EHB 2242 Funding Basic Education Dave Cook Yakima County Assessor How Yakima County Taxpayers will be impacted

Overview McCleary vs. State of Washington 2017 Legislative Session – EHB 2242 Impact to Yakima County Taxpayers Conclusion Questions & Discussion

McCleary vs State of Washington Trial in 2009 – State of Washington lost State of Washington appealed Washington State Supreme Court upheld lower court ruling in January 2012 Supreme Court retained jurisdiction over the case to ensure the Legislature met the court’s mandate for increased funding by 2018 https://waschoolexcellence.org/the-mccleary-case/ McCleary v. State: A landmark case for Washington schoolchildren Faced with a long-outdated state funding system that failed to fully fund even the basic elements of a high quality 21st century education, the Network for Excellence in Washington Schools filed a lawsuit in 2007 asking the courts to order the State of Washington to live up to its paramount constitutional duty to make ample provision for the education of all Washington children. The suit was brought on behalf of two Washington families: Matthew and Stephanie McCleary and their children, Kelsey and Carter, and Robert and Patty Venema and their children, Halie and Robbie.  In the suit, NEWS sought to establish that the State was in violation of its constitutional “paramount duty” and that, in the words of the Washington State Constitution: “Paramount” means paramount, that public education is funded first before everything else “Ample” means ample, more than enough and not just what is left over “All” means all students, not just those living in wealthy school districts or those who are easy to teach, and “Education” means the knowledge and skills students need to succeed in today’s world as established in State education standards such as the Essential Academic Learning Requirements (EALRs) A trial in King County Superior Court in 2009 was decided in NEWS’s favor on virtually all points. The State appealed, and in January 2012, the Washington State Supreme Court upheld the lower court ruling. The Supreme Court also took the remarkable and unprecedented step of retaining jurisdiction over the case to ensure that the Legislature met the court’s mandate for increased funding by 2018.

Legislature’s Solution to McCleary In the final days of the 3rd Special Session, the 2017 Legislature passed EHB 2242 to increase funding for education in 2018. Their solution was to increase the State School Levy for all taxable properties in the State. https://waschoolexcellence.org/the-mccleary-case/ McCleary v. State: A landmark case for Washington schoolchildren Faced with a long-outdated state funding system that failed to fully fund even the basic elements of a high quality 21st century education, the Network for Excellence in Washington Schools filed a lawsuit in 2007 asking the courts to order the State of Washington to live up to its paramount constitutional duty to make ample provision for the education of all Washington children. The suit was brought on behalf of two Washington families: Matthew and Stephanie McCleary and their children, Kelsey and Carter, and Robert and Patty Venema and their children, Halie and Robbie.  In the suit, NEWS sought to establish that the State was in violation of its constitutional “paramount duty” and that, in the words of the Washington State Constitution: “Paramount” means paramount, that public education is funded first before everything else “Ample” means ample, more than enough and not just what is left over “All” means all students, not just those living in wealthy school districts or those who are easy to teach, and “Education” means the knowledge and skills students need to succeed in today’s world as established in State education standards such as the Essential Academic Learning Requirements (EALRs) A trial in King County Superior Court in 2009 was decided in NEWS’s favor on virtually all points. The State appealed, and in January 2012, the Washington State Supreme Court upheld the lower court ruling. The Supreme Court also took the remarkable and unprecedented step of retaining jurisdiction over the case to ensure that the Legislature met the court’s mandate for increased funding by 2018.

2017 Legislative Session – EHB 2242 Statewide school levy rate increased to a Base Rate of $2.70 per $1,000 of assessed value State school levy becomes rate based for the next four years $2.70 Tax Year 2018 Tax Year 2019 Tax Year 2020 Tax Year 2021

State School Levy Part 1 & Part 2 $2.70 per $1,000 of Assessed Value Part 1 Establish TY 2018 base rate as always Part 2 Calculate an additional amount to get to $2.70 Part 1 TY 2017 Base Rate $1.89 Part 2 $1.89 + $x.xx $2.70

State School Levy Base Rate Current & Future 2017 State School Levy Rate $1.89 2018 State School Levy Rate $2.70 Difference = $0.81 per 1000 of value - tax increase for 2018 State School Levy State School Levy Rate for each County is determined by the Washington State Department of Revenue. Levy rate is dollars per $1,000 of assessed value

So the State School Levy is going up to $2.70! That’s Not Quite Accurate!!! The $2.70 the Legislature is talking about isn’t really $2.70! The increase in the State School Levy to $2.70 per thousand of value is to the new base rate.

What is the base rate and how do Assessment Ratios Enter into This? DOR does an Annual Ratio Study of Sales to Assessment for all 39 Counties Purpose To equalize each county’s share of the state school levy

Ratios – Equalization - Why is this even important? Defined Goal for Assessment is 100% of Market Value IF every county’s Assessment Ratio was at 100% of Market Value, the new State School Levy Rate would be $2.70 (per $1000) for every county. To insure uniform taxation of the State School Levy statewide, DOR does an annual study of property sales to assessed values in each of the 39 counties. They measure how closely a particular county’s assessed values compare to market sales prices. The ratio % of assessed value to market sales is then used to adjusted (equalize) the State School Levy Rate from county to county.

Ratios – Example Mr. Smith and Mr. Jones both own the exact same 2,000 sq. ft., 3 bedroom, 2.5 bath home on 1 acre of land. The Market Value for both of these properties is $100,000. Mr. Smith owns property in Green County, WA Green County has assessed Mr. Smith’s property at $99,000 Mr. Jones owns property in Blue County, WA Blue County has assessed Mr. Jones’ property at $80,000 If BOTH properties are identical AND the Market Value is $100,000, it appears that Green County is a lot closer to being at 100% of Market Value than Blue County.

Ratios - Without an Equalized Assessment Assessed Value State School Rate Tax Due Mr. Smith $99,000 x 2.70 (per $1000) = $356.00 Mr. Jones $80,000 x = $288.00 Without an Equalized Levy Rate, Mr. Smith is paying a larger portion to the State School Levy than Mr. Jones, even though both properties have a Market Value of $100,000. If the Levy Rate is not equalized throughout the state, Mr. Smith is paying a larger portion even though his county Assessor’s office is more accurate in their valuation.

Ratios - With an Equalized Assessment Assessed Value Equalizing Rate Equalized Rate Tax Due Mr. Smith $99,000 x ($2.70/99%) = $2.72 (per $1000) = $269 Mr. Jones $80,000 x ($2.70/80%) = $3.37 (per $1000) Green County Ratio: 99% - therefore equalized rate is lower (2.72) Blue County Ratio: 80% - therefore equalized rate is higher (3.37) The rate difference doesn’t mean one owner is getting a break, or that another owner is over charged. It simply allows for equal application of the state school levy throughout the 39 counties of WA.

Yakima County Equalized Rate for 2017 2017 State School Levy Rate per DOR $1.89 per $1,000 of assessed value 2017 Yakima County Ratio 92.1% or .921 $1.89 92.1% $2.05 (Yakima County’s Equalized Rate) Formula: State School Levy Rate / County Ratio = Equalized County Rate for State School Levy

Ratios – impact to 2018 State School Levy 2018 State School Levy Base Rate – Equalized per DOR Base Rate of $2.70 per $1,000 of assessed value $2.70 .921 or 92.1% $2.93 Ratio is an estimate only and has not yet been determined by the DOR for 2018

Current State & Local School Levies - 2017 How much do you pay for Schools now? (not including Bonds) Taxpayer in Yakima County with a home valued at $350,000 Formula: (AV / 1000 x total levy rate*) Lowest – ($350,000/1000 = 350 x $3.06 = $1,071.00 Highest - ($350,000/1000 = 350 x $5.58 = $1,953.00 *State School Levy + Local School M&O Levy = total levy rate. For the purposes of this example we did not include any bonds/capital projects or any other excess levies.

As well as Estimated 2019 State School/Enrichment Levy Cap of $1.50 Comparison of 2017 State School/M&O – Estimated 2018 – State School/M&O As well as Estimated 2019 State School/Enrichment Levy Cap of $1.50 State School Levy Estimated at $2.95 for 2018 and $2.98 for 2019 School District 2017 State/M&O 2018 State/M&O 2019 State/Enrichment 2017 to 2019 Difference East Valley $5.30 $6.07 $4.48 $0.82 Grandview $3.96 $5.04 $0.52 Granger $4.17 $4.92 $0.31 Highland $4.97 $5.77 $0.49 Mt. Adams $3.06 $3.84 $ Mabton $3.74 $4.60 $0.74 Naches $5.58 $6.42 $1.10 Selah $5.71 $6.51 $1.23 Sunnyside $4.02 $4.85 $0.46 Toppenish $4.14 $4.82 $0.34 Union Gap $4.13 $4.91 $0.35 Wapato $3.79 $4.59 $0.69 West Valley $4.73 $5.73 $0.25 Yakima $5.07 $5.86 $0.59 Zillah $3.92 $0.56

2018 M&O Levy vs 2019 “Enrichment Levy” M&O levies remain in place for 2018 “Enrichment Levies” replace M&O for 2019 and forward “Enrichment Levies” are capped at $1.50 per $1,000 of assessed value ** **Enrichment levy rates are limited to the lesser of $1.50 per thousand dollars assessed value or $2,500 per student.

Impact of the enrichment levy cap in 2019 Example: taxpayer with a home valued at $350,000 Formula: (AV / 1000 x total levy rate*) ($350,000 x 4.48) / 1000 = $1,568 Compared to a 2017 high of $1953.00 *Total Estimated Levy Rate: 2.70 +0.28+1.50 = 4.48

Example: Selah SD 2017 – 2018 – 2019 2017 2018 2019 Assessed Value 350,000 Total Levy Rate (State School + Local School M&O) 5.71 (2.05 + 3.66) 6.51 (2.95* + 3.56) 4.48 (2.98* + 1.50*) Total Amount Due $1,998.50 $2,278.50 $1,568.00 *Assumes State School Levy of 2.95 in 2018 2.98 in 2019 and an Enrichment Levy at maximum of 1.50 in 2019

Levy Information on your Tax Statement Property Tax Levy Information is available online at: Individual Property Tax Information is available online at: Click on Tax Information – Enter the parcel number http://www.yakimacounty.us/609/Tax-Booklets http://www.yakimacounty.us/218/Assessors-Office

Conclusion Tax Year 2018 – approximate $0.85 to $0.95 increase per $1,000 of assessed value directly attributable to the increase in the State School Levy. Tax Year 2019 – Truth be Told – We Don’t Know for sure. Other than the State School Levy will be up and the local “Enrichment Levies” (if passed) will be capped at $1.50 per 1000 of value. Depending on the School District, there is the potential to decrease back down to 2017 taxes or lower – But – as I said - no one can tell you that for sure -

Questions & Discussion Dave Cook Yakima County Assessor