1. Education Funding in Washington State
Issaquah Schools Foundation
Chad Magendanz | 5th LD
5/31/2017

2. The state school levy as we know it today was enacted in 1975.
The state school levy provides about a quarter of the money in the General Fund that the state spends on public schools. In addition, revenues from the sales tax, business and occupation tax, real estate excise tax, and other sources support public schools.
The state school levy as we know it today was enacted in 1975.
Prior to 1975, property owners paid a local regular school levy of $3.60 per $1,000. The local regular levy was replaced by the regular state levy and state aid was increased to replace the lost local revenue. Over the following few years, the state moved to fully fund basic education from the state General Fund.
2/17/2019

3. 2/17/2019

4. 2/17/2019

5. 2/17/2019
CONFIDENTIAL

6. 2/17/2019
CONFIDENTIAL

7. 2/17/2019

8. Above graph is not pro-rated for 180-day school year
Above graph is not pro-rated for 180-day school year.  Teachers work 36 weeks per year vs. more typical weeks per year, so average weekly teacher salary is actually 50% higher than the median household income.
Current per-pupil funding is now $12,652, which is over $300,000 per classroom!

9. 2/17/2019

10. According to OSPI's final report that was released in December, the average WA full-time teacher salary in increased by 4.2% to $68,853. This doesn't include benefits, which increased 9.7% to $22,994. So, the average teacher now costs our school districts $91,847! There is really no justification for increasing average teacher compensation, but we probably should decrease the variance to increase starting salaries (and reduce the number collecting six figures).
Note: This still also doesn’t fully capture the 3% COLA increase ($231M) and additional one-time 1.8% salary increase ($152M) that we approved for teachers in the budget.
2/17/2019

11. Since the school year shown in this graph…you have increased the pupil transportation by $108M, MSOC by $280M, and staffing allocations by $316M per school year. = $704M each year
2/17/2019

12. 2/17/2019

14. Any McCleary school funding solution needs to recognize that housing costs for school employees vary widely throughout the state.  In fact, the median home price in a school district ranges from $864K to just $49K.  Our compensation system needs to account for this so that we can offer a competitive salary at every location.
We already do this for our state troopers (Geographical Pay) and military (Basic Housing Allowance).
Ideally, we’d use an index for the overall regional cost of living, but those aren't readily available.  The best we can get (National Center for Education Statistics’ Comparable Wage Index) divides the state into only 16 regional labor markets.
This is not a COLA!  The adjustment only affects the distribution, so you can’t game the system to bump every district like we have with LEA.

15. 2/17/2019

16. Local Per-pupil Funding
Local funding per pupil generally ranges from Seattle at $3,578 to 9 small districts that raise nothing.
The differences in the ROI, however, are quite striking. For example, consider how much is raised per pupil for every dollar in levy rate:
Seattle ($2,714)
Highline ($693)
Tacoma ($668),
Vancouver ($572),
Spokane ($552),
Pasco ($309), and
Yakima ($302).
2/17/2019
CONFIDENTIAL

17. Right now we have a highly regressive system where large school districts with high property values pay less than half the average levy rates. If we move local spending for basic education to the state, everyone pays the same rate. That means property tax relief for most districts, but an increase for districts like Seattle and Bellevue. (However, these areas would get more money back from the state because of their higher regional cost of living, as suggested above.)
Overall, it's revenue neutral, less regressive, and satisfies McCleary.
2/17/2019

18. Estimated SB 6109 Impact by District
Includes LEA, but excludes HB 2776
District
Levy Rate
Rate Diff
School Impact
District Net
Seattle
$1.32
+$1.43
+$105M
-$97M
Tacoma
$4.39
-$1.64
-$2M
+$30M
Spokane
$4.52
-$1.77
-$32M
-$3M
Kent
$4.42
-$1.56
+$6M
+$34M
Puyallup
$4.06
-$1.31
+$12M
+$28M
Kennewick
$3.45
-$0.70
+$4M
+$9M
Issaquah
$2.16
+$0.59
+$19M
+$7M
Yakima
$2.91
-$0.16
+$0.6M
+$1.3M
Bellingham
$2.37
+$0.38
-$2.9M
-$7.7M
Wenatchee
$2.79
-$0.04
+$0.9M
+$1.0M
Walla Walla
$3.56
-$0.81
+$0.5M
2/17/2019
CONFIDENTIAL

19. Impact for 5th District District Levy Rate Rate Diff School Impact
Includes LEA, but excludes HB 2776
District
Levy Rate
Rate Diff
School Impact
District Net
Bellevue
$1.30
+$1.45
+$37M
-$29M
Issaquah
$2.16
+$0.59
+$19M
+$7M
Tahoma
$3.51
-$0.76
+$6.9M
+$10.5M
Enumclaw
$3.53
-$0.78
+$1.9M
+$4.1M
Snoqualmie Valley
$2.49
+$0.26
+$6.4M
+$4.8M
Riverview
$2.70
+$0.05
+$2.4M
+$2.3M
Kent
$4.31
-$1.56
+$6.0M
+$33.8M
2/17/2019
CONFIDENTIAL

21. Includes LEA, but excludes HB 2776
2/17/2019
CONFIDENTIAL

22. 2/17/2019

23. The Proposals

24. Both:
House Democrats propose to spend $22.0 billion on K-12 schools in their budget proposal. Senate Republicans propose to spend almost exactly the same amount, $21.9 billion.
These means that in the next biennium over 50 percent of the state budget, the highest proportion since 1983, will be spent on K-12 schools.
These proposals would deliver $3.8 billion more to schools, a 20% increase over the current budget.
Total funding would climb to about $13,000 per student by , placing Washington state among the top states in the nation in school funding.  
Nearly $3 billion new revenue in the current budget!
House Democrats propose to spend $22.0 billion on K-12 schools in their budget proposal. Senate Republicans propose to spend almost exactly the same amount, $21.9 billion. These means that in the next biennium over 50 percent of the state budget, the highest proportion since 1983, will be spent on K-12 schools. These proposals would deliver $3.8 billion more to schools, a 20% increase over the current budget. Total funding would climb to about $13,000 per student by , placing Washington state among the top states in the nation in school funding.  
2/17/2019
CONFIDENTIAL

25. Senate Proposal (SB 5607) Positives
Everyone pays same levy rate for basic education, with no new taxes
Supplemental per-pupil funding for special education, poverty, bilingual, CTE, highly capable & homeless
Reimbursing taxing districts that might be squeezed out by 1% constitutional limit
Reviews, OSPI approval and audits for accountability of excess levy spending
School district performance targets and timelines
Additional flexibility for high performing school districts
Voter referendum
2/17/2019
CONFIDENTIAL

26. Senate Proposal (SB 5607) Concerns
Hold harmless provision should be based on current funding levels
Housing allowance must be part of basic education, and based on better index than average residential property value
Set starting salaries and per-pupil funding levels don’t consider local purchasing power
Some terms used (e.g. “local effort levy”) create confusion on what is state and local funding
Keeping the levy lid as a percentage of state and federal funding perpetuates the “double whammy”
Difficulties measuring performance for top teacher recognition grant program
2/17/2019
CONFIDENTIAL

27. House Proposal (HB 1843) Positives
Raises minimum statewide average salaries for teachers, administrators and classified staff
Addresses staff mix inequities
Increases prototypical school allocations for parent involvement coordinators and guidance counselors
Increases vocational education funding by reducing class sizes for career and technical education and skills centers
Increases the state-funded instructional hours for the Learning Assistance, Highly Capable, and Transitional Bilingual Instructional program
2/17/2019
CONFIDENTIAL

28. House Proposal (HB 1843) Concerns
Replaces state salary allocation model with minimum statewide average salaries rebased every 6 years, leaving more scope for local bargaining and opportunity for future “levy creep”
Local levy lids are lowered to 24%, which provides little property tax relief
Punts to OSPI working groups for reforms to accounting practices, regional adjustments, and special education
COLA is based on CPI Seattle, which is overly generous for most of state
Depends on $7.1B in new taxes over next 4 years (7% capital gains tax, raise B&O tax to 20%, Internet sales tax, progressive real estate excise tax, and repealing some tax exemptions)
2/17/2019
CONFIDENTIAL

29. Thank you.