BILL REQ. #:  S-5079.1 

Read first time 02/27/12.   Referred to Committee on Ways & Means.

     AN ACT Relating to requiring a financial plan to adequately and amply fund basic education while modifying nonbasic education funding mandates; amending RCW 28A.505.220 and 43.135.045; amending 2010 1st sp.s. c 27 s 1 (uncodified); creating new sections; repealing RCW 28A.400.205, 28A.400.206, 28B.50.465, and 28B.50.468; and providing an effective date.

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

NEW SECTION.  Sec. 1   The legislature is committed to public elementary and secondary education in Washington state and further recognizes its authority and responsibility to define and fund a program of basic education as its paramount duty under the state Constitution. In January 2012, the Washington state supreme court held that the state has not complied with its Article IX, section 1 constitutional duty to make ample provision for the basic education program for all children in Washington. The court did acknowledge the recent enactment of sweeping reforms under chapter 548, Laws of 2009, and acknowledged the current progress toward implementing those reforms. The court also noted that, if fully funded, the reform package will remedy deficiencies in the K-12 funding system. Therefore, continuing to make vigorous progress in phasing in those reforms must be the legislature's focused priority with regard to K-12 funding.
     In November 2000, the voters of Washington state approved Initiatives 728 and 732 to enhance per-student funding allocations to school districts and provide annual cost-of-living salary increases to education employees. The initiatives did not provide increased revenue to fund the enhanced expenditures. Additionally, Initiative 728 is designated for specific purposes including reducing class sizes in grades kindergarten through four, making selected class size reductions in grades five through twelve, providing extended learning for students in grades kindergarten through twelve, providing additional professional development for educators, providing early assistance for children who need prekindergarten support, and providing improvements or additions to school facilities that are directly related to class size reductions and extended learning opportunities. In the most recent year in which school districts received Initiative 728 funding, and not counting amounts carried over to the following year, the majority of funds were expended on class size reduction. Further, the legislature has currently convened a compensation working group to make recommendations regarding salaries. The Washington supreme court did note that both Initiative 728 and Initiative 732 are considered not part of basic education.
     Given that a substantial portion of the purpose of the initiatives will be incorporated as part of the focused work group created in this act for phasing-in the reforms recently enacted under chapter 548, Laws of 2009, and given that all K-12 funding efforts should be aimed toward basic education, the separate initiative requirements must be set aside.

Sec. 2   RCW 28A.505.220 and 2011 1st sp.s. c 17 s 1 are each amended to read as follows:
     (1) Total distributions for the student achievement program from the general fund 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 as reported to the office of the superintendent of public instruction by August 31st of the previous school year. The superintendent of public instruction shall ensure that moneys generated by skill center students are returned to skill centers.
     (2) The allocation rate per full-time equivalent student shall be three hundred dollars in the 2005-06 school year, three hundred seventy-five dollars in the 2006-07 school year, and four hundred fifty dollars in the 2007-08 school year. For each subsequent school year, the amount allocated per full-time equivalent student shall be adjusted for inflation by the implicit price deflator as published by the federal bureau of labor statistics. However, ((for the 2011-12 and 2012-13 school years)) beginning with the 2012-13 school year, the amount allocated per full-time equivalent student shall be as specified in the omnibus appropriations act. These allocations per full-time equivalent student shall be supported from the distributions from the education legacy trust account created in RCW 83.100.230 and the state general fund.
     (3) The school district annual amounts as defined in subsection (2) of this section shall be distributed on the monthly apportionment schedule as defined in RCW 28A.510.250.

Sec. 3   RCW 43.135.045 and 2011 1st sp.s. c 50 s 950 are each amended to read as follows:
     The education construction fund is hereby created in the state treasury.
     (1) Funds may be appropriated from the education construction fund exclusively for common school construction or higher education construction. During the 2007-2009 fiscal biennium, funds may also be used for higher education facilities preservation and maintenance. During the 2009-2011 and 2011-2013 fiscal biennia, the legislature may transfer from the education construction fund to the state general fund such amounts as reflect the excess fund balance of the fund.
     (2) 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.
     (3) Funds for the student achievement program in RCW 28A.505.210 and 28A.505.220 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.
     (((4) After July 1, 2010, the state treasurer shall transfer one hundred two million dollars from the general fund to the education construction fund by June 30th of each year.))

Sec. 4   2010 1st sp.s. c 27 s 1 (uncodified) is amended to read as follows:
     The legislature finds that institutions of higher education are key to the future employment opportunities of Washington citizens and to the economic well-being of the state. The legislature finds that the recruitment of entrepreneurial researchers at institutions of higher education and the formation of research innovation teams will further enhance faculty recruitment and economic development. The legislature further finds that current financial aid and early childhood education programs are underfunded and subject to the unpredictability of the state budget. It is the intent of the legislature to direct lottery account moneys toward the Washington opportunity pathways account and that those funds stabilize and increase existing resources for the recruitment of entrepreneurial researchers, innovation partnership zones and research teams, early childhood education, opportunity grants, educational opportunity grants, get ready for math and science scholarships, passport to college promise scholarships, college bound scholarships, the state work study program, the state need grant, Washington scholars awards, the Washington award for vocational excellence, and Washington promise scholarships. ((It is also the intent of the legislature to continue funding the education construction fund by redirecting a portion of general state revenues to that fund.))

NEW SECTION.  Sec. 5   The basic education funding joint legislative work group is established. The eight-member work group comprises the chairs and the ranking minority members of the senate and house of representatives ways and means committees and the senate and house of representatives education policy committees. The work group must consider the information available to date regarding the priority order of phased-in funding enhancements and review the phase-in schedule in light of any newly available research-based evidence. The work group must develop a long-term financial plan that phases in enhancements, and matches the expenditure plan with options for existing or additional state revenue that may include shifting a portion of school district excess levy authority to state property tax levy. The plan must provide for progress in executing and funding the education reforms while making realistic commitments. The financial plan must take into account the objectives of Initiative 728 by integrating the funding for that initiative with the implementation of the prototypical school model, as recommended by the funding formula technical working group. The financial plan must also consider upcoming findings of the compensation working group and review that group's recommendations regarding the objectives of Initiative 732 and the state's larger education reform plan.
     Staff support may be provided by senate committee services, house of representatives office of program research, the Washington state institute for public policy, or other state agencies as needed including the department of revenue, the office of financial management, and the office of the superintendent of public instruction. The work group shall report to the legislative fiscal committees and education policy committees by December 31, 2012, with a recommended phase-in and financing plan.

NEW SECTION.  Sec. 6   The following acts or parts of acts are each repealed:
     (1) RCW 28A.400.205 (Cost-of-living increases for employees) and 2011 1st sp.s. c 18 s 1, 2009 c 573 s 1, 2003 1st sp.s. c 20 s 1, & 2001 c 4 s 2;
     (2) RCW 28A.400.206 (Cost-of-living increases -- Duty of state) and 2003 1st sp.s. c 20 s 2 & 2001 c 4 s 1;
     (3) RCW 28B.50.465 (Cost-of-living increases -- Academic employees) and 2011 1st sp.s. c 18 s 2, 2009 c 573 s 2, 2003 1st sp.s. c 20 s 3, & 2001 c 4 s 3; and
     (4) RCW 28B.50.468 (Cost-of-living increases -- Classified employees) and 2011 1st sp.s. c 18 s 3, 2009 c 573 s 3, 2003 1st sp.s. c 20 s 4, & 2001 c 4 s 4.

NEW SECTION.  Sec. 7   Section 2 of this act takes effect July 1, 2012.