BILL REQ. #:  H-0286.3 

Read first time 02/16/11.   Referred to Committee on Ways & Means.

     AN ACT Relating to establishing a process to make strategic investments in education; reenacting and amending RCW 43.84.092; and adding a new chapter to Title 44 RCW.

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

NEW SECTION.  Sec. 1   (1) The legislature finds that the structure of the rapidly changing economy of our state and nation places a high premium on education, both in the workplace and in civic life. In addition, one of the most significant levers to make long-term improvements in the state's economy is education.
     (2) The legislature further finds that Washington state is underperforming other states on a number of education indicators and outcomes:
     (a) Washington is below the national average in the percent of children aged three to five who are not enrolled in early learning, preschool, or kindergarten;
     (b) Washington is listed among the bottom five states seeing an increase, rather than a decline, in the achievement gap between white and Asian students and other students of color as measured by national reading and mathematics assessments;
     (c) Washington ranks below the national average for on-time graduation from high school;
     (d) Washington ranks forty-seventh in the nation for the percentage of young adults aged eighteen to twenty-four enrolled in college; and
     (e) Washington ranks below the national average for per capita state and local financial support for higher education.
     (3) Therefore, strategic investments must be made to enhance and improve public education in Washington, from early learning through higher education. Furthermore, these investments must be identified and funded in a thoughtful and responsible manner. The legislature intends to establish a deliberative process for identifying incremental, strategic investments to enhance and improve public education, as well as providing the funding necessary to support the investments through the modification and elimination of current tax preferences.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Public education" means:
     (a) Early learning programs and services supported by public funds and administered by the department of early learning;
     (b) Instruction and programs delivered by the common schools defined under RCW 28A.150.020, including but not limited to the program of basic education defined under RCW 28A.150.200;
     (c) Programs and services delivered by the office of the superintendent of public instruction to benefit the students and staff of the common schools;
     (d) Instruction, programs, and research at institutions of higher education as defined in RCW 28B.10.016; and
     (e) State programs for higher education student financial aid.
     (2) "Tax preference" has the definition in RCW 43.136.021.

NEW SECTION.  Sec. 3   (1) Each odd-numbered year, the legislature shall identify and establish a set of strategic investments to enhance and improve public education.
     (2) The strategic investments shall be established through the omnibus appropriations act or other legislation, which must enumerate each proposed investment and its estimated projected annual cost if the investment were implemented beginning July 1st of the next ensuing odd-numbered year. The purpose of this budget proviso or other legislation is to identify proposed strategic investments and their estimated costs, but the investments proposed are not binding and do not take effect without further implementing legislation as provided in section 5 of this act.
     (3) In identifying the strategic investments, the appropriate standing committees of the legislature shall:
     (a) Hold public hearings to receive input on investment priorities for education;
     (b) Receive recommendations from the quality education council regarding priorities for early learning and the common schools; and
     (c) Receive recommendations from the state board for community and technical colleges and the higher education coordinating board regarding priorities for higher education.
     (4) After the budget proviso or other legislation under this section is signed into law, the office of the governor shall notify the citizen commission for performance measurement of tax preferences created in RCW 43.136.035.

NEW SECTION.  Sec. 4   (1) Upon receipt of the notification from the office of the governor under section 3 of this act, the citizen commission for performance measurement of tax preferences shall identify and recommend the repeal or modification of a set of tax preferences that are expected to create sufficient revenue for the state general fund to make the strategic investments included in the legislation under section 3 of this act beginning July 1st of the next ensuing odd-numbered year.
     (2)(a) The commission shall submit its recommendations under this section to the legislature in the form of proposed implementing legislation by December 1st of each odd-numbered year.
     (b) The proposed implementing legislation must include each tax preference to be modified or repealed, necessary amendments to current law to implement the modifications or repeals, and the estimated revenue to the state general fund associated with the modifications or repeals.

NEW SECTION.  Sec. 5   (1) During the legislative session convened each even-numbered year, the appropriate standing committees of the legislature shall hold a public hearing on the proposed legislation submitted by the citizen commission for performance measurement of tax preferences under section 4 of this act.
     (2) Legislation to implement the recommendations of the commission must be divided into two parts as provided in this subsection (2).
     (a) Part I must be the proposed legislation submitted by the citizen commission for performance measurement of tax preferences under section 4 of this act, which shall be adopted or rejected as submitted except that provisions of the legislation may be amended if approved by a two-thirds vote of each house of the legislature.
     (b) Part II must contain:
     (i) The specific strategic investments to enhance and improve public education that will be made with the estimated revenue and their projected costs beginning July 1st of the next ensuing odd-numbered year;
     (ii) Any amendments to current law or other authorizing provisions necessary to implement the strategic investments;
     (iii) A determination of how the estimated revenue associated with the modifications or repeal of tax preferences must be distributed, including the estimated amounts to be deposited in the strategic investments in education account created in section 6 of this act; and
     (iv) A direction to the state treasurer to deposit the estimated revenue as determined under (b)(iii) of this subsection into the strategic investments in education account for the purposes of making the strategic investments identified in the legislation.
     (3) Legislation enacted to implement the recommendations of the commission under this section shall be submitted as a referendum bill to the people at the next general election as provided under Article II, section 1 of the state Constitution.

NEW SECTION.  Sec. 6   (1) The strategic investments in education account is created in the state treasury. Moneys in the account may be spent only after appropriation. Interest earned on moneys in the account remain in the account.
     (2) Moneys in the strategic investments in education account must be used to make the strategic investments to enhance and improve public education identified in the legislation enacted and approved under section 5 of this act.

Sec. 7   RCW 43.84.092 and 2010 1st sp.s. c 30 s 20, 2010 1st sp.s. c 9 s 7, 2010 c 248 s 6, 2010 c 222 s 5, 2010 c 162 s 6, and 2010 c 145 s 11 are each reenacted and amended to read as follows:
     (1) All earnings of investments of surplus balances in the state treasury shall be deposited to the treasury income account, which account is hereby established in the state treasury.
     (2) The treasury income account shall be utilized to pay or receive funds associated with federal programs as required by the federal cash management improvement act of 1990. The treasury income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for refunds or allocations of interest earnings required by the cash management improvement act. Refunds of interest to the federal treasury required under the cash management improvement act fall under RCW 43.88.180 and shall not require appropriation. The office of financial management shall determine the amounts due to or from the federal government pursuant to the cash management improvement act. The office of financial management may direct transfers of funds between accounts as deemed necessary to implement the provisions of the cash management improvement act, and this subsection. Refunds or allocations shall occur prior to the distributions of earnings set forth in subsection (4) of this section.
     (3) Except for the provisions of RCW 43.84.160, the treasury income account may be utilized for the payment of purchased banking services on behalf of treasury funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasury and affected state agencies. The treasury income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments shall occur prior to distribution of earnings set forth in subsection (4) of this section.
     (4) Monthly, the state treasurer shall distribute the earnings credited to the treasury income account. The state treasurer shall credit the general fund with all the earnings credited to the treasury income account except:
     (a) The following accounts and funds shall receive their proportionate share of earnings based upon each account's and fund's average daily balance for the period: The aeronautics account, the aircraft search and rescue account, the budget stabilization account, the capitol building construction account, the Cedar River channel construction and operation account, the Central Washington University capital projects account, the charitable, educational, penal and reformatory institutions account, the cleanup settlement account, the Columbia river basin water supply development account, the common school construction fund, the county arterial preservation account, the county criminal justice assistance account, the county sales and use tax equalization account, the deferred compensation administrative account, the deferred compensation principal account, the department of licensing services account, the department of retirement systems expense account, the developmental disabilities community trust account, the drinking water assistance account, the drinking water assistance administrative account, the drinking water assistance repayment account, the Eastern Washington University capital projects account, the education construction fund, the education legacy trust account, the election account, the energy freedom account, the energy recovery act account, the essential rail assistance account, The Evergreen State College capital projects account, the federal forest revolving account, the ferry bond retirement fund, the freight congestion relief account, the freight mobility investment account, the freight mobility multimodal account, the grade crossing protective fund, the public health services account, the health system capacity account, the high capacity transportation account, the state higher education construction account, the higher education construction account, the highway bond retirement fund, the highway infrastructure account, the highway safety account, the high occupancy toll lanes operations account, the hospital safety net assessment fund, the industrial insurance premium refund account, the judges' retirement account, the judicial retirement administrative account, the judicial retirement principal account, the local leasehold excise tax account, the local real estate excise tax account, the local sales and use tax account, the marine resources stewardship trust account, the medical aid account, the mobile home park relocation fund, the motor vehicle fund, the motorcycle safety education account, the multiagency permitting team account, the multimodal transportation account, the municipal criminal justice assistance account, the municipal sales and use tax equalization account, the natural resources deposit account, the oyster reserve land account, the pension funding stabilization account, the perpetual surveillance and maintenance account, the public employees' retirement system plan 1 account, the public employees' retirement system combined plan 2 and plan 3 account, the public facilities construction loan revolving account beginning July 1, 2004, the public health supplemental account, the public transportation systems account, the public works assistance account, the Puget Sound capital construction account, the Puget Sound ferry operations account, the Puyallup tribal settlement account, the real estate appraiser commission account, the recreational vehicle account, the regional mobility grant program account, the resource management cost account, the rural arterial trust account, the rural Washington loan fund, the site closure account, the small city pavement and sidewalk account, the special category C account, the special wildlife account, the state employees' insurance account, the state employees' insurance reserve account, the state investment board expense account, the state investment board commingled trust fund accounts, the state patrol highway account, the state route number 520 civil penalties account, the state route number 520 corridor account, the strategic investments in education account, the supplemental pension account, the Tacoma Narrows toll bridge account, the teachers' retirement system plan 1 account, the teachers' retirement system combined plan 2 and plan 3 account, the tobacco prevention and control account, the tobacco settlement account, the transportation 2003 account (nickel account), the transportation equipment fund, the transportation fund, the transportation improvement account, the transportation improvement board bond retirement account, the transportation infrastructure account, the transportation partnership account, the traumatic brain injury account, the tuition recovery trust fund, the University of Washington bond retirement fund, the University of Washington building account, the urban arterial trust account, the volunteer firefighters' and reserve officers' relief and pension principal fund, the volunteer firefighters' and reserve officers' administrative fund, the Washington judicial retirement system account, the Washington law enforcement officers' and firefighters' system plan 1 retirement account, the Washington law enforcement officers' and firefighters' system plan 2 retirement account, the Washington public safety employees' plan 2 retirement account, the Washington school employees' retirement system combined plan 2 and 3 account, the Washington state health insurance pool account, the Washington state patrol retirement account, the Washington State University building account, the Washington State University bond retirement fund, the water pollution control revolving fund, and the Western Washington University capital projects account. Earnings derived from investing balances of the agricultural permanent fund, the normal school permanent fund, the permanent common school fund, the scientific permanent fund, and the state university permanent fund shall be allocated to their respective beneficiary accounts.
     (b) Any state agency that has independent authority over accounts or funds not statutorily required to be held in the state treasury that deposits funds into a fund or account in the state treasury pursuant to an agreement with the office of the state treasurer shall receive its proportionate share of earnings based upon each account's or fund's average daily balance for the period.
     (5) In conformance with Article II, section 37 of the state Constitution, no treasury accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

NEW SECTION.  Sec. 8   Sections 1 through 6 of this act constitute a new chapter in Title 44 RCW.