potential for increased funding, subject to voter approval and legislative action. The bill requires the secretary of state to refer the ballot issue and directs legislative council staff to determine funding amounts. School districts would receive additional funding through a 'positive factor' mechanism, with strict guidelines on how these funds can be utilized. Compliance officers should monitor the progress of this bill through the legislative process and prepare for potential new funding streams and associated reporting requirements if the ballot question is approved. No immediate compliance actions are required until voter approval and further legislative implementation.

What to do next

Monitor legislative progress of SB26-135.
Prepare for potential new funding allocation and expenditure reporting requirements if the ballot question is approved by voters in November 2026.

Source document (simplified)

SB26-135

State Public K-12 Education Funding

| Type | Bill |
| --- | --- |
| Session | 2026 Regular Session |
| Subjects | Education & School Finance (Pre & K-12) Fiscal Policy & Taxes |
Concerning state public education K-12 funding, and, in connection therewith, increasing appropriations for state public education K-12 by up to two percent for ten years, using the increased appropriations for district school financing factor funding, allowing the state to retain an amount of state revenue in excess of the limitation on state fiscal year spending equal to state public K-12 education funding, and submitting a ballot question to the registered electors of the state.

Recent Bill (PDF) Recent Fiscal Note (PDF) Bill Summary:

The bill requires the secretary of state to refer a ballot issue at the November 2026 general election to seek voter approval for the state to retain and spend an amount of state revenue equal to the amount of state public K-12 education funding in excess of the limitation on state fiscal year spending and to increase state public K-12 education funding by up to 2% for 10 years.

The bill directs legislative council staff to determine the amount of state public K-12 education funding and describes how legislative council staff will make that determination.

The bill creates a positive factor to provide additional funding for each district. A positive factor is equal to the lesser of 2% of statewide total program funding for the 2026-27 budget year multiplied by a district's total program as a percentage of the statewide total program or the amount that the state is authorized to retain and spend that would otherwise have been in excess of the limitation on state fiscal year spending multiplied by a district's total program as a percentage of the statewide total program. A district may only use its positive factor funding for increasing teacher pay, improving teacher retention, lowering class sizes, and increasing access to career and technical courses.

The bill creates the excess state revenues account (account) within the general fund. The account consists of an amount of money equal to the amount of state revenues in excess of the excess state revenues cap that the state retains for a given fiscal year pursuant to voter approval of the bill. Money in the account must first be spent for paying districts their positive factor and only after that may be spent for any other purpose.

The bill directs the state auditor to conduct and publish, for each state fiscal year that the state retains and spends state revenues in excess of the limitation on state fiscal year spending, a legislative report. That report must include descriptions of:

The amount of state revenues that the state retained and spent that would otherwise have been in excess of the limitation on state fiscal year spending; and
How the state revenues that the state retained and spent that would otherwise have been in excess of the limitation on state fiscal year spending were expended. Lastly, the bill makes conforming amendments to ensure that voter approval of the bill does not impact the expanded earned income tax credit, the family affordability tax credit, or the affordable housing financing fund. (Note: This summary applies to this bill as introduced.)