"NEW SECTION.  Sec. 1   (1) The legislature intends to fund a plan of incremental implementation to carry out the reforms enacted in chapter 548, Laws of 2009, chapter 236, Laws of 2010, and to make statutory changes necessary to support this plan.
     (2) The legislature confirms its intent to review and revise as necessary the funding formulas that support the program.
     (3) To ensure the state's ability to support the Article IX program of basic education and implement the McCleary ruling, the legislature intends to eliminate certain transfers out of the general fund and to make a temporary revision to the state expenditure limit laws during the period of incremental implementation of basic education funding reforms. By temporarily suspending the "rebasing" that would otherwise occur under the limit calculation, the legislature will preserve the ability to fund basic education enhancements during the transition to full funding of the formula.
     (4) The legislature finds that the 2015-16 school year targets for increased minimum allocations for materials, supplies, and operating costs established under chapter 236, Laws of 2010 were based on a reasonable estimate that relied on a survey of school districts of their expenditures from basic education dollars in the 2007-08 school year. In the course of reviewing and revising education funding formulas pursuant to chapter 548, Laws of 2009, the legislature has determined that more accurate expenditure information from the 2011-12 school year is now available. The legislature finds that this expenditure data, which has been generated from all school districts rather than a sample and is based on audited actual expenditures rather than estimates from a survey, warrants adjustment to the 2015-16 school year targets for minimum allocations for materials, supplies, and operating costs.

Sec. 2   RCW 28A.150.260 and 2011 1st sp.s. c 27 s 2 are each amended to read as follows:
     The purpose of this section is to provide for the allocation of state funding that the legislature deems necessary to support school districts in offering the minimum instructional program of basic education under RCW 28A.150.220. The allocation shall be determined as follows:
     (1) The governor shall and the superintendent of public instruction may recommend to the legislature a formula for the distribution of a basic education instructional allocation for each common school district.
     (2) The distribution formula under this section shall be for allocation purposes only. Except as may be required under chapter 28A.155, 28A.165, 28A.180, or 28A.185 RCW, or federal laws and regulations, nothing in this section requires school districts to use basic education instructional funds to implement a particular instructional approach or service. Nothing in this section requires school districts to maintain a particular classroom teacher-to-student ratio or other staff-to-student ratio or to use allocated funds to pay for particular types or classifications of staff. Nothing in this section entitles an individual teacher to a particular teacher planning period.
     (3)(a) To the extent the technical details of the formula have been adopted by the legislature and except when specifically provided as a school district allocation, the distribution formula for the basic education instructional allocation shall be based on minimum staffing and nonstaff costs the legislature deems necessary to support instruction and operations in prototypical schools serving high, middle, and elementary school students as provided in this section. The use of prototypical schools for the distribution formula does not constitute legislative intent that schools should be operated or structured in a similar fashion as the prototypes. Prototypical schools illustrate the level of resources needed to operate a school of a particular size with particular types and grade levels of students using commonly understood terms and inputs, such as class size, hours of instruction, and various categories of school staff. It is the intent that the funding allocations to school districts be adjusted from the school prototypes based on the actual number of annual average full-time equivalent students in each grade level at each school in the district and not based on the grade-level configuration of the school to the extent that data is available. The allocations shall be further adjusted from the school prototypes with minimum allocations for small schools and to reflect other factors identified in the omnibus appropriations act.
     (b) For the purposes of this section, prototypical schools are defined as follows:
     (i) A prototypical high school has six hundred average annual full-time equivalent students in grades nine through twelve;
     (ii) A prototypical middle school has four hundred thirty-two average annual full-time equivalent students in grades seven and eight; and
     (iii) A prototypical elementary school has four hundred average annual full-time equivalent students in grades kindergarten through six.
     (4)(a) The minimum allocation for each level of prototypical school shall be based on the number of full-time equivalent classroom teachers needed to provide instruction over the minimum required annual instructional hours under RCW 28A.150.220 and provide at least one teacher planning period per school day, and based on the following general education average class size of full-time equivalent students per teacher:

       General education
       average
       class size
Grades K-3 . . . . . . . . . . . . 25.23
Grade 4 . . . . . . . . . . . . 27.00
Grades 5-6 . . . . . . . . . . . . 27.00
Grades 7-8 . . . . . . . . . . . . 28.53
Grades 9-12 . . . . . . . . . . . . 28.74

     (b) During the 2011-2013 biennium and beginning with schools with the highest percentage of students eligible for free and reduced-price meals in the prior school year, the general education average class size for grades K-3 shall be reduced until the average class size funded under this subsection (4) is no more than 17.0 full-time equivalent students per teacher beginning in the 2017-18 school year.
     (c) The minimum allocation for each prototypical middle and high school shall also provide for full-time equivalent classroom teachers based on the following number of full-time equivalent students per teacher in career and technical education:

       Career and technical
       education average
       class size
Approved career and technical education offered at
the middle school and high school level . . . . . . . . . . . . 26.57
Skill center programs meeting the standards established
by the office of the superintendent of public
instruction . . . . . . . . . . . . 22.76

     (d) In addition, the omnibus appropriations act shall at a minimum specify:
     (i) A high-poverty average class size in schools where more than fifty percent of the students are eligible for free and reduced-price meals; and
     (ii) A specialty average class size for laboratory science, advanced placement, and international baccalaureate courses.
     (5) The minimum allocation for each level of prototypical school shall include allocations for the following types of staff in addition to classroom teachers:
     

Sec. 3   RCW 28A.510.250 and 2011 1st sp.s. c 4 s 1 are each amended to read as follows:
     (1) On or before the last business day of September 1969 and each month thereafter through August 31, 2013, the superintendent of public instruction shall apportion from the state general fund to the several educational service districts of the state the proportional share of the total annual amount due and apportionable to such educational service districts for the school districts thereof as follows:

Sec. 4   RCW 28A.160.192 and 2011 1st sp.s. c 27 s 3 are each amended to read as follows:
     (1) ((The superintendent of public instruction shall phase-in the implementation of)) The distribution formula under this chapter for allocating state funds to school districts for the transportation of students to and from school((. The phase-in shall begin no later than the 2011-2013 biennium and be fully implemented by the 2013-2015 biennium.)) must:
     (a) ((The formula must)) Be developed and revised on an ongoing basis using the major cost factors in student transportation, including basic and special student loads, school district land area, average distance to school, roadway miles, and number of locations served. Factors must include all those site characteristics that are statistically significant after analysis of the data required by the revised reporting process.
     (b) ((The formula must)) Allocate funds to school districts based on the average predicted costs of transporting students to and from school, using a regression analysis. Only factors that are statistically significant shall be used in the regression analysis. Employee compensation costs included in the allowable transportation expenditures used for the purpose of establishing each ((school district's independent)) variable in the regression analysis shall be limited to the base salary or hourly wage rates, fringe benefit rates, and ((applicable health care)) the insurance benefit allocation rate((s)) provided in the omnibus appropriations act.
     (2) ((During the phase-in period,)) Funding provided to school districts for student transportation operations shall be distributed on the following basis:
     (a) Annually, each school district shall receive the lesser of the ((previous school year's pupil transportation operations allocation)) expected cost as predicted by the regression analysis under subsection (1)(b) of this section, or the total of allowable pupil transportation expenditures identified on the previous school year's final expenditure report to the state plus district indirect expenses using the federal restricted indirect rate as calculated in the district annual financial report;
     (b) Annually, the amount identified in (a) of this subsection shall be adjusted for any budgeted ((increases)) changes provided in the omnibus appropriations act for salaries ((or)), fringe benefits, and the insurance benefit allocation rate; and
     (c) ((Annually, any funds appropriated by the legislature in excess of the maintenance level funding amount for student transportation shall be distributed among school districts on a prorated basis using the difference between the amount identified in (a) adjusted by (b) of this subsection and the amount determined under the formula in RCW 28A.160.180; and
     (d))) Allocations provided to recognize the cost of depreciation to districts contracting with private carriers for student transportation shall be deducted from the allowable transportation expenditures in (a) of this subsection.

Sec. 5   RCW 43.135.025 and 2009 c 479 s 35 are each amended to read as follows:
     (1) The state shall not expend from the general fund during any fiscal year state moneys in excess of the state expenditure limit established under this chapter.
     (2) Except pursuant to a declaration of emergency under RCW 43.135.035 or pursuant to an appropriation under RCW 43.135.045(2), the state treasurer shall not issue or redeem any check, warrant, or voucher that will result in a state general fund expenditure for any fiscal year in excess of the state expenditure limit established under this chapter. A violation of this subsection constitutes a violation of RCW 43.88.290 and shall subject the state treasurer to the penalties provided in RCW 43.88.300.
     (3) The state expenditure limit for any fiscal year shall be the previous fiscal year's state expenditure limit increased by a percentage rate that equals the fiscal growth factor.
     (4) For purposes of computing the state expenditure limit for the fiscal year beginning July 1, 2009, the phrase "the previous fiscal year's state expenditure limit" means the total state expenditures from the state general fund, the public safety and education account, the health services account, the violence reduction and drug enforcement account, the student achievement fund, the water quality account, and the equal justice subaccount, not including federal funds, for the fiscal year beginning July 1, 2008, plus the fiscal growth factor.
     (5) A state expenditure limit committee is established for the purpose of determining and adjusting the state expenditure limit as provided in this chapter. The members of the state expenditure limit committee are the director of financial management, the attorney general or the attorney general's designee, and the chairs and ranking minority members of the senate committee on ways and means and the house of representatives committee on ways and means. All actions of the state expenditure limit committee taken pursuant to this chapter require an affirmative vote of at least four members.
     (6) Each November, the state expenditure limit committee shall adjust the expenditure limit for the preceding fiscal year based on actual expenditures and known changes in the fiscal growth factor and then project an expenditure limit for the next two fiscal years. However, to facilitate incremental implementation of basic education formula enhancements under chapter 548, Laws of 2009, chapter 236, Laws of 2010, and appropriations legislation, when calculating the expenditure limit for fiscal years 2014 through and including fiscal year 2018, the state expenditure limit committee must adjust the limit as otherwise required by this chapter but may not rebase the limit by adjusting the limit for the preceding fiscal year based on actual expenditures. If, by November 30th, the state expenditure limit committee has not adopted the expenditure limit adjustment and projected expenditure limit as provided in subsection (5) of this section, the attorney general or his or her designee shall adjust or project the expenditure limit, as necessary.
     (7) "Fiscal growth factor" means the average growth in state personal income for the prior ten fiscal years.
     (8) "General fund" means the state general fund.

Sec. 6   RCW 43.135.045 and 2012 2nd sp.s. c 5 s 1 and 2012 1st sp.s. c 10 s 5 are each reenacted and 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 must result in an adjustment to the state expenditure limit only for the fiscal period for which the appropriation is made and does not affect any subsequent fiscal period.
     (((3) After July 1, 2010, the state treasurer must transfer one hundred two million dollars from the general fund to the education construction fund by June 30th of each year. However, the transfers may not take place in the fiscal biennium ending June 30, 2015.))

NEW SECTION.  Sec. 7   Sections 2 and 3 of this act are necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and take effect September 1, 2013.

NEW SECTION.  Sec. 8   Sections 5 and 6 of this act are necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and take effect July 1, 2013.

NEW SECTION.  Sec. 9   Section 4 of this act takes effect September 1, 2014."