Read first time 04/03/12.   Referred to Committee on Ways & Means.

     AN ACT Relating to addressing comprehensive funding for education by developing a plan for full funding and by freeing certain existing revenues for support of the basic education program; amending RCW 28A.600.405, 43.135.045, 67.70.340, and 83.100.230; reenacting and amending RCW 28A.150.380 and 84.52.0531; repealing RCW 28A.505.210 and 28A.505.220; creating new sections; and providing an expiration date.

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

NEW SECTION.  Sec. 1   (1) Legislation enacted in 2009 (chapter 548, Laws of 2009) and in 2010 (chapter 236, Laws of 2010) revised the definition of the program of basic education, established new methods for distributing state funds to school districts to support this program of basic education, and provided an outline of specific enhancements to the program of basic education that are required to be implemented by 2018. In order to meet the required deadlines to implement full funding of the enhancements, the joint task force in section 2 of this act is created to develop and recommend options for a permanent funding mechanism.
     (2) Initiative Measure No. 728 (chapter 3, Laws of 2001) dedicated a portion of state revenues to fund class size reductions and other education improvements. Because class size reductions and similar improvements are incorporated in the reforms that were enacted in chapter 548, Laws of 2009, and chapter 236, Laws of 2010, and that are being incrementally implemented through 2018, Initiative Measure No. 728 is repealed in order to make these dedicated revenues available for implementation of basic education reform and to facilitate the funding reform recommendations of the joint task force in section 2 of this act.
     (3) Nothing in this act alters or amends the elements included in the school district levy base set forth in RCW 84.52.0531.

NEW SECTION.  Sec. 2   (1) The joint task force on education funding is established. The task force shall make recommendations on how the legislature can meet the requirements outlined in chapter 548, Laws of 2009 and chapter 236, Laws of 2010. In particular, the task force shall develop a proposal for a reliable and dependable funding mechanism to support basic education programs. At a minimum, the proposed funding mechanism must support full implementation of the programmatic enhancements required in chapter 548, Laws of 2009, and chapter 236, Laws of 2010, including full-day kindergarten; reduced K-3 class size; increased allocations for maintenance, supplies, and operating costs; and a new pupil transportation formula. The task force shall also consider the specific recommendations for the transitional bilingual instructional program from the quality education council to the legislature dated January 6, 2012. It shall provide recommendations for: Implementation of a scaled funding formula based on levels of English language proficiency, a supplemental formula based on students exiting the program due to demonstrated English language proficiency, and implementing legislation.
     (2)(a) The joint task force on education funding shall consist of the following members:
     (i) Eight legislators, with two members from each of the two largest caucuses of the senate appointed by the president of the senate and two members from each of the two largest caucuses of the house of representatives appointed by the speaker of the house of representatives; and
     (ii) Three individuals, to be appointed by the governor.
     (b) The task force may recommend multiple options, but shall recommend one preferred alternative, including an outline of necessary implementing legislation. Should the task force recommend an option to fully fund the program of basic education with no new revenues, the task force must identify what areas already in the budget would be eliminated or reduced.
     (c) The task force shall be staffed by the house of representatives office of program research, senate committee services, and the office of financial management, with assistance from the Washington state institute for public policy and other agencies as necessary.
     (3) The task force shall submit a final report to the legislature by December 31, 2012.

Sec. 3   RCW 28A.150.380 and 2009 c 548 s 110 and 2009 c 479 s 16 are each reenacted and amended to read as follows:
     (1) The state legislature shall, at each regular session in an odd-numbered year, appropriate for the current use of the common schools such amounts as needed for state support to school districts during the ensuing biennium for the program of basic education under RCW 28A.150.200.
     (2) In addition to those state funds provided to school districts for basic education, the legislature may appropriate funds to be distributed to school districts for other factors and for other special programs to enhance or enrich the program of basic education.
     (((3) The state legislature shall also, at each regular session in an odd-numbered year, appropriate from the general fund and education construction fund for the purposes of and in accordance with the provisions of the student achievement act during the ensuing biennium.))

Sec. 4   RCW 28A.600.405 and 2007 c 355 s 4 are each amended to read as follows:
     (1) For purposes of this section and RCW 28B.50.534, "eligible student" means a student who has completed all state and local high school graduation requirements except the certificate of academic achievement under RCW 28A.655.061 or the certificate of individual achievement under RCW 28A.155.045, who is less than age twenty-one as of September 1st of the academic year the student enrolls at a community and technical college under this section, and who meets the following criteria:
     (a) Receives a level 2 (basic) score on the reading and writing content areas of the high school ((Washington assessment of student learning)) statewide student assessment;
     (b) Has not successfully met state standards on a retake of the assessment or an alternative assessment;
     (c) Has participated in assessment remediation; and
     (d) Receives a recommendation to enroll in courses or a program of study made available under RCW 28B.50.534 from his or her high school principal.
     (2) An eligible student may enroll in courses or a program of study made available by a community or technical college participating in the pilot program created under RCW 28B.50.534 for the purpose of obtaining a high school diploma.
     (3) For eligible students in courses or programs delivered directly by the community or technical college participating in the pilot program under RCW 28B.50.534 and only for enrollment in courses that lead to a high school diploma, the superintendent of public instruction shall transmit to the colleges participating in the pilot program an amount per each full-time equivalent college student at statewide uniform rates. The amount shall be the sum of (a), (b), and (c)((, and (d))) of this subsection, as applicable.
     (a) The superintendent shall separately calculate and allocate moneys appropriated for basic education under RCW 28A.150.260 for purposes of making payments under this section. The calculations and allocations shall be based upon the estimated statewide annual average per full-time equivalent high school student allocations under RCW 28A.150.260, excluding small high school enhancements, and applicable rules adopted under chapter 34.05 RCW.
     (b) The superintendent shall allocate an amount equal to the per funded student state allocation for the learning assistance program under chapter 28A.165 RCW for each full-time equivalent college student or a pro rata amount for less than full-time enrollment.
     (c) ((The superintendent shall allocate an amount equal to the per full-time equivalent student allocation for the student achievement program under RCW 28A.505.210 for each full-time equivalent college student or a pro rata amount for less than full-time enrollment.
     (d))) For eligible students who meet eligibility criteria for the state transitional bilingual instruction program under chapter 28A.180 RCW, the superintendent shall allocate an amount equal to the per student state allocation for the transitional bilingual instruction program or a pro rata amount for less than full-time enrollment.
     (4) The superintendent may adopt rules establishing enrollment reporting, recordkeeping, and accounting requirements necessary to ensure accountability for the use of basic education, learning assistance, and transitional bilingual program funds under this section for the pilot program created under RCW 28B.50.534.
     (5) All school districts in the geographic area of the two community and technical colleges selected pursuant to section 8, chapter 355, Laws of 2007 to participate in the pilot program shall provide information about the high school completion option under RCW 28B.50.534 to students in grades ten, eleven, and twelve and the parents or guardians of those students.

Sec. 5   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. 6   RCW 67.70.340 and 2010 1st sp.s. c 27 s 4 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 fund most impacted by this potential event is the Washington opportunity pathways 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 Washington opportunity pathways account. The legislature further intends to use some of the proceeds from the shared game lottery to fund programs and services related to problem and pathological gambling.
     (2) The Washington opportunity pathways account is expected to receive one hundred two million dollars annually from state lottery games other than the shared game lottery. For fiscal year 2011 and thereafter, if the amount of lottery revenues earmarked for the Washington opportunity pathways account is less than one hundred two million dollars, the commission, after making the transfer required under subsection (3) of this section, must transfer sufficient moneys from revenues derived from the shared game lottery into the Washington opportunity pathways account to bring the total revenue up to one hundred two million dollars.
     (3)(a) The commission shall transfer, from revenue derived from the shared game lottery, to the problem gambling account created in RCW 43.20A.892, an amount equal to the percentage specified in (b) of this subsection of net receipts. For purposes of this subsection, "net receipts" means the difference between (i) revenue received from the sale of lottery tickets or shares and revenue received from the sale of shared game lottery tickets or shares; and (ii) the sum of payments made to winners.
     (b) In fiscal year 2006, the percentage to be transferred to the problem gambling account is one-tenth of one percent. In fiscal year 2007 and subsequent fiscal years, the percentage to be transferred to the problem gambling account is thirteen one-hundredths of one percent.
     (4) The commission shall transfer the remaining net revenues, if any, derived from the shared game lottery "Powerball" authorized in RCW 67.70.044(1) after the transfers pursuant to this section into the state general fund for ((the student achievement program under RCW 28A.505.220)) support for the program of basic education under RCW 28A.150.200.
     (5) The remaining net revenues, if any, in the shared game lottery account after the transfers pursuant to this section shall be deposited into the Washington opportunity pathways account.

Sec. 7   RCW 83.100.230 and 2010 1st sp.s. c 37 s 953 are each amended to read as follows:
     The education legacy trust account is created in the state treasury. Money in the account may be spent only after appropriation. Expenditures from the account may be used only for ((deposit into the student achievement fund)) support of the common schools, and for expanding access to higher education through funding for new enrollments and financial aid, and other educational improvement efforts. ((During the 2009-2011 fiscal biennium, moneys in the account may also be transferred into the state general fund.))

Sec. 8   RCW 84.52.0531 and 2010 c 237 s 1 and 2010 c 99 s 11 are each reenacted and amended to read as follows:
     The maximum dollar amount which may be levied by or for any school district for maintenance and operation support under the provisions of RCW 84.52.053 shall be determined as follows:
     (1) For excess levies for collection in calendar year 1997, the maximum dollar amount shall be calculated pursuant to the laws and rules in effect in November 1996.
     (2) For excess levies for collection in calendar year 1998 and thereafter, the maximum dollar amount shall be the sum of (a) plus or minus (b), (c), and (d) of this subsection minus (e) of this subsection:
     (a) The district's levy base as defined in subsections (3) and (4) of this section multiplied by the district's maximum levy percentage as defined in subsection (6) of this section;
     (b) For districts in a high/nonhigh relationship, the high school district's maximum levy amount shall be reduced and the nonhigh school district's maximum levy amount shall be increased by an amount equal to the estimated amount of the nonhigh payment due to the high school district under RCW 28A.545.030(3) and 28A.545.050 for the school year commencing the year of the levy;
     (c) Except for nonhigh districts under (d) of this subsection, for districts in an interdistrict cooperative agreement, the nonresident school district's maximum levy amount shall be reduced and the resident school district's maximum levy amount shall be increased by an amount equal to the per pupil basic education allocation included in the nonresident district's levy base under subsection (3) of this section multiplied by:
     (i) The number of full-time equivalent students served from the resident district in the prior school year; multiplied by:
     (ii) The serving district's maximum levy percentage determined under subsection (6) of this section; increased by:
     (iii) The percent increase per full-time equivalent student as stated in the state basic education appropriation section of the biennial budget between the prior school year and the current school year divided by fifty-five percent;
     (d) The levy bases of nonhigh districts participating in an innovation academy cooperative established under RCW 28A.340.080 shall be adjusted by the office of the superintendent of public instruction to reflect each district's proportional share of student enrollment in the cooperative;
     (e) The district's maximum levy amount shall be reduced by the maximum amount of state matching funds for which the district is eligible under RCW 28A.500.010.
     (3) For excess levies for collection in calendar year 2005 and thereafter, a district's levy base shall be the sum of allocations in (a) through (c) of this subsection received by the district for the prior school year and the amounts determined under subsection (4) of this section, including allocations for compensation increases, plus the sum of such allocations multiplied by the percent increase per full time equivalent student as stated in the state basic education appropriation section of the biennial budget between the prior school year and the current school year and divided by fifty-five percent. A district's levy base shall not include local school district property tax levies or other local revenues, or state and federal allocations not identified in (a) through (c) of this subsection.
     (a) The district's basic education allocation as determined pursuant to RCW 28A.150.250, 28A.150.260, and 28A.150.350;
     (b) State and federal categorical allocations for the following programs:
     (i) Pupil transportation;
     (ii) Special education;
     (iii) Education of highly capable students;
     (iv) Compensatory education, including but not limited to learning assistance, migrant education, Indian education, refugee programs, and bilingual education;
     (v) Food services; and
     (vi) Statewide block grant programs; and
     (c) Any other federal allocations for elementary and secondary school programs, including direct grants, other than federal impact aid funds and allocations in lieu of taxes.
     (4) For levy collections in calendar years 2005 through 2017, in addition to the allocations included under subsection (3)(a) through (c) of this section, a district's levy base shall also include the following:
     (a)(i) For levy collections in calendar year 2010, the difference between the allocation the district would have received in the current school year had RCW 84.52.068 not been amended by chapter 19, Laws of 2003 1st sp. sess. and the allocation the district received in the current school year pursuant to RCW 28A.505.220;
     (ii) For levy collections in calendar years 2011 through 2017, ((the difference between)) the allocation rate the district would have received in the prior school year using the Initiative 728 rate ((and the allocation rate the district received in the prior school year pursuant to RCW 28A.505.220)) multiplied by the full-time equivalent student enrollment used to calculate the Initiative 728 allocation for the prior school year; and
     (b) The difference between the allocations the district would have received the prior school year using the Initiative 732 base and the allocations the district actually received the prior school year pursuant to RCW 28A.400.205.
     (5) For levy collections in calendar years 2011 through 2017, in addition to the allocations included under subsections (3)(a) through (c) and (4)(a) and (b) of this section, a district's levy base shall also include the difference between an allocation of fifty-three and two-tenths certificated instructional staff units per thousand full-time equivalent students in grades kindergarten through four enrolled in the prior school year and the allocation of certificated instructional staff units per thousand full-time equivalent students in grades kindergarten through four that the district actually received in the prior school year, except that the levy base for a school district whose allocation in the 2009-10 school year was less than fifty-three and two-tenths certificated instructional staff units per thousand full-time equivalent students in grades kindergarten through four shall include the difference between the allocation the district actually received in the 2009-10 school year and the allocation the district actually received in the prior school year.
     (6)(a) A district's maximum levy percentage shall be twenty-four percent in 2010 and twenty-eight percent in 2011 through 2017 and twenty-four percent every year thereafter;
     (b) For qualifying districts, in addition to the percentage in (a) of this subsection the grandfathered percentage determined as follows:
     (i) For 1997, the difference between the district's 1993 maximum levy percentage and twenty percent; and
     (ii) For 2011 through 2017, the percentage calculated as follows:
     (A) Multiply the grandfathered percentage for the prior year times the district's levy base determined under subsection (3) of this section;
     (B) Reduce the result of (b)(ii)(A) of this subsection by any levy reduction funds as defined in subsection (7) of this section that are to be allocated to the district for the current school year;
     (C) Divide the result of (b)(ii)(B) of this subsection by the district's levy base; and
     (D) Take the greater of zero or the percentage calculated in (b)(ii)(C) of this subsection.
     (7) "Levy reduction funds" shall mean increases in state funds from the prior school year for programs included under subsections (3) and (4) of this section: (a) That are not attributable to enrollment changes, compensation increases, or inflationary adjustments; and (b) that are or were specifically identified as levy reduction funds in the appropriations act. If levy reduction funds are dependent on formula factors which would not be finalized until after the start of the current school year, the superintendent of public instruction shall estimate the total amount of levy reduction funds by using prior school year data in place of current school year data. Levy reduction funds shall not include moneys received by school districts from cities or counties.
     (8) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
     (a) "Prior school year" means the most recent school year completed prior to the year in which the levies are to be collected.
     (b) "Current school year" means the year immediately following the prior school year.
     (c) "Initiative 728 rate" means the allocation rate at which the student achievement program would have been funded under chapter 3, Laws of 2001, if all annual adjustments to the initial 2001 allocation rate had been made in previous years and in each subsequent year as provided for under chapter 3, Laws of 2001.
     (d) "Initiative 732 base" means the prior year's state allocation for annual salary cost-of-living increases for district employees in the state-funded salary base as it would have been calculated under chapter 4, Laws of 2001, if each annual cost-of-living increase allocation had been provided in previous years and in each subsequent year.
     (9) Funds collected from transportation vehicle fund tax levies shall not be subject to the levy limitations in this section.
     (10) The superintendent of public instruction shall develop rules and inform school districts of the pertinent data necessary to carry out the provisions of this section.
     (11) For calendar year 2009, the office of the superintendent of public instruction shall recalculate school district levy authority to reflect levy rates certified by school districts for calendar year 2009.

NEW SECTION.  Sec. 9   The following acts or parts of acts are each repealed:
     (1) RCW 28A.505.210 (Student achievement funds -- Use and accounting of funds -- Public hearing -- Report) and 2009 c 479 s 17, 2005 c 497 s 105, & 2001 c 3 s 3; and
     (2) RCW 28A.505.220 (Student achievement program -- General fund allocation) and 2011 1st sp.s. c 17 s 1.

NEW SECTION.  Sec. 10   Section 8 of this act expires January 1, 2018.