2. Purpose of Presentation To submit that equal education and economic opportunity in America cannot be ensured unless we address three underlying issues: 1) school funding, 2) tax policy, and 3) economic development. To provide you knowledge and data that can be useful in the work you do, especially lobbying and organizing.

4. -- Overview of State Funding -- What Is the State’s Responsibility? Washington State Constitution Article IX Section 1. “It is the paramount duty of the state to make ample provision for the education of all children residing within its borders, without distinction or preference on account of race, color, caste, or sex.” Section 2. “The legislature shall provide a general and uniform system of public schools... and such... normal and technical schools as may hereafter be established.”

5. Enrollment Formula Staff Ratios (Teachers, Administrators & Aides) Salaries & Benefits Nonemployee Related Costs (NERC) = State General Apportionment Allocation Basic Funding Concepts #1 #2 #3, 4, 5 #6

6. What has been the effect of state funding?

7. Expenditures per student as a percent of the national average have declined since the state took over “full” funding of basic education.

9. 2004-05 SY Revenues Dollars in Millions State$5,365 Local Taxes 1,258 Federal 783 Other 319 Total$7,724 School districts receive about 70 percent of their general fund revenues from the state.

10. Where does our money come from??? Not trees…

11. But TAXES …… The state collects several types of taxes… Sales taxes Business and occupation taxes Property taxes

12. Who pays? Lower and moderate income folks pay a higher % of their income in taxes than high- income folks do… Washington places greater tax responsibility on its low and middle income families…

13. Who Pays State and Local Taxes? (Adjusted to Scale)

14. Problem: Revenue in Washington Relies Heavily on Retail Sales Taxes Note: These figures are for state taxes for the 2005-07 biennium.

15. What about the lottery???? True, the lottery generates income, but not as much as you would think…. only the equivalent of 2% of K-12 education spending.

16. 197119731975197719791981198319851987198919911993199519971999 2001 100 300 500 700 900 1100 1300 Percent of 1971 value Excluding tax base and rate changes, over the past 30 years General Fund revenue has grown more slowly than the economy. Revenues (excluding tax base and rate changes) The Economy (Personal Income) Based on growth in major General Fund tax sources. Based on constant rate, constant base assumptions, excluding legislative changes. 1971 = 100

17. 100 300 500 700 900 1100 1300 197319751977197919811983198519871989199119931995199719992001 Percent of 1971 value Meanwhile, operating expenses grew at about the same pace as the economy. Expenditures from all operating funds Expenditures grew at 8.9 percent Personal Income grew at 8.8 percent. 1971 = 100 Operating Expenses Personal Income

18. …and the base of traditional sales taxes is declining 46% 33% Trends such as the continual shift toward consumer services and internet purchases are likely to cause this trend to continue

19. Is Washington’s tax regressivity that much different than other states? Yes

20. –Why Invest in Public Education?

21. We live in a new economic age. New evidence suggests that, dollar for dollar, investing in K – 12 public education will create more jobs and income than would an equal amount spent in any other sector.

23. “There is no greater return to an economy or to a society than an educational system second to none.” John F. Kennedy