- Zig Ziglar
On a positive note, the Regular Session ended with a flurry of proposals designed to address the ordered plan. Senate Republicans introduced one comprehensive bill, SB 6109, designed to address the compensation and local levy issues that are at the heart of that decision. The Senate Democrats proposal was framed by three bills, SB 6102, SB 6103, and SB 6104. The House Democrats took a more long-term approach with HB 2239, which laid out a two-year process with key deadlines for the Legislature to address the same issues.
It probably comes as no surprise that these bills were under attack from all corners soon after they were released. Or it’s probably more accurate to say that the Senate bills were under attack because there wasn’t enough substance in the House bill to warrant such concerns. Some of the complaints related to very specific implementation issues, but others were more focused on the global concepts that seem embedded within the McCleary decision itself.
Whether or not any of the proposed bills move forward, they have generated good debate about what is required by McCleary; and they have identified some of the elements that may become part of the state’s plan. The following list includes our thoughts on key elements that seem imbedded within the Court’s ruling and likely need to be part of any legislative plan to address that ruling.
1. Restriction on the Use of Local Levies
The recent bills generated some debate regarding whether the Court was concerned about any use of local levy funds for basic education, or whether the concern was about over reliance on those funds for such purposes. The following section of the Court’s ruling seems pretty clear on that point:
The fact that local levy funds have been at least in part supporting the basic education program is inescapable . . . . Reliance on levy funding to finance basic education was unconstitutional 30 years ago . . . and it is unconstitutional now. (pg. 68)
Either way, it seems that business as we have become accustomed to during the past few decades will need to change significantly as it relates to the use of local levies. According to OSPI, over half of levy funds are currently spent to cover labor costs. And on a statewide basis, they estimate that over 85% of levy expenditures cover basic education costs. Given that fact and the Court’s ruling, it stands to reason that the Legislature will pass laws that restrict or eliminate school districts’ use of levies to fund basic education. If such restriction occurs, it also stands to reason that school districts will not need to collect nearly as much local levy revenue as is currently the case.
2. Levy Equalization, AKA Local Effort Assistance
Local Effort Assistance (LEA) is a critical part of the funding puzzle for school districts that are relatively property poor. The notion behind that allocation is to level the playing field somewhat for communities without much of a tax base by matching up to half of their local levy with state funds. None of the proposals released so far would eliminate LEA and that makes sense. On the other hand, if total levy collections are reduced because of the issues raised on point 1, LEA support would be reduced in a similar manner. While that would translate in a loss of revenue for many districts, that loss should in theory be offset by increased state basic education allocations.
3. State Funding of Salary and Benefits
The Court made it clear that underfunding of salaries and benefits was a major area of concern:
During trial, the evidence highlighted three major areas of underfunding: basic operational costs, or NERCs; student to/from transportation; and staff salaries and benefits. (pg. 61)
The Court has addressed two issues related to educator compensation. The first is who pays. As stated previously, school districts currently spend over half of the levy funds on compensation. According to Representative Hunter’s earlier estimate, for the state to pick up those current costs that are paid locally it would amount to $1.8 billion per year in 2019. But that investment does nothing to provide the competitive salaries called for in Section 601 of ESSHB 2261. In their January 9, 2014, Order, the Court expressed frustration with the lack of progress or even a plan to provide such improvements:
The inescapable fact is that salaries for educators in Washington are no better now than when this case went to trial . . . . It is deeply troubling that the State's Report does not address this component of ESHB 2261 or offer any plan for meeting its goals. (pg. 6)
Based on these statements, it seems clear that the Court expects both aspects of educator compensation to be addressed by the Legislature, and to their credit, the Senate’s proposals attempt to do so.
One element of the Senate approach to salaries that isn’t embedded in the McCleary decision, is the use of a differentiated salary model based on regional cost of living differences. While that doesn’t appear to be called out by the Court, political and practical considerations are likely to cause that kind of differential to be included in any salary solution. And whether one agrees or disagrees that it should be included, as long as the Legislature has good data to support that approach, it seems doubtful that the Court would offer any opposition.
4. Statewide Negotiation for Educator Compensation
It is difficult to see how a fully state funded compensation system could work within the current context of local bargaining for those issues. While the Court might allow such local bargaining to continue, there would be no incentive for districts to oppose local union requests if they knew the state would ultimately be on the hook to pay for any increases. From the State’s perspective, that would create an untenable situation. While it is likely that the various unions will vigorously oppose the move to statewide bargaining for compensation, it is difficult to see how the change to full state funding of compensation could work without the state taking control of what those costs are. Based on the Senate bills, there may be an exception related to salary enhancements for activities outside of basic education. If so, it will be critical for the Legislature to define what’s outside of basic education.
5. State Medical Insurance Pool for Educators
The idea of statewide medical insurance pooling for educators has been around for a long time; and it is included in SB 6109 under a newly created School Employees Benefit Board. It is hard to see how a statewide pool of all educators wouldn’t be a much more cost effective way of providing medical insurance. It would also meet the Court’s expectation of uniform system. One could argue that uniformity would also be achieved by a consistent state allocation for medical benefits without any ability to supplement that amount with local funds. Such a system would likely be much less cost effective, though, with questionable value to local bargaining if enhancements aren’t possible.
6. New Sources of Revenue to Fund State Education Obligations
One of the main sticking points between the Senate and the House budget writers is whether or not the McCleary obligations can be funded without significant new revenue. While the Senate argues that their budget achieves the necessary funding without new revenue, both points are contested by the House. Even if their plan works for the coming biennium, it is hard to see how it is sustainable beyond that. It is also unclear how the Court would respond to the Senate’s no-new-revenue approach to the McCleary solution. Two things stand out in my memory of the Contempt Hearing the Supreme Court conducted last September. The first is Deputy Solicitor General Alan Copsey’s request for more time, stating that the focus of the 2015 Legislative Session would be to come up with the revenue necessary to fully fund K-12 education. Given that defense, I wonder how the Court will respond to a session that does little to raise new revenue. The second is Justice Charles Johnson’s suggestion that the solution for the Court might be to invalidate ALL of the current $30 billion in tax exemptions and allow the Legislature to determine which ones the state can afford to reinstate after education is fully funded. Taken together, there may be reason for the Senate to tread lightly on their no new taxes rhetoric.
It will likely take most of a second special session to resolve the issues addressed above along with agreeing on a biennial budget. There are some encouraging signs, however, that the kind of bipartisan discussion needed to resolve these issues is beginning to occur. Hopefully, that momentum will accelerate in the coming days and weeks.