Original Notice.

     Preproposal statement of inquiry was filed as WSR 03-05-093.

     Title of Rule: School district maintenance and operation levy authority and eligibility for local effort assistance (LEA).

     Purpose: To update rules regarding the inclusion and exclusion of revenues in the local levy base used for state local effort assistance.

     Other Identifying Information: Chapter 392-139 WAC, Finance levies.

     Statutory Authority for Adoption: RCW 84.52.0531(9) and 28A.150.290.

     Statute Being Implemented: None.

     Summary: 1. Rules are updated to reflect changes in state and federal revenues in the levy base.

     2. Changes are proposed to prevent monies received by a school district as fiscal agent from substantially increasing a district's LEA eligibility and reducing LEA eligibility for other districts.

     Name of Agency Personnel Responsible for Drafting and Implementation: Calvin W. Brodie, Office of Superintendent of Public Instruction, (360) 725-6300; and Enforcement: Michael L. Bigelow, Office of Superintendent of Public Instruction, (360) 753-1718.

     Name of Proponent: Office of Superintendent of Public Instruction, governmental.

     Rule is not necessitated by federal law, federal or state court decision.

     Explanation of Rule, its Purpose, and Anticipated Effects: The rules govern what revenues may be included in the school district levy base used to calculate the state local effort assistance. The proposed revisions would affect this base as follows:

     1. Revise the source of the direct funded revenue amounts used in the levy base from the latest budgeted amounts to the last actual amounts.

     2. Prevent distortions of LEA eligibility due to monies received as a fiscal agent.

     Proposal Changes the Following Existing Rules: See above.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. No small business impacts have been identified.

     RCW 34.05.328 does not apply to this rule adoption.

     Hearing Location: Old Capitol Building, P.O. Box 47200, Room 152, Olympia, WA 98504-7200, on July 22, 2003, at 10:00 a.m.

     Assistance for Persons with Disabilities: Contact Ben Gravely by July 12, 2003, TDD (360) 664-3631 or (360) 725-6133.

     Submit Written Comments to: Legal Services, Office of Superintendent of Public Instruction, P.O. Box 47200, 600 South Washington Street, Olympia, WA 98504-7200, fax (360) 753-4201, by July 21, 2003.

     Date of Intended Adoption: July 23, 2003.

June 12, 2003

Dr. Terry Bergeson

Superintendent of

Public Instruction

OTS-6426.2

AMENDATORY SECTION(Amending WSR 02-17-113, filed 8/21/02, effective 9/21/02)

WAC 392-139-008   Effective date.   This chapter applies to levy authority and local effort assistance calculations for the ((2003)) 2005 calendar year and thereafter. Levy authority and local effort assistance calculations for prior calendar years are governed by rules in effect as of January 1 of the calendar year.

[Statutory Authority: RCW 28A.150.290(1) and 84.52.0531(9). 02-17-113, § 392-139-008, filed 8/21/02, effective 9/21/02; 01-22-098, § 392-139-008, filed 11/6/01, effective 12/7/01. Statutory Authority: RCW 84.52.0531(9) and 28A.150.290. 00-09-017, § 392-139-008, filed 4/11/00, effective 5/12/00.]

     (1) Sum the following state and federal allocations ((for)) from the prior school year(s) as determined in subsections (4) and (5) of this section:

     (a) The basic education allocation as defined in WAC 392-139-115 and as reported on the August Report 1191;

     (b) The state and federal categorical allocations for the following:

     (i) Pupil transportation. Allocations for pupil transportation include allocations for the following accounts:

     4199 Transportation - operations; and

     4499 Transportation - depreciation.

     (ii) Special education. Allocations for special education include allocations for the following accounts:

     4121 Special education; and

     6124 Special education supplemental.

     (iii) Education of highly capable students. Allocations for education of highly capable students include allocations identified by account 4174 Highly capable.

     (iv) Compensatory education. Allocations for compensatory education include allocations identified by the following accounts:

     4155 Learning assistance;

     4165 Transitional bilingual;

     4166 Student achievement;

     ((6151 Remediation through 2001-02 school year;))

     6151 Disadvantaged (((2002-03 school year and thereafter)));

     6153 Migrant;

     6164 Limited English proficiency (((2002-03 school year and thereafter)));

     6264 Bilingual (direct);

     6267 Indian education - JOM;

     6268 Indian education - ED; and

     6367 Indian education - JOM.

     (v) Food services. Allocations for food services include allocations identified by the following accounts:

     4198 School food services (state);

     6198 School food services (federal); and

     6998 USDA commodities.

     (vi) Statewide block grant programs. Allocations for statewide block grant programs include allocations identified by the following accounts:

     ((4175 Local education program enhancement (through 2001-02 school year);))

     4175 Flexible education (((2002-03 school year and thereafter))); and

     6176 Targeted assistance.

     (c) General federal programs. Allocations for general federal programs identified by the following accounts:

     5200 General purpose direct federal grants - unassigned;

     6100 Special purpose - OSPI - unassigned;

     6121 Special education - Medicaid reimbursement;

     6138 Secondary vocational education;

     6146 Skills center;

     6152 School improvement (((2002-03 school year and thereafter)));

     6154 Reading first (((2002-03 school year and thereafter)));

     6177 Eisenhower professional development;

     6200 Direct special purpose grants; and

     6300 Federal grants through other agencies - unassigned; and

     6310 Medicaid administrative match (((2002-03 school year and thereafter))).

     (2) Increase the result obtained in subsection (1) of this section by the percentage increase per full-time equivalent student in the state basic education appropriation between the prior school year and the current school year as stated in the state Operating Appropriations Act divided by 0.55.

     (3) Revenue accounts referenced in this section are defined in the accounting manual for public school districts in the state of Washington, ((revised 2001, except those identified for the 2002-03 school year and thereafter, which are from the accounting manual)) revised 2002.

     (4) The dollar amount of revenues for state and federal categorical allocations identified in this section shall come from the following sources:

     (a) The following state and federal categorical allocations are taken from the Report 1197 Column A (Annual Allotment Due):

     4121 Special education;

     4155 Learning assistance;

     4165 Transitional bilingual;

     4166 Student achievement;

     4174 Highly capable;

     ((4175 Local education program enhancement (through 2001-02 school year);))

     4175 Flexible education (2002-03 school year and thereafter);

     4198 School food services (state);

     4199 Transportation - operations;

     4499 Transportation - depreciation;

     6121 Special education - Medicaid reimbursements;

     6124 Special education - supplemental;

     6138 Secondary vocational education;

     6146 Skills center;

     ((6151 Remediation (through 2001-02 school year);))

     6151 Disadvantaged (((2002-03 school year and thereafter)));

     6152 School improvement (((2002-03 school year and thereafter)));

     6153 Migrant;

     6154 Reading first (((2002-03 school year and thereafter)));

     6164 Limited English proficiency (((2002-03 school year and thereafter)));

     6176 Targeted assistance;

     6177 Eisenhower professional development; and

     6198 School food services (federal).

     (b) For the 2004 calendar year, the following state and federal allocations are taken from the F-195 budget including budget extensions.

     For the 2005 calendar year and thereafter, the following federal allocations shall be taken from the school district's second prior year F-196 annual financial report:

     5200 General purpose direct federal grants - unassigned;

     6100 Special purpose - OSPI - unassigned;

     6200 Direct special purpose grants;

     6264 Bilingual (direct);

     6267 Indian education - JOM;

     6268 Indian education - ED;

     6300 Federal grants through other agencies - unassigned;

     6310 Medicaid administrative match (((2002-03 school year and thereafter)));

     6367 Indian education - JOM; and

     6998 USDA commodities.

     (5) Effective for levy authority and local effort assistance calculations for the 2005 calendar year and thereafter:

     (a) District revenues determined in subsection (4) of this section shall be reduced for revenues received as a fiscal agent. School districts shall report fiscal agent revenues pursuant to instructions provided by the superintendent of public instruction.

     (b) The amount determined in subsection (4)(b) of this section, after adjustment for fiscal agent moneys, shall be inflated for one year using the percentage change in the implicit price deflator for personal consumption expenditures for the United States as published for the most recent twelve-month period by the Bureau of Economic Analysis of the Federal Department of Commerce.

     (6) State moneys generated by a school district's students and redirected by the superintendent of public instruction to an educational service district at the request of the school district shall be included in the district's levy base.

     (((6))) (7) State basic education moneys generated by a school district's students and allocated directly to a technical college shall be included in the district's levy base.

[Statutory Authority: RCW 28A.150.290(1) and 84.52.0531(9). 02-17-113, § 392-139-310, filed 8/21/02, effective 9/21/02; 01-22-098, § 392-139-310, filed 11/6/01, effective 12/7/01. Statutory Authority: RCW 84.52.0531(9) and 28A.150.290. 00-09-017, § 392-139-310, filed 4/11/00, effective 5/12/00. Statutory Authority: RCW 84.52.0531(a) and 28A.150.290(2). 98-08-096 (Order 98-06), § 392-139-310, filed 4/1/98, effective 5/2/98. Statutory Authority: RCW 84.52.0531(10) and 28A.150.290. 96-19-037 (Order 96-13), § 392-139-310, filed 9/11/96, effective 10/12/96. Statutory Authority: RCW 28A.150.290(2) and 84.52.0531(10). 93-21-092 (Order 93-20), § 392-139-310, filed 10/20/93, effective 11/20/93; 92-19-124 (Order 92-07), § 392-139-310, filed 9/21/92, effective 10/22/92. Statutory Authority: RCW 28A.41.170 and 84.52.0531(10). 89-23-121 (Order 18), § 392-139-310, filed 11/22/89, effective 12/23/89; 88-03-007 (Order 88-6), § 392-139-310, filed 1/8/88.]

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     (a) Received by the district as an administrator for a consortium or cooperative for the benefit of students enrolled in other school districts;

     (b) Passed through to another entity for the benefit of students not enrolled in the school district or persons not employed by the school district; or

     (c) Directly expended by the district for the benefit of students not enrolled in the school district or persons not employed by the school district.

     (2) For the purposes of this chapter, "revenues in the levy base received as a fiscal agent" do not include:

     (a) Revenues received for the operation of an interdistrict cooperation program authorized pursuant to RCW 28A.335.160 or 28A.225.250 and chapter 392-135 WAC, if levy authority is transferred pursuant to WAC 392-139-330 or 392-139-901; or

     (b) Revenues received by a high school district for serving students from a nonhigh school district pursuant to chapter 28A.545 RCW and chapter 392-132 WAC for which levy authority is transferred pursuant to WAC 392-139-340.

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