SENATE BILL REPORT

SHB 2378

BYHouse Committee on Capital Facilities & Financing (originally sponsored by Representatives Leonard, Holland, Walker, Cole, Nutley, Pruitt, Prentice, Kirby, Heavey, Ebersole, G. Fisher, Peery, H. Sommers, Miller, Winsley and Wineberry)

Changing the authority of educational service district boards with regard to the purchase and sale of property used for the operation of the educational service district.

House Committe on Capital Facilities & Financing

Senate Committee on Education

Senate Hearing Date(s):February 22, 1990

Majority Report:  Do pass and be referred to Committee on Ways & Means.

      Signed by Senators Bailey, Chairman; Lee, Vice Chairman; Bender, Benitz, Fleming, Gaspard, Murray, Rinehart.

Senate Staff:Leslie Goldstein (786-7424)

                  February 23, 1990

Senate Committee on Ways & Means

Senate Hearing Date(s):February 26, 1990

Majority Report:  Do pass as amended.

      Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Amondson, Bailey, Bauer, Bluechel, Cantu, Gaspard, Hayner, Johnson, Lee, Owen, Saling, Smith.

Senate Staff:Ken Kanikeberg (786-7715)

                  February 27, 1990

AS REPORTED BY COMMITTEE ON WAYS & MEANS, FEBRUARY 26, 1990

BACKGROUND:

Educational Service Districts (ESDs) receive funding from three main sources:  state allocations, competitive state and federal grants, and cooperative agreements with school districts.  State funding is based on statutorily defined "core services" provided by each ESD.  State funds make up as little as 5 percent of an ESD's budget.

Overhead costs such as housing for the ESD's offices are included in cooperative agreements and as part of the state funds allotted for core services.  ESDs have authority to enter into contracts for up to 20 years to rent or lease building space.  The service districts also have authority, with prior approval of the State Board of Education, to purchase or otherwise contract for real or personal property necessary for the operation of the ESD.

Since ESDs do not have taxing authority, they cannot issue bonds for the purchase of buildings or other real property.  Some ESDs have been able to purchase facilities through lease-purchase agreements.

SUMMARY:

Educational Service Districts (ESDs) are given authority to borrow funds to acquire real or personal property necessary for the operation of the ESD, subject to whatever provisions the State Board of Education may establish for such an acquisition.  When borrowing funds, the ESD may pledge as collateral the property being acquired.  A note or other instrument between the district and the lender is required.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

SUMMARY OF PROPOSED SENATE WAYS & MEANS AMENDMENT:

Educational Service Districts (ESDs) are prohibited from pledging state funds as collateral for a loan.  The provisions for borrowing only apply to ESDs that serve over 200,000 students in grades K-12.

Senate Committee - Testified: EDUCATION:  Terry Lindquist, Puget Sound ESD 121 (pro)

Senate Committee - Testified: WAYS & MEANS:  FOR:  Elizabeth M. Hyde, Puget Sound ESD; Gretchen Ilgenfritz, Puget Sound ESD Board; Larry Swift, Association of Educational Service Districts