Nonvoted Bonds. A school district may contract indebtedness and issue bonds, up to a total value of 0.375 percent of the taxable property in the district, without a vote of the people for the following purposes:
Before issuing nonvoted bonds in excess of $250,000, a school district must publish a notice of intent to issue such bonds and hold a public hearing on the proposal. At the conclusion of public comment, the board of directors may determine, by resolution, whether to issue such bonds.
Binding Conditions and Financial Oversight. Binding Conditions. School districts must annually prepare and submit a balanced budget to the Office of the Superintendent of Public Instruction (OSPI) in which expected expenditures do not exceed expected revenues. If a school district is not able to submit a balanced budget, the school board may deliver a petition to OSPI requesting permission to include receivables collectible in future years in order to balance the budget. If such permission is granted, it must contain binding conditions designed to improve the district's financial condition. Binding conditions typically take the form of benchmarks the district must achieve through actions locally determined by the school board, such as reaching a certain general fund balance by a defined date.
Financial Oversight. If a school district has been on binding conditions for two consecutive years and is unable to prepare a satisfactory financial plan, or is reasonably foreseeable and likely to have a deficit general fund balance within three years and is unable to prepare a satisfactory financial plan, the school district is considered financially insolvent. In these circumstances, a financial oversight committee must review the financial condition of the school district and recommend either enhanced financial oversight or dissolution of the district. Enhanced financial oversight may include, but is not limited to, appointing a special administrator, approving or limiting hiring and personnel actions, approving or limiting a district's authority to enter into contracts, and liquidating or disposing of fixed assets and contractual liabilities.
A district may contract indebtedness and issue bonds without a vote of the people for the purpose of erecting all buildings authorized by law, including those necessary or proper to carry out the functions of a school district, and providing the necessary furniture, apparatus, or equipment. This authority is subject to the statutory indebtedness limit of 0.375 percent.
A school district that contracts indebtedness for this purpose must have received voter approval to collect a capital levy and must not have been on binding conditions in the three years preceding the date of the contract.
The committee recommended a different version of the bill than what was heard. PRO: Current law allows nonvoted bonds for the purchase of sites, improvements, and major and minor structural changes, but it is missing the middle point which is erecting the building on the site. This bill would expand a tool that districts already have access to and use regularly by allowing them to build new buildings. New buildings are often the most expensive and take the longest to build, but they are also the most needed. The Lake Washington School District uses nonvoted bonds to front-fund projects that are funded by approved capital levies. This allows the district to combat inflation and save costs by building projects sooner. The fact that districts cannot do this already is an anomaly in the statute. This will allow districts to allocate funds in the most efficient way possible and provide flexibility. It doesn't change the indebtedness threshold, it doesn't change the public approval process, it doesn't change the SCAP formula, it will not increase capital facilities costs, and it has no fiscal impact on the state.