30 years ago, Washington State’s system of financing education was ruled unconstitutional for the same set of conditions that have re-emerged and again exist today. The budget situation we face this year is likely to result in additional reductions that will exacerbate the problems in the system.
- In the McCleary case two years ago Washington courts ruled that school funding was unconstitutionally inadequate. Since then the recession has resulted in even more reduced funding. On January 5th 2012 the Supreme Court upheld this decision in a landmark ruling.
- The percent of the total funding for schools coming from local levies as is back up to near historic highs. This level of dependence on our current local tax system was found by the court to be unreliable and results in uneven distribution around the state.
- The state’s contribution to K-12 education – due to the combined effects of initiatives and the mechanics of how our statewide property tax is collected – has also diminished over time. The original goal of setting aside $3.60 per $1,000 of property value is not even close to a reality.
The combined effects of these factors have led us to a funding system which is increasingly unstable and unreliable, and ultimately, unsustainable. This sets the stage for a replay of the types of devastating levy failures that crippled the system 30 years ago.
The legislature cannot add billions to the education budget in the worst economic downturn since the depression, but we can fix the structural elements of the system that will allow it to grow as we come out of the recession, and rebalance the dependence on local funding.
The basic idea is to do a revenue-neutral swap of state property tax for local levies, staying within the constitutional 1% limit for regular property taxes. This would make the statutory $3.60 per 1,000 set aside for public education a meaningful, rather than hollow, commitment, and bring $1 billion of existing local excess levies into a more regular and dependable tax structure – the statewide property tax.
- Raise the state property tax from the current $2.03 per thousand dollars of property value to $3.20, raising about $1 billion in funding that is constitutionally dedicated to public school funding.
- Distribute the new money to school districts using the normal school funding formulas, and simultaneously reduce each district’s local levy by the amount of new money they receive. This guarantees that each district will not be hurt financially by what is effectively a revenue neutral ‘swap’ of local for state tax collections in each school district.
- Allow state property tax collections to grow as property values recover from the downturn, helping us deliver on our constitutional requirements.
- Reset local levy lids in a simpler way, so that local communities better understand the relationship between their local levies and school programs and services. Set a simple per student levy lid that naturally adjusts for inflation and student growth in district.
With these changes we would no longer be as dependent on “levy equalization,” hundreds of millions that we use to correct for the fact that some districts don’t have the property base to collect similar amounts of levies. These districts will be better served by increased state funding and less reliance on levies. We will still need some LEA system, but smaller and with a more focused formula.
In addition, we should make local school levies more reliable, since they are likely to be a significant part of school funding well into the future. Instead of voting to renew levies every 4 years we should amend the constitution to allow voters to approve levies that would stay in place until the district asks voters to increase them.
Together these changes would result in a more stable system, a system that grows as we come out of the recession, and one that distributes funding more fairly across the state.
The following documents may be useful to people:
- PowerPoint slideshow presenting the idea
- Background and summary of the bill
- Draft legislation
- Data Table 1 – impact on districts
- Data Table 2 – impact on taxpayers by district
For those who want to mess around with the data in Excel or another spreadsheet program the following links are to a CSV formatted file, and a Word document describing each of the columns and showing how it is calculated.
