Provides that the superintendent of public instruction, in cooperation with the legislative evaluation and accountability program, shall develop and propose a new distribution formula for allocating state funds for transportation costs under RCW 28A.160.150 through 28A.160.180.

Provides that the distribution formula developed under this act should seek to achieve the following objectives: (1) More accurately reflect the costs of providing transportation for eligible students to and from school based on data reported under RCW 28A.160.170;

(2) Promote the efficient use of state and local resources; and

(3) Continue to allow local control of school district student transportation programs, including determination of which individual students are transported and by what manner and what routes are most efficiently used.

Requires the superintendent and the legislative evaluation and accountability program to make a preliminary report on the proposed distribution formula to the governor and the education and fiscal committees of the legislature by September 1, 2007. A final report with recommendations, estimates of the fiscal impact of the proposal on the state and school districts, and draft legislation necessary to implement the proposal shall be submitted by December 15, 2007.