HOUSE BILL REPORT

ESHB 1197

BYHouse Committee on Ways & Means (originally sponsored by Representatives Grimm, Holland, Ebersole, Betrozoff, Taylor, Cole, Hine, Bristow, Brough, Dellwo, Brekke, Rayburn, Wang, Jacobsen, P. King, Nelson, Todd, Unsoeld and Locke)

Revising provisions governing school capital projects.

House Committe on Ways and Means

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (22)

      Signed by Representatives Grimm, Chair; Bristow, Vice Chair; Allen, Appelwick, Basich, Belcher, Braddock, Brekke, Ebersole, Hine, Holland, Locke, Madsen, McLean, McMullen, Niemi, Peery, Rust, Sayan, H. Sommers, Sprenkle and Taylor.

Minority Report:  Do not pass.  (3)

      Signed by Representatives Fuhrman, Nealey and Schoon.

House Staff:Janet Peterson (786-7143)

AS PASSED HOUSE MARCH 20, 1987

BACKGROUND:

The Common School Construction Fund provides state matching grants for eligible school district construction projects, as administered by the State Board of Education.  Currently, the revenue source for this fund is income from school trust lands administered by the Department of Natural Resources--primarily timber sales and leases of property.  Since the 1983-85 biennium, timber revenues for this fund have been at approximately half the level reached in 1979-81, first as a result of defaults on timber contracts and then as a result of lower bids on new timber sales.  At the same time, anticipated enrollment growth and aging facilities have increased local school district demand for state construction monies.

For both years of the 1985-87 biennium, eligible school construction projects have exceeded the funding capacity of the Common School Construction Fund.  A backlog has developed which, as of February 10, 1987, totalled $304 million in unfunded projects which already have both State Board of Education approval and local matching funds.  New projects will be added to this backlog as school districts continue to pass bond levies to raise the local share of construction costs.  By comparison, the school trust land revenue is projected to provide only $95 million for school construction during the 1987-89 biennium.

SUMMARY:

The bill is contingent on voter approval of the constitutional amendment in House Joint Resolution 4220 and passage of a statewide referendum establishing a fifteen-year state property tax of 35 cents per $1,000 assessed valuation, dedicated to school construction.

Portions of the proceeds of the additional state property tax are to be used to increase the principal of the Permanent School Fund, an endowment fund generating interest earnings for school construction projects, as follows:  10 percent of the proceeds in calendar years 1988 through 1992, 40 percent of the proceeds from 1993 through 1997, and 90 percent of the proceeds from 1998 through 2002.

Remaining proceeds of the additional state property tax would be deposited in the Common School Construction Fund for financing school construction projects.

Regarding allocations for school projects, any rule changes by the State Board of Education which could potentially increase state costs would have to be expressly ratified by the Legislature in a capital appropriations bill.  The current maximum funding rate for new construction ($75.10 per square foot, adjusted for inflation) is put into statute.  After January 1, 1992, vocational technical institute projects would need a specific legislative appropriation, but would not require local matching funds.  Also, the 90 percent state "supermatch" for desegregation projects is eliminated after January 1, 1992.  Finally, districts could not qualify for new buildings simply as a result of redesignating their current facilities' grade level spans within the past five years, unless the State Board found that the district's needs could not be met through modernization or replacement of facilities.

EFFECT OF SENATE AMENDMENT(S):  While the bill is still contingent on voter approval of House Joint Resolution 4220, the additional referendum on the statewide property tax for school construction is deleted.  A specific legislative appropriation would not be required for vocational technical institute projects, and there would be no phase-out of the current 90 percent state "supermatch" for desegregation projects.

Fiscal Note:      Attached.

House Committee ‑ Testified For:    Larry Swift, Washington State School Directors Association; Harry Petersen, State Board of Education; Dianne Campbell, School Facilities Cost Advisory Board; Bruce Mrkvicka, Office of the Superintendent of Public Instruction; Jim Hanson, Evergreen School District; Wendy Flint, Evergreen School District Board of Directors; Jerry Hosman, Bethel School District; Tom Brandon, Pasco School District; Duanne Zinger, Tacoma School District and Roy Duncan, Shoreline School District.

House Committee - Testified Against:      Tim Strege, Council of Vocational Technical Institutes and Dan Organ, Yakima School District.

House Committee - Testimony For:    School districts are currently anticipating delays of up to ten years or more for needed construction projects, without supplementation of existing Common School Construction Fund revenues.  A major influx of additional revenues is needed.  If the state cannot provide money for modernization of schools, buildings will deteriorate to the point where they need to be replaced.  The bill represents both a short-term and a long-term solution to school construction funding needs.

House Committee - Testimony Against:      Vocational technical institutes need funding for new facilities.  The desegregation "supermatch" has provided unique opportunities for improving racial balance in schools by means of school construction.

VOTE ON FINAL PASSAGE:

      Yeas 97; Excused 1

Excused:    Representative May