FINAL BILL REPORT

E2SHB 1777

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

C 12 L 17 E 3

Synopsis as Enacted

Brief Description: Concerning the financing of early learning facilities.

Sponsors: House Committee on Capital Budget (originally sponsored by Representatives Kagi, Johnson, Doglio, Dent, Ryu, MacEwen, Senn, Farrell, Nealey, Ortiz-Self, McBride, Macri, Fey, Slatter and Jinkins).

Background:

Department of Commerce.

The Department of Commerce (COM) administers programs intended to promote community and economic development. For example, the COM manages the Community Development Block Grant program, which provides federal grant funds to small counties, cities, and towns for public facilities, community facilities, microenterprise, and affordable housing projects.

Department of Early Learning.

The Department of Early Learning (DEL) implements state early learning policy and oversees various programs serving young children, including the Early Childhood Education and Assistance Program (ECEAP) and the Working Connections Child Care (WCCC) program. Beginning in the 2022-23 school year, any eligible child will be entitled to enroll in the ECEAP. Eligible children are admitted to the ECEAP and the WCCC programs to the extent that slots are available.

Licensed ECEAP and WCCC providers are required to participate in the DEL's Early Achievers quality rating and improvement system. Early Achievers is a common set of standards to measure and improve the quality of early learning and child care. Participants advance through program levels based on criteria including child outcomes, facility curriculum and learning environment, professional development, and family engagement and partnership.

Community Development Financial Institutions Fund.

The Community Development Financial Institutions Fund (CDFI fund) is a program of the United States Department of the Treasury. The CDFI fund certifies nongovernmental entities and tribal governments who operate banks, credit unions, loan funds, and venture capital funds to provide underserved communities with access to affordable financial services.

Certified organizations are then eligible to apply for technical assistance, training, and financial assistance awards from the CDFI fund. To be certified, organizations must have a primary mission of promoting community development, provide both financial and educational services, and serve and maintain accountability to one or more defined target markets. Many CDFI fund-certified organizations offer financing with terms more favorable than financing available through traditional lenders.

Housing Trust Fund.

The Housing Trust Fund (HTF) is administered by the COM and provides funding to help low-income households meet basic housing needs. Assistance from the HTF is distributed through a competitive grant process to eligible organizations for projects serving individuals and families with special needs or incomes below 80 percent of the area median income.

Summary:

Early Learning Facilities Grants and Loans.

The Early Learning Facilities Revolving Account (ELFRA) and the Early Learning Facilities Development Account (ELFDA) are established in the state treasury and are overseen by the COM in consultation with the DEL. The Early Learning Facilities Grant and Loan Program (ELFGLP) is created and is administered by the COM.

The ELFRA may receive revenues from legislative appropriations, grant and loan repayments, taxable bond proceeds, and any other source. The ELFDA may receive revenues from tax-exempt bond proceeds. Expenditures from both accounts are subject to appropriation and allotment provisions.

Funds from the ELFRA and ELFDA must be used as state grants or loans to match private and other public funding for early learning facilities projects. Eligible projects include the planning, renovation, purchase, and construction of early learning facilities to provide classroom space for the ECEAP and the WCCC program.

State funds for construction, purchase, or renovation may not be committed until private or public matching funds are secured. Matching funds may consist of cash, equipment, buildings, land or like-kind. When determining the level of required match, the COM must consider the financial need of the applicant and the economic conditions of the location of the proposed facility.

Any recipient of a grant or loan must own or secure a long-term lease for the project site and commit to using the funded facility for preschool or childcare for 10 or 20 years, depending on the amount of funding received. Recipients must also commit to being an active participant in good standing with Early Achievers. If a recipient ceases to be in good standing with Early Achievers, the grant must be repaid.

Project Prioritization.

The COM must convene a committee of early learning facilities experts to develop a prioritization methodology for project selection. The committee must include representatives from the DEL, an organization certified by the CDFI, the Washington State Housing Finance Commission, and the Office of the Superintendent of Public Instruction (OSPI).

When developing the prioritization methodology, the committee must consider projects that:

Early Learning Facilities Grants and Loans for Eligible Organizations.

Beginning August 1, 2017, the COM must contract with at least one nongovernmental private-public partnership certified by the CDFI fund to award funds from the ELFRA or ELFDA to eligible organizations. The private-public partnership must demonstrate an ability to raise funds for early learning construction projects and must report annually to the COM beginning July 1, 2018, on early learning projects funded.

An eligible organization may apply for a grant or loan without the involvement of a non-governmental private-public partnership certified by the CDFI if such an entity is not reasonably available to the location of the proposed facility or if the applicant has sufficient capacity to proceed with the project without the involvement of such an entity.

Organizations eligible to receive grants and loans are ECEAP and WCCC providers who are eligible to receive state subsidies, licensed early learning centers not currently participating in ECEAP but intending to participate, developers of housing and community facilities, community and technical colleges, educational service districts, local governments, federally recognized tribes, and religiously affiliated entities.

Eligible organizations may receive grants or loans in amounts up to:

Early Learning Facilities Grants and Loans for School Districts.

Beginning August 1, 2017, the COM must consult with the OSPI to implement and administer early learning grants and loans to school districts. School districts may receive grants or loans in amounts up to $800,000 to purchase, construct, or renovate early learning facilities.

The COM must submit a ranked and prioritized list of proposed early learning facilities projects for school districts to the Office of Financial Management and the Legislature by December 15, 2017 and by September 15 of each subsequent even-numbered year.

Licensing Standards Review.

The DEL must consult with stakeholders to review existing facility licensing standards to eliminate potential licensing barriers while ensuring the health and safety of children in early learning programs. Standards to be reviewed include, but are not limited to, requirements for plumbing, fixtures, and playground equipment. The DEL must create a process by which projects receiving grants or loans from the ELFRA or ELFDA can be preapproved under existing licensing standards related to facility requirements. Licensing standards accepted in the pre-approval are the licensing standards that must be met upon project completion.

Housing Trust Fund.

When selecting projects to receive funding from the HTF, the COM must give preference to projects that include an early learning facility.

Other.

In collaboration with the DEL, the COM must report to the Governor and the Legislature by December 1 of every even-numbered year that follows a biennium in which funding was provided for the ELFGLP. The report must provide an update on the status of the ELFGLP and must include the total amount of funds contracted and spent and a list of the projects that were awarded funds.

The COM must consult with the DEL to adopt rules to implement the ELFGLP.

Votes on Final Passage:

Regular Session

House

84

13

First Special Session

House

79

13

Second Special Session

House

79

15

Third Special Session

House

79

15

Senate

45

4

Effective:

July 6, 2017