SENATE BILL REPORT

SB 5909

BYSenator McDermott

Relating to common school funding.

Senate Committee on Ways & Means

Senate Hearing Date(s):March 23, 1987

Senate Staff:Mike Williams (786-7715)

AS OF MARCH 23, 1987

BACKGROUND:

A series of levy failures in larger school districts during the mid-1970's preceded the original Seattle school funding court case and the passage of the 1977 Basic Education Act.  Also in 1977 the Legislature enacted a plan to phase down districts' maintenance and operations levies to a maximum of 10 percent of state allocations.  The 1977 act granted most districts "grandfather" levy authority above 10 percent, in order to cushion the levy lid's immediate impact on district revenues.  In the intervening decade, the levy lid statute has been amended a number of times to postpone the phase-down to 10 percent.

Most recently, in 1985, the Legislature amended the Levy Lid Act to hold districts' maximum levy percentages constant for 1986 through 1988 at the district's 1985 levy percentage, or the 1985 state or Educational Service District average, whichever is greater.  An effect of this change is that the levy lid is currently higher than 18 percent in all districts.  The 1985 legislation retained the goal of a phase-down to 10 percent, however.  Without further amendments, a phase-down in levy capacity would resume in 1989, with a 10 percent lid implemented in 1993.

The Governor also appointed an Advisory Council on School Funding in 1985, to study and make recommendations on school funding issues.  In discussing the role of levies, the council addressed the issue of disparities in local taxing effort.  Currently, a district with a low assessed valuation per pupil must assess a higher tax rate to support the same program level that a district with a high assessed valuation per pupil can support at a lower tax rate.

SUMMARY:

Senate Bill 5909 was introduced by title only.

EFFECT OF PROPOSED SUBSTITUTE:

The bill addresses the areas of school levy lids and levy equalization.

The five-year phase-down of school levies to 10 percent of state allocations is eliminated, and replaced with an indefinite phase- down to a twenty-percent lid.  Districts below 20 percent would be authorized to go up to 20 percent, effective for levies collected in calendar year 1989.  Other districts would be authorized to retain current levy percentages up to 30 percent, with phase-down occurring only as state allocation formulas are enhanced.  Enhancements in state allocations, other then enrollment or workload increases, compensation increases, or inflationary adjustments, count as "levy reduction funds".

Furthermore, the bill establishes a new base for computing a district's levy lid.  Formerly, the district's lid was calculated by multiplying the levy percentage by the district's state allocations for the prior school year.  The new base under the bill includes most federal as well as state allocations (Federal Impact Aid monies, or Public Law 874 funds, are not included). Also, the bill contains a statewide factor for adjusting districts allocations to a current year rather than prior year basis.  While the other enhancements to the levy base are effective for levies collected in 1989 and thereafter, the current year adjustment also applies to levies collected in 1988.

The bill establishes a state program of levy equalization, to be implemented for levies collected in calendar year 1989.  This program provides state matching funds, based on local effort, to districts with an assessed valuation per pupil which is below the statewide average.  Levies above 10 percent would not be matched with state equalization funds.

Fiscal Note:      requested