Colorado school district lawsuit seeks to prevent loss of federal funding

Adobe Stock

Colorado's second-largest school district is asking a court to address a conflict between state law and federal guidelines that could cost it more than $50 million in funding.

A lawsuit filed Tuesday in federal court in Colorado by Jefferson County School District R-1 against the U.S. Department of Education and its Secretary Linda McMahon concerns state law allowing transgender girl students to access facilities and participate in sports earmarked for females and the federal agency's stance that Title IX requires schools to use students' birth sex.

In a message posted on the district's website, Interim School Superintendent Dr. Rob Stein said Jeffco Public Schools was put on notice by the department's Office for Civil Rights that continuing to follow Colorado law could place more than $50 million in annual federal funding at risk. 

"This has placed the district in an impossible position," his message said. "Because the new federal guidelines and state law conflict, Jeffco has asked the court to provide clarity about which direction the district must follow. This lawsuit is a procedural legal step that seeks guidance from the courts on how to resolve that conflict."

The federal agency said on Wednesday it does not comment on ongoing investigations. 

After releasing findings in March that the district violated Title IX by allowing male students to participate in female sports, occupy female bathrooms and locker rooms, and share overnight accommodations with females based on their gender identity, the federal agency issued a Letter of Impending Enforcement Action last month.

Public schools in other states, including Kansas, Maryland, and Michigan, have been the target of similar probes by the agency.

The Colorado lawsuit contends a June 30 U.S. Supreme Court ruling upholding state laws preventing transgender girls from playing in female school sports did not expressly prohibit policies adopted in other states allowing the practice. 

For Jeffco Public Schools, which serves 75,000 students in 145 schools, the potential loss of federal funding comes amid financial woes that led to rating downgrades in April by Moody's Ratings, which cut its issuer rating to Aa3 from Aa2, citing budget deficits, shrinking reserves and elevated unfunded pension liabilities.

The rating agency also lowered the district's unlimited tax general obligation rating to Aa2 from Aa1 and certificates of participation rating to A1 from Aa3. The downgraded ratings were given stable outlooks. 

Jeffco's GO bonds are rated AA and the COPs are rated AA-minus by S&P Global Ratings with stable outlooks.

The school system, which is considering asking voters to approve a property tax rate hike in November, had about $726.7 million of debt, including $673 million of GO bonds, outstanding at the end of fiscal 2025.