― C.S. Lewis
Governor Jay Inslee was similarly enthusiastic in his signing statement for the bill, “This is a historic budget that I believe fully funds our schools for the first time in decades and will meet our constitutional obligations.” State Superintendent Chris Reykdal offered similar support, stating “Our perspective at OSPI is I think the Legislature met their objective.” These initial positive reactions may have softened in the weeks after those statements as more information about the impacts have become known.
Most of that impact knowledge emerged as school districts began raising serious concerns about the damage done to their current programs by the new funding plan. One of the more pointed comments in that regard was provided in the Tacoma School District statement:
Despite rhetoric that the Legislature’s action had improved education funding for our state’s children, our analysis clearly shows the opposite …Tacoma Public Schools would have a better financial future if the Legislature had not made any changes in the funding formula for education.
Clearly there is a wide difference of opinion regarding the impact of EHB 2242 and whether it represents the ample funding ordered by our State Supreme Court in the McCleary decision. A deeper dive into the numbers may help shed light on this difference of opinion.
The first issue to clarify about EHB 2242 is that it used a “levy swap” as a major part of the funding mechanism. The state property tax was increased to generate additional state revenue for schools, but the local levies were reduced to help minimize impacts on taxpayers. As a result of that swap, the heralded $7.3 billion in new funding over four years only provides $4.5 billion of net new school funding.
That four-year loss of local funding is what is causing many school districts significant budget challenges. In essence, the state took away $3 billion of the flexible funds school districts have used to offset shortfalls in various aspects of state funding. That flexible money was replaced with dedicated allocations that can only be used for specified programs.
Increases were provided for Bilingual, Highly Capable, Learning Assistance, and Special Education. While the students who are served by those programs will benefit from this new funding, it cannot be used to offset the loss of levy funds. And even though it’s been stated that EHB 2242 “fully funds our schools,” there are still many programs such as Special Education, MSOC, and transportation that remain woefully underfunded for many districts. Based on OSPI’s data for 2015-16, school districts spent over $524 million in local funding on those programs. They also hired 2,243 certificated and 3,572 classified staff above the state allocation at a locally funded cost of over $465 million.
It is worth noting that the future comparisons in this article are based on local levy authorizations before the levy cliff occurred, which lowered the levy lid from 28% to 24% of revenue. Some would argue the 24% level should be used as the basis of comparison because that reduction was the law prior to the passage of EHB 2242. While that might make sense from a legalistic perspective, it makes no sense for school districts who assumed the a McCleary solution would improve the funding they received in 2016-17. It’s pretty clear the Court had that expectation as well.
The increased allocation for salaries is the main element of new funding that could help offset the loss of local levy funds. If districts have used their levies to enhance state salary allocations in the past, and if the district can bargain with their local education association that the local contribution is now absorbed within the state salary allocation, the levy dollars that are saved could be used to continue paying for the other levy-funded obligations. Those are some pretty big “ifs” that will play out differently in each school district.
With those limitations in mind, it would be good to explore how school districts’ new salary funding compares with their loss of levy capacity. Since 2019-20 is the first full school year implementing the new funding plan, it provides the best frame for analyzing these impacts and is the basis for the data below. At a statewide level there is an increase of $1.87 billion in salary allocations, which more than offsets the loss of $1.17 billion in local funds that year (levy plus local effort assistance). While this math appears to work at a statewide level, it begins to look much different through the lens of local school district impacts.
Given Tacoma School District’s forceful statement, it would be good to see how they fare in this regard.
This type of comparison yields widely different results depending on the district. Lake Washington, for example, appears to be a big winner with this aspect of the new formula.
Since the levy swap concept was first introduced, we assumed that it would likely be part of any new school funding formula. We also recognized that such a change could have many negative, unintended consequences. That is why WASA's written testimony to the Education Funding Task Force in June of 2016 stated that any levy reductions “should only occur after the new state funding is fully integrated into school district operating costs.” The reason that kind of sequencing with the levy swap did not occur appears to be largely political, to make the net impact of the plan neutral for most tax payers.
While many have applauded the relatively tax-neutral aspect of the new funding plan, the Court did not order the State to create minimal tax impacts with its solution to the McCleary decision. It ordered the State to amply fund the program of basic education for every student in the state. Unfortunately, political considerations have undermined that constitutional imperative. Those considerations have also undercut Senator Braun’s pronouncement that “Students from every community in our state will now have the same opportunity and support as their peers in high-performing schools.” Given these deficiencies, it will be very interesting to see how the Court responds to this new funding plan.