1. Superintendent Workshop Lake Chelan, May 4, 2015

2.  Setting the Stage  2015-17 Budget Update  McCleary Implementation  Compensation/Levy Reform  Education Legislation 2

3.  Odd-year “long” session, limited to 105 days ◦ (Convenes: Jan. 12; Sine Die: April 26)  Major focus: ◦ 2015-17 Operating Budget  Addressing McCleary compliance ◦ 2015-17 Capital Construction Budget ◦ 2015-17 Transportation Budget & Revenue Package 3

4.  18 new members in Legislature ◦ 14 new House members ◦ 4 new Senate members (2 from House)  Pre-election party strength: ◦ House: 55 Democrats, 43 Republicans ◦ Senate: Controlled by Republican-led “Majority Coalition Caucus”  2013: 23 R’s + 2 D’s vs 24 D’s  2014: 24 R’s + 2 D’s vs 23 D’s  Post-election party strength: ◦ House: 51 Democrats, 47 Republicans ◦ Senate: 25 Republicans, 24 Democrats  Majority Coalition: 25 R’s + 1 D vs 23 D’s 4

5. 55 Pension costs; Debt service; St. employee health care - $665 M I-732 COLA - $250 M St. employee CBA - $583 M 2015-17 Budget Situation

6. House Democratic Proposal (HB 1106)  Total Spending = $38.8 billion  Revenues/Savings: ◦ Fund transfers = $97 million ◦ Revenue increases = $1.5 billion ◦ Budget-driven revenue = $2 million  Total Reserves = $1.2 billion ($354 million unrestricted)  McCleary–related spending = $1.4 billion 6

7. Senate Republican Proposal (SB 5077)  Total Spending: $37.8 billion  Revenues/Savings: ◦ Fund transfers = $377 million ◦ Marijuana revenue = $296 million ◦ Revenue decreases = ($114 million) ◦ Revenue increases = $38 million ◦ Budget-driven revenue = $42 million  Total Reserves = $1.37 billion ($480 million unrestricted)  McCleary-related spending = $1.3 billion 7

8. Major Points of Disagreement  Total spending & revenue enhancement  Compensation—COLAs & health benefits  I-1351 adjustments  Higher education tuition  McCleary-related funding  Compensation reform & levy reform & required revenue 8

9. HouseSenate MSOC741.5 K-3 Class Size Reduction411.8350.2 Full-Day Kindergarten180.0187.7 Parent Engagement Coordinators32.1- - Guidance Counselors25.3- - Bilingual Instruction12.1- - Highly Capable Program- - 16.0 B ASIC E DUCATION (HB 2776)1,402.81,295.4 COLAs384.7241.6 Health Benefit Rate Adjustment203.1- - I-1351 Class Size(2,042.7) Assessment Reform(29.0)- - Levy Equalization(.185)(20.3) 9 K-12 Budget Proposals – Major Highlights (dollars in millions)

10. Real and Steady Progress Towards Full Funding — State Testimony vs. Actual /Proposed Funding— (Per Pupil State Funding) Source: Network for Excellence in Washington Schools, 4/15

11. Competitive Public School Employee Compensation

12. 12 Note: Salaries are for all programs and do not include benefits Source: OSPI, 9/14 School District Employee Salaries Percentage of Average Salary Paid by State and Local District

13. 13 Educator Compensation State Responsibility vs. Local Funding

14. Key Recommendations:  Fund the full cost of basic education labor first, followed by other improvements as outlined in ESHB 2261 and SHB 2776  Update and implement recommendations of Compensation Technical Working Group  Recognize and mitigate impact of any reduction to local levy authority on districts’ ability to meet financial obligations Local Funding Workgroup White Paper: http://bit.ly/1wxMg3aTalking Points: http://bit.ly/1GACQ7lhttp://bit.ly/1wxMg3ahttp://bit.ly/1GACQ7l

15. Compensation Reform & Levy Reform

16.  Senate Democrats: SB 6103/SB 6104  Senate Republicans: SB 6109  House Democrats: HB 2239  Rep. Hunter proposal: No bill, yet Full side-by-side summary of bills: http://1.usa.gov/1QdYPGe 16

17.  States intent to phase-in new compensation system by 2021-22 school year  Reduces local levy authority as salary enhancements are provided, dollar for dollar  As levies are reduced, a district’s levy rate cannot be less than $1.00 per $1,000 of assessed valuation  Beginning in 2023, $1.00 per $1,000 of assessed valuation becomes the levy lid 17

18.  Establishes a six-year phase-in plan for a new compensation system for all education staff  Requires salary adjustments based on a comparative labor market analysis every four years  Limits levy salary enhancements to ten percent above schedule only for non-basic education activities  Creates a Local Levy Reduction Technical Working Group to determine how to reduce levy authority 18

19.  Establishes a new Capital Gains tax to provide funding to support the phase-in of a new compensation system  Includes a phase-in plan to implement the State’s obligations to fully fund smaller class sizes; implementation of I-1351 would be delayed until 2017–18 and full implementation would be phased in over three biennia rather than two 19

20.  Establishes a two-year phase-in plan for a new compensation system for all education staff; CIS salaries established in biennial budget bill  New salary schedule includes a “Localization Factor”  Requires salary adjustments based on a comparative labor market analysis every six years 20

21.  Decreases local levy funding with a floor of $1.25 per $1,000 of assessed valuation  Limits use of levy funds to non-basic education enhancements; requires school districts to separately account for local revenues  Establishes new School Employee Benefits Board, eliminating health benefits from local bargaining  Phases in increases in the State Property Tax to fund compensation system 21

22.  Establishes plan, with annual benchmarks, for remedying the deficiencies in state funding support for salary allocations by Sept 2018  Establishes annual benchmarks and deadlines to submit data and recommendations  Identifies components that need to be addressed: expenditures on supplemental contracts; establishing new SAM; defining scope of non-basic education spending; reviewing LEA, levy rates and levy collections 22

23.  Creates WA Education Funding Council to advise and report to Legislature  Requires Legislature by June 30, 2017, to: enact new SAM; provide appropriations to fund model; establish new levy rates or bases; and consider changes to tax laws 23

24. Education Legislation — Outstanding Issues —

25.  HB 1345 – Professional learning definition ◦ Contains SB 5748 waiver language  HB 1570/SB 5312 – Educator retooling  HB 1745 – Voting Rights Act  HB 2023 – Non-renewal deadline  HB 2214 – High School assessments  SB 5179 – Paraeducators  SB 5252 – Regional safety centers  SB 5976 – School Employee Benefit Board 25

26. Daniel P. Steele Assistant Executive Director, Government Relations 825 Fifth Avenue SE Olympia, WA 98501 360.489.3642 dsteele@wasa-oly.org 2015 Superintendent Workshop