BILL REQ. #:  H-2985.1 

Read first time 04/17/2003.   Referred to Committee on Appropriations.

     AN ACT Relating to education funds; amending RCW 84.52.068, 28A.505.210, 28A.150.380, 67.70.240, and 67.70.340; reenacting and amending RCW 43.135.045; adding a new section to chapter 43.79 RCW; providing an effective date; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 84.52.068 and 2001 c 3 s 5 are each amended to read as follows:
     (1) A portion of the proceeds of the state property tax levy shall be distributed to school districts in the amounts and in the manner provided in this section.
     (2) The amount of the distribution to each school district shall be based upon the average number of full-time equivalent students in the school district during the previous school year, and shall be calculated as follows:
     (a) Out of taxes collected in calendar years 2001 through and including 2003, an annual amount equal to one hundred forty dollars per each full-time equivalent student in all school districts shall be deposited in the student achievement fund to be distributed to each school district based on one hundred forty dollars per full-time equivalent student in the school district for each year beginning with the school year 2001-2002 and through the end of the 2003-04 school year.
     (b) ((Out of taxes collected in calendar year 2004, an annual amount equal to four hundred fifty dollars per full-time equivalent student in all school districts shall be deposited in the student achievement fund to be distributed to each school district based on four hundred fifty dollars per full-time equivalent student for each year beginning with the school year 2004-2005.)) In fiscal year 2006, out of taxes collected in calendar year 2005, an annual amount equal to one hundred forty-nine dollars per full-time equivalent student in all school districts shall be deposited in the student achievement fund to be distributed to each school district based on one hundred forty-nine dollars per full-time equivalent student for school year 2005-06.
     (c) In fiscal year 2007, out of taxes collected in calendar year 2006, an annual amount equal to one hundred ninety-one dollars per full-time equivalent student in all school districts shall be deposited in the student achievement fund to be distributed to each school district based on one hundred ninety-one dollars per full-time equivalent student for school year 2006-07.
     (d) In fiscal year 2008, out of taxes collected in calendar year 2007, an annual amount equal to two hundred thirty-two dollars per full-time equivalent student in all school districts shall be deposited in the student achievement fund to be distributed to each school district based on two hundred thirty-two dollars per full-time equivalent student for school year 2007-08. Each subsequent year following the 2007-08 school year, the amount deposited and distributed shall be adjusted for inflation as defined in RCW 43.135.025(((7))) (8).
     (3) The office of the superintendent of public instruction shall verify the average number of full-time equivalent students in each school district from the previous school year to the state treasurer by August 1st of each year.

NEW SECTION.  Sec. 2   A new section is added to chapter 43.79 RCW to read as follows:
     The student achievement fund is created in the state treasury. Appropriations from the student achievement fund may be made for the following purposes:
     (1) Distributions to school districts based on the average number of full-time equivalent students in the school district during the previous school year for the purposes set forth in RCW 28A.505.210 as follows:
     (a) For the 2003-04 school year, moneys in the student achievement fund shall be distributed on the basis of an equal amount per full-time equivalent student as provided in RCW 84.52.068 and 43.135.045(5);
     (b) For the 2004-05 school year, the legislature shall appropriate an annual amount equal to three hundred sixteen dollars per full-time equivalent student to the superintendent of public instruction for distribution to each school district based on three hundred sixteen dollars per full-time equivalent student from the sales tax established for deposit in the student achievement fund in RCW 82.08.020 as amended by chapter . . ., Laws of 2003 (H-2947/03) and from the lottery game created under chapter . . . (HB 2213), Laws of 2003. If sufficient revenue is not generated from these sources, the amount provided per full-time equivalent student under this subsection (1)(b) shall be reduced;
     (c) For the 2005-06 school year, the legislature shall appropriate: (i) An annual amount equal to one hundred forty-nine dollars per full-time equivalent student from the property tax as provided in RCW 84.52.068 and (ii) two hundred one dollars per full-time equivalent student from the sales tax established for deposit in the student achievement fund in RCW 82.08.020 as amended by chapter ..., Laws of 2003 (H-2947/03) and from the lottery game created under chapter . . . (HB 2213), Laws of 2003. If sufficient revenue is not generated from these sources, the amount provided per full-time equivalent student under (c)(ii) of this subsection shall be reduced;
     (d) For the 2006-07 school year, the legislature shall appropriate: (i) An annual amount equal to one hundred ninety-one dollars per full-time equivalent student from the property tax as provided in RCW 84.52.068 and (ii) two hundred nine dollars per full-time equivalent student from the sales tax established for deposit in the student achievement fund in RCW 82.08.020 as amended by chapter ..., Laws of 2003 (H-2947/03) and from the lottery game created under chapter. . . (HB 2213), Laws of 2003. If sufficient revenue is not generated from these sources, the amount provided per full-time equivalent student under (d)(ii) of this subsection shall be reduced;
     (e) For the 2007-08 school year, the legislature shall appropriate: (i) An annual amount equal to two hundred thirty-two dollars per full-time equivalent student from the property tax as provided in RCW 84.52.068 and (ii) two hundred eighteen dollars per full-time equivalent student from the sales tax established for deposit in the student achievement fund in RCW 82.08.020 as amended by chapter ..., Laws of 2003 (H-2947/03) and from the lottery game created under chapter . . . (HB 2213), Laws of 2003. If sufficient revenue is not generated from these sources, the amount provided per full-time equivalent student under (e)(ii) of this subsection shall be reduced;
     (f) Each subsequent year following the 2007-08 school year, the per student distributions from the property tax and the sales tax shall each be adjusted for inflation as defined in RCW 43.135.025(8);
     (2) Beginning with school year 2004-05, allocations to school districts for the better schools program, subject to any conditions, limitations, and formulae in the omnibus operating appropriations act;
     (3) Beginning with school year 2004-05, appropriations to the higher education coordinating board and two-year and four-year institutions of higher education for programs that increase access to higher education, including but not limited to the Washington promise scholarship program and high-demand enrollments, and subject to any conditions or limitations in the omnibus operating appropriations act; and
     (4) The legislature, in the omnibus operating appropriations act, may transfer unappropriated balances in the student achievement fund to the general fund.

Sec. 3   RCW 28A.505.210 and 2001 c 3 s 3 are each amended to read as follows:
     ((School)) For student achievement fund moneys distributed to school districts pursuant to RCW 84.52.068 and section 2(1) of this act, the districts shall have the authority to decide the best use of student achievement funds to assist students in meeting and exceeding the new, higher academic standards in each district consistent with the provisions of chapter 3, Laws of 2001.
     (1) Student achievement funds shall be allocated for the following uses:
     (a) To reduce class size by hiring certificated elementary classroom teachers in grades K-4 and paying nonemployee-related costs associated with those new teachers;
     (b) To make selected reductions in class size in grades 5-12, such as small high school writing classes;
     (c) To provide extended learning opportunities to improve student academic achievement in grades K-12, including, but not limited to, extended school year, extended school day, before-and-after-school programs, special tutoring programs, weekend school programs, summer school, and all-day kindergarten;
     (d) To provide additional professional development for educators, including additional paid time for curriculum and lesson redesign and alignment, training to ensure that instruction is aligned with state standards and student needs, reimbursement for higher education costs related to enhancing teaching skills and knowledge, and mentoring programs to match teachers with skilled, master teachers. The funding shall not be used for salary increases or additional compensation for existing teaching duties, but may be used for extended year and extended day teaching contracts;
     (e) To provide early assistance for children who need prekindergarten support in order to be successful in school;
     (f) To provide improvements or additions to school building facilities which are directly related to the class size reductions and extended learning opportunities under (a) through (c) of this subsection.
     (2) Annually on or before May 1st, the school district board of directors shall meet at the time and place designated for the purpose of a public hearing on the proposed use of these funds to improve student achievement for the coming year. Any person may appear or by written submission have the opportunity to comment on the proposed plan for the use of these funds. No later than August 31st, as a part of the process under RCW 28A.505.060, each school district shall adopt a plan for the use of these funds for the upcoming school year. Annually, each school district shall provide to the citizens of their district a public accounting of the funds made available to the district during the previous school year under chapter 3, Laws of 2001, how the funds were used, and the progress the district has made in increasing student achievement, as measured by required state assessments and other assessments deemed appropriate by the district. Copies of this report shall be provided to the superintendent of public instruction and to the academic achievement and accountability commission.

Sec. 4   RCW 28A.150.380 and 2001 c 3 s 10 are each amended to read as follows:
     (1) The state legislature shall, at each regular session in an odd-numbered year, appropriate from the state general fund for the current use of the common schools such amounts as needed for state support to the common schools during the ensuing biennium as provided in this chapter, RCW 28A.160.150 through 28A.160.210, 28A.300.170, and 28A.500.010.
     (2) The state legislature shall also, at each regular session in an odd-numbered year, appropriate from the student achievement fund ((and education construction fund solely for the purposes of and in accordance with the provisions of the student achievement act during the ensuing biennium)) as provided in RCW 84.52.068 and section 2 of this act.

Sec. 5   RCW 67.70.240 and 2001 c 3 s 4 are each amended to read as follows:
     The moneys in the state lottery account shall be used only:
     (1) For the payment of prizes to the holders of winning lottery tickets or shares;
     (2) For purposes of making deposits into the reserve account created by RCW 67.70.250 and into the lottery administrative account created by RCW 67.70.260;
     (3) For purposes of making deposits into the education construction fund and student achievement fund created in RCW 43.135.045. For the transition period from July 1, 2001, until and including June 30, 2002, fifty percent of the moneys not otherwise obligated under this section shall be placed in the student achievement fund and fifty percent of these moneys shall be placed in the education construction fund. On and after July 1, 2002, until June 30, 2004, seventy-five percent of these moneys shall be placed in the student achievement fund and twenty-five percent shall be placed in the education construction fund, except for moneys generated from the game created under chapter . . . (HB 2213), Laws of 2003 which shall be placed into the student achievement fund. On and after July 1, 2004, all deposits not otherwise obligated under this section shall be placed in the education construction fund, except for moneys generated from the game created under chapter . . . (HB 2213), Laws of 2003 which shall be placed into the student achievement fund. However, after July 1, 2004, the legislature may direct the transfer of lottery deposits from the education construction fund to the state general fund in the omnibus operating appropriations act. Moneys in the state lottery account deposited in the education construction fund and the student achievement fund are included in "general state revenues" under RCW 39.42.070;
     (4) For distribution to a county for the purpose of paying the principal and interest payments on bonds issued by the county to construct a baseball stadium, as defined in RCW 82.14.0485, including reasonably necessary preconstruction costs. Three million dollars shall be distributed under this subsection during calendar year 1996. During subsequent years, such distributions shall equal the prior year's distributions increased by four percent. Distributions under this subsection shall cease when the bonds issued for the construction of the baseball stadium are retired, but not more than twenty years after the tax under RCW 82.14.0485 is first imposed;
     (5) For distribution to the stadium and exhibition center account, created in RCW 43.99N.060. Subject to the conditions of RCW 43.99N.070, six million dollars shall be distributed under this subsection during the calendar year 1998. During subsequent years, such distribution shall equal the prior year's distributions increased by four percent. No distribution may be made under this subsection after December 31, 1999, unless the conditions for issuance of the bonds under RCW 43.99N.020(2) are met. Distributions under this subsection shall cease when the bonds are retired, but not later than December 31, 2020;
     (6) For the purchase and promotion of lottery games and game-related services; and
     (7) For the payment of agent compensation.
     The office of financial management shall require the allotment of all expenses paid from the account and shall report to the ways and means committees of the senate and house of representatives any changes in the allotments.

Sec. 6   RCW 67.70.340 and 2002 c 349 s 3 are each amended to read as follows:
     (1) The legislature recognizes that creating a shared game lottery could result in less revenue being raised by the existing state lottery ticket sales. The legislature further recognizes that the two funds most impacted by this potential event are the student achievement fund and the education construction account. Therefore, it is the intent of the legislature to use some of the proceeds from the shared game lottery to make up the difference that the potential state lottery revenue loss would have on the student achievement fund and the education construction account.
     (2) The student achievement fund and the education construction account are expected to collectively receive one hundred two million dollars annually from state lottery games other than the shared game lottery and from the lottery game created under chapter . . . (HB 2213), Laws of 2003. For fiscal year 2003 and thereafter, if the amount of lottery revenues, other than revenues generated under the lottery game created under chapter . . . (HB 2213), Laws of 2003, earmarked for the student achievement fund and the education construction account are less than one hundred two million dollars, the commission must transfer sufficient moneys from revenues derived from the shared game lottery into the student achievement fund and the education construction account to bring the total revenue up to one hundred two million dollars. The funds transferred from the shared game lottery account under this subsection must be divided between the student achievement fund and the education construction account in a manner consistent with RCW 67.70.240(3).
     (3) For fiscal year 2003, the commission shall transfer from revenues derived from the shared game lottery to the violence reduction and drug enforcement account under RCW 69.50.520 five hundred thousand dollars exclusively for the treatment of pathological gambling as prescribed by RCW 67.70.350.
     (4) The remaining net revenues, if any, in the shared game lottery account after the transfers shall be deposited into the general fund.

Sec. 7   RCW 43.135.045 and 2001 c 3 s 9, 2000 2nd sp.s. c 5 s 1, and 2000 2nd sp.s. c 2 s 3 are each reenacted and amended to read as follows:
     (1) The emergency reserve fund is established in the state treasury. During each fiscal year, the state treasurer shall deposit in the emergency reserve fund all general fund -- state revenues in excess of the state expenditure limit for that fiscal year. Deposits shall be made at the end of each fiscal quarter based on projections of state revenues and the state expenditure limit. The treasurer shall make transfers between these accounts as necessary to reconcile actual annual revenues and the expenditure limit for fiscal year 2000 and thereafter.
     (2) The legislature may appropriate moneys from the emergency reserve fund only with approval of at least two-thirds of the members of each house of the legislature, and then only if the appropriation does not cause total expenditures to exceed the state expenditure limit under this chapter.
     (3) The emergency reserve fund balance shall not exceed five percent of annual general fund -- state revenues as projected by the official state revenue forecast. Any balance in excess of five percent shall be transferred on a quarterly basis by the state treasurer as follows: Seventy-five percent to the student achievement fund ((hereby created in the state treasury)) and twenty-five percent to the general fund balance. The treasurer shall make transfers between these accounts as necessary to reconcile actual annual revenues for fiscal year 2000 and thereafter. When per-student state funding for the maintenance and operation of K-12 education meets a level of no less than ninety percent of the national average of total funding from all sources per student as determined by the most recent published data from the national center for education statistics of the United States department of education, as calculated by the office of financial management, further deposits to the student achievement fund shall be required only to the extent necessary to maintain the ninety-percent level. Remaining funds are part of the general fund balance and these funds are subject to the expenditure limits of this chapter.
     (4) The education construction fund is hereby created in the state treasury.
     (a) Funds may be appropriated from the education construction fund exclusively for common school construction or higher education construction or, after July 1, 2004, for transfer to the state general fund.
     (b) Funds may be appropriated for any other purpose only if approved by a two-thirds vote of each house of the legislature and if approved by a vote of the people at the next general election. An appropriation approved by the people under this subsection shall result in an adjustment to the state expenditure limit only for the fiscal period for which the appropriation is made and shall not affect any subsequent fiscal period.
     (5) Until June 30, 2004, funds from the student achievement fund shall be appropriated to the superintendent of public instruction strictly for distribution to school districts to meet the provisions set out in the student achievement act. Allocations shall be made on an equal per full-time equivalent student basis to each school district.
     (6) Earnings of the emergency reserve fund under RCW 43.84.092(4)(a) shall be transferred quarterly to the multimodal transportation account, except for those earnings that are in excess of thirty-five million dollars each fiscal year. Within thirty days following any fiscal year in which earnings transferred to the multimodal transportation account under this subsection did not total thirty-five million dollars, the state treasurer shall transfer from the emergency reserve fund an amount necessary to bring the total deposited in the multimodal transportation account under this subsection to thirty-five million dollars. The revenues to the multimodal transportation account reflected in this subsection provide ongoing support for the transportation programs of the state. However, it is the intent of the legislature that any new long-term financial support that may be subsequently provided for transportation programs will be used to replace and supplant the revenues reflected in this subsection, thereby allowing those revenues to be returned to the purposes to which they were previously dedicated.

NEW SECTION.  Sec. 8   This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect July 1, 2003.