Background:

Basic Education.

In the 2009-11 biennium, two pieces of legislation were enacted to redefine basic education and restructure the K-12 funding formulas. The first was Engrossed Substitute House Bill 2261 (Chapter 548, Laws of 2009), which expanded the definition of basic education and established a framework for a new K-12 funding allocation formula based on prototypical schools. These changes took effect September 1, 2011. The bill also contained a statement of legislative intent that the redefined program of basic education and funding for the program be fully implemented by 2018.

The second bill, Substitute House Bill 2776 (Chapter 236, Laws of 2010) enacted in statute the new prototypical school allocation formulas at funding levels that represented the 2009-10 school year state spending on basic education. The bill also established a timeline for phasing in enhancements to the program of basic education and its funding levels as follows:

During the 2011-13 biennium, the K-3 class size must be reduced to 17 students per teacher, beginning with the schools with the highest poverty students, by 2017-18.
During the 2011-13 biennium, the minimum allocation for maintenance, supplies, and operating costs (MSOC) must be increased as specified in the omnibus operating appropriations act until specific amounts are provided in the 2015-16 school year.
During the 2011-13 biennium, funding for all-day kindergarten must continue to be phased in each year until full statewide implementation is achieved in the 2017-18 school year.
During the 2011-13 biennium, funding for a revised formula for pupil transportation must begin and be fully implemented by the 2013-15 biennium.

Partial implementation of these four enhancements is included in the appropriations approved by the Legislature for the 2011-13 biennium. These appropriations include approximately $5 million for full-day kindergarten enhancements in select school districts, approximately $33.6 million to reduce class sizes in grades K-3 in high poverty school districts, $5 million for pupil transportation, and inflationary increases to the MSOC formulas.

Based on current enrollment figures, future enrollment projections and inflation projections, the estimated cost of fully implementing the four enhancements included in Substitute House Bill 2776 is approximately $1.6 billion in fiscal year (FY) 2018. This estimate assumes each enhancement is evenly phased in beginning in FY 2014, completed by each respective fiscal year deadline and, if required by current legislation, increased by inflation.

Initiative 728.

In November 2000, Initiative 728 (I-728), the K-12 2000 Student Achievement Act was approved by Washington voters. Under I-728, a portion of certain state revenues were dedicated to the Student Achievement Fund. School districts were given the discretion to use the I-728 related funding for any of six activities for improving student achievement. These activities included:

reductions in K-4 class size;
selected class size reductions in grades 5-12;
extended learning opportunities for students who need or want additional time in school;
investments in educators and their professional development;
early assistance for children who need pre-kindergarten support in order to be successful in school; and
providing improvement or additions to facilities to support class size reductions and extended learning opportunities.

Upon initial approval, $140 per pupil of the state property tax was directed to be placed in the Student Achievement Fund for calendar years 2001 through 2003. As directed in I-728, the dedicated funding to the Student Achievement Fund would increase in 2004 to $450 per pupil and be adjusted for inflation thereafter. However, the 2003 Legislature revised the per pupil amounts of the state property tax to be placed in the Student Achievement Fund to $140 in the 2003-04 school year, $254 in 2004-05, $300 in 2005-06, $375 in 2006-07, and $450 in 2007-08. Each year after 2007-08, the per pupil figure was to be adjusted annually for inflation.

In 2008 the Legislature made additional adjustments to the Student Achievement Fund. In 2008, the amount dedicated to the Student Achievement Fund was $458.10. For the 2009-10 school year, the per pupil appropriations began to be specified in the omnibus operating appropriations act and the figure was reduced to $131.16. Concurrently, the K-12 2000 Student Achievement Act Account was consolidated into the State General Fund under Engrossed Substitute Senate Bill 5073, and the Student Achievement Act and Student Achievement Fund became the Student Achievement Program. Funding for the program was suspended in the 2010-11 school year and continues to be suspended through 2012-13.

Summary:

A joint task force on education funding is created, consisting of four members of the House of Representatives, four members of the Senate, and three individuals appointed by the Governor. The task force is required to develop a proposal for fully funding the state's program of basic education including the programmatic enhancements required by Substitute House Bill 2776. The task force is staffed by the 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. The task force's final report must be submitted to the Legislature by December 31, 2012.

The statutory requirement to provide funding in specified annual amounts for the Student Achievement Program is repealed. In addition, all statutory references to the Student Achievement Program are removed. Statutory references to dedication of remaining net lottery revenues to the Student Achievement Fund is directed to the program of basic education, while education legacy trust funds previously dedicated to the Student Achievement Fund are directed to the support of the common schools. The levy base is unaffected by the repeal of I-728.

House	68	26
Senate	28	20	(Senate amended)
House	74	24	(House concurred)