BILL REQ. #:  S-2439.2 

Read first time 04/04/13.   Referred to Committee on Ways & Means.

     AN ACT Relating to increasing education funding, including adjusting school district levy and state levy equalization provisions; amending RCW 28A.150.260, 28A.160.192, 84.52.0531, 28A.500.020, and 28A.500.030; reenacting and amending RCW 84.52.0531; providing effective dates; and providing an expiration date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   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. 2   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 rates 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 rates; 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. 3   RCW 84.52.0531 and 2012 1st sp.s. c 10 s 8 are each amended to read as follows:
     The maximum dollar amount which may be levied by or for any school district for maintenance and operation support under the provisions of RCW 84.52.053 shall be determined as follows:
     (1) For excess levies for collection in calendar year 1997, the maximum dollar amount shall be calculated pursuant to the laws and rules in effect in November 1996.
     (2) For excess levies for collection in calendar year 1998 and thereafter, the maximum dollar amount shall be the sum of (a) plus or minus (b), (c), and (d) of this subsection minus (e) of this subsection:
     (a) The district's levy base as defined in subsections (3) and (4) of this section multiplied by the district's maximum levy percentage as defined in subsection (6) of this section;
     (b) For districts in a high/nonhigh relationship, the high school district's maximum levy amount shall be reduced and the nonhigh school district's maximum levy amount shall be increased by an amount equal to the estimated amount of the nonhigh payment due to the high school district under RCW 28A.545.030(3) and 28A.545.050 for the school year commencing the year of the levy;
     (c) Except for nonhigh districts under (d) of this subsection, for districts in an interdistrict cooperative agreement, the nonresident school district's maximum levy amount shall be reduced and the resident school district's maximum levy amount shall be increased by an amount equal to the per pupil basic education allocation included in the nonresident district's levy base under subsection (3) of this section multiplied by:
     (i) The number of full-time equivalent students served from the resident district in the prior school year; multiplied by:
     (ii) The serving district's maximum levy percentage determined under subsection (6) of this section; increased by:
     (iii) The percent increase per full-time equivalent student as stated in the state basic education appropriation section of the biennial budget between the prior school year and the current school year divided by fifty-five percent;
     (d) The levy bases of nonhigh districts participating in an innovation academy cooperative established under RCW 28A.340.080 shall be adjusted by the office of the superintendent of public instruction to reflect each district's proportional share of student enrollment in the cooperative;
     (e) The district's maximum levy amount shall be reduced by the maximum amount of state matching funds for which the district is eligible under RCW 28A.500.010.
     (3) For excess levies for collection in calendar year 2005 and thereafter, a district's levy base shall be the sum of allocations in (a) through (c) of this subsection received by the district for the prior school year and the amounts determined under subsection (4) of this section, including allocations for compensation increases, plus the sum of such allocations multiplied by the percent increase per full time equivalent student as stated in the state basic education appropriation section of the biennial budget between the prior school year and the current school year and divided by fifty-five percent. A district's levy base shall not include local school district property tax levies or other local revenues, or state and federal allocations not identified in (a) through (c) of this subsection.
     (a) The district's basic education allocation as determined pursuant to RCW 28A.150.250, 28A.150.260, and 28A.150.350;
     (b) State and federal categorical allocations for the following programs:
     (i) Pupil transportation;
     (ii) Special education;
     (iii) Education of highly capable students;
     (iv) Compensatory education, including but not limited to learning assistance, migrant education, Indian education, refugee programs, and bilingual education;
     (v) Food services; and
     (vi) Statewide block grant programs; and
     (c) Any other federal allocations for elementary and secondary school programs, including direct grants, other than federal impact aid funds and allocations in lieu of taxes.
     (4) For levy collections in calendar years 2005 through 2017, in addition to the allocations included under subsection (3)(a) through (c) of this section, a district's levy base shall also include the following:
     (a)(i) For levy collections in calendar year 2010, the difference between the allocation the district would have received in the current school year had RCW 84.52.068 not been amended by chapter 19, Laws of 2003 1st sp. sess. and the allocation the district received in the current school year pursuant to RCW 28A.505.220;
     (ii) For levy collections in calendar years 2011 through 2017, the allocation rate the district would have received in the prior school year using the Initiative 728 rate multiplied by the full-time equivalent student enrollment used to calculate the Initiative 728 allocation for the prior school year; and
     (b) The difference between the allocations the district would have received the prior school year using the Initiative 732 base and the allocations the district actually received the prior school year pursuant to RCW 28A.400.205.
     (5) For levy collections in calendar years 2011 through 2017, in addition to the allocations included under subsections (3)(a) through (c) and (4)(a) and (b) of this section, a district's levy base shall also include the difference between an allocation of fifty-three and two-tenths certificated instructional staff units per thousand full-time equivalent students in grades kindergarten through four enrolled in the prior school year and the allocation of certificated instructional staff units per thousand full-time equivalent students in grades kindergarten through four that the district actually received in the prior school year, except that the levy base for a school district whose allocation in the 2009-10 school year was less than fifty-three and two-tenths certificated instructional staff units per thousand full-time equivalent students in grades kindergarten through four shall include the difference between the allocation the district actually received in the 2009-10 school year and the allocation the district actually received in the prior school year.
     (6)(a) A district's maximum levy percentage shall be twenty-four percent in 2010 ((and)); twenty-eight percent in 2011 through 2014; twenty-seven percent in 2015; twenty-six percent in 2016; twenty-five percent in 2017; and twenty-four percent every year thereafter;
     (b) For qualifying districts, in addition to the percentage in (a) of this subsection the grandfathered percentage determined as follows:
     (i) For 1997, the difference between the district's 1993 maximum levy percentage and twenty percent; and
     (ii) For 2011 through 2017, the percentage calculated as follows:
     (A) Multiply the grandfathered percentage for the prior year times the district's levy base determined under subsection (3) of this section;
     (B) Reduce the result of (b)(ii)(A) of this subsection by any levy reduction funds as defined in subsection (7) of this section that are to be allocated to the district for the current school year;
     (C) Divide the result of (b)(ii)(B) of this subsection by the district's levy base; and
     (D) Take the greater of zero or the percentage calculated in (b)(ii)(C) of this subsection.
     (7) "Levy reduction funds" shall mean increases in state funds from the prior school year for programs included under subsections (3) and (4) of this section: (a) That are not attributable to enrollment changes, compensation increases, or inflationary adjustments; and (b) that are or were specifically identified as levy reduction funds in the appropriations act. If levy reduction funds are dependent on formula factors which would not be finalized until after the start of the current school year, the superintendent of public instruction shall estimate the total amount of levy reduction funds by using prior school year data in place of current school year data. Levy reduction funds shall not include moneys received by school districts from cities or counties.
     (8) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
     (a) "Prior school year" means the most recent school year completed prior to the year in which the levies are to be collected.
     (b) "Current school year" means the year immediately following the prior school year.
     (c) "Initiative 728 rate" means the allocation rate at which the student achievement program would have been funded under chapter 3, Laws of 2001, if all annual adjustments to the initial 2001 allocation rate had been made in previous years and in each subsequent year as provided for under chapter 3, Laws of 2001.
     (d) "Initiative 732 base" means the prior year's state allocation for annual salary cost-of-living increases for district employees in the state-funded salary base as it would have been calculated under chapter 4, Laws of 2001, if each annual cost-of-living increase allocation had been provided in previous years and in each subsequent year.
     (9) Funds collected from transportation vehicle fund tax levies shall not be subject to the levy limitations in this section.
     (10) The superintendent of public instruction shall develop rules and inform school districts of the pertinent data necessary to carry out the provisions of this section.
     (11) For calendar year 2009, the office of the superintendent of public instruction shall recalculate school district levy authority to reflect levy rates certified by school districts for calendar year 2009.

Sec. 4   RCW 84.52.0531 and 2010 c 237 s 2 and 2010 c 99 s 11 are each reenacted and amended to read as follows:
     The maximum dollar amount which may be levied by or for any school district for maintenance and operation support under the provisions of RCW 84.52.053 shall be determined as follows:
     (1) For excess levies for collection in calendar year 1997, the maximum dollar amount shall be calculated pursuant to the laws and rules in effect in November 1996.
     (2) For excess levies for collection in calendar year 1998 and thereafter, the maximum dollar amount shall be the sum of (a) plus or minus (b), (c), and (d) of this subsection minus (e) of this subsection:
     (a) The district's levy base as defined in subsection (3) of this section multiplied by the district's maximum levy percentage as defined in subsection (4) of this section;
     (b) For districts in a high/nonhigh relationship, the high school district's maximum levy amount shall be reduced and the nonhigh school district's maximum levy amount shall be increased by an amount equal to the estimated amount of the nonhigh payment due to the high school district under RCW 28A.545.030(3) and 28A.545.050 for the school year commencing the year of the levy;
     (c) Except for nonhigh districts under (d) of this subsection, for districts in an interdistrict cooperative agreement, the nonresident school district's maximum levy amount shall be reduced and the resident school district's maximum levy amount shall be increased by an amount equal to the per pupil basic education allocation included in the nonresident district's levy base under subsection (3) of this section multiplied by:
     (i) The number of full-time equivalent students served from the resident district in the prior school year; multiplied by:
     (ii) The serving district's maximum levy percentage determined under subsection (4) of this section; increased by:
     (iii) The percent increase per full-time equivalent student as stated in the state basic education appropriation section of the biennial budget between the prior school year and the current school year divided by fifty-five percent;
     (d) The levy bases of nonhigh districts participating in an innovation academy cooperative established under RCW 28A.340.080 shall be adjusted by the office of the superintendent of public instruction to reflect each district's proportional share of student enrollment in the cooperative;
     (e) The district's maximum levy amount shall be reduced by the maximum amount of state matching funds for which the district is eligible under RCW 28A.500.010.
     (3) For excess levies for collection in calendar year 1998 and thereafter, a district's levy base shall be the sum of allocations in (a) through (c) of this subsection received by the district for the prior school year, including allocations for compensation increases, plus the sum of such allocations multiplied by the percent increase per full time equivalent student as stated in the state basic education appropriation section of the biennial budget between the prior school year and the current school year and divided by fifty-five percent. A district's levy base shall not include local school district property tax levies or other local revenues, or state and federal allocations not identified in (a) through (c) of this subsection.
     (a) The district's basic education allocation as determined pursuant to RCW 28A.150.250, 28A.150.260, and 28A.150.350;
     (b) State and federal categorical allocations for the following programs:
     (i) Pupil transportation;
     (ii) Special education;
     (iii) Education of highly capable students;
     (iv) Compensatory education, including but not limited to learning assistance, migrant education, Indian education, refugee programs, and bilingual education;
     (v) Food services; and
     (vi) Statewide block grant programs; and
     (c) Any other federal allocations for elementary and secondary school programs, including direct grants, other than federal impact aid funds and allocations in lieu of taxes.
     (4)(a) A district's maximum levy percentage shall be twenty-four percent in 2010 ((and)); twenty-eight percent in 2011 through 2014; twenty-seven percent in 2015; twenty-six percent in 2016; twenty-five percent in 2017; and twenty-four percent every year thereafter;
     (b) For qualifying districts, in addition to the percentage in (a) of this subsection the grandfathered percentage determined as follows:
     (i) For 1997, the difference between the district's 1993 maximum levy percentage and twenty percent; ((and))
     (ii) For 2011 through 2017, the percentage calculated as follows:
     (A) Multiply the grandfathered percentage for the prior year times the district's levy base determined under subsection (3) of this section;
     (B) Reduce the result of (b)(ii)(A) of this subsection by any levy reduction funds as defined in subsection (5) of this section that are to be allocated to the district for the current school year;
     (C) Divide the result of (b)(ii)(B) of this subsection by the district's levy base; and
     (D) Take the greater of zero or the percentage calculated in (b)(ii)(C) of this subsection;
     (iii) For 2018 and thereafter, the percentage shall be calculated as follows:
     (A) Multiply the grandfathered percentage for the prior year times the district's levy base determined under subsection (3) of this section;
     (B) Reduce the result of (b)(iii)(A) of this subsection by any levy reduction funds as defined in subsection (5) of this section that are to be allocated to the district for the current school year;
     (C) Divide the result of (b)(iii)(B) of this subsection by the district's levy base; and
     (D) Take the greater of zero or the percentage calculated in (b)(iii)(C) of this subsection.
     (5) "Levy reduction funds" shall mean increases in state funds from the prior school year for programs included under subsection (3) of this section: (a) That are not attributable to enrollment changes, compensation increases, or inflationary adjustments; and (b) that are or were specifically identified as levy reduction funds in the appropriations act. If levy reduction funds are dependent on formula factors which would not be finalized until after the start of the current school year, the superintendent of public instruction shall estimate the total amount of levy reduction funds by using prior school year data in place of current school year data. Levy reduction funds shall not include moneys received by school districts from cities or counties.
     (6) For the purposes of this section, "prior school year" means the most recent school year completed prior to the year in which the levies are to be collected.
     (7) For the purposes of this section, "current school year" means the year immediately following the prior school year.
     (8) Funds collected from transportation vehicle fund tax levies shall not be subject to the levy limitations in this section.
     (9) The superintendent of public instruction shall develop rules and regulations and inform school districts of the pertinent data necessary to carry out the provisions of this section.

Sec. 5   RCW 28A.500.020 and 2010 c 237 s 5 are each amended to read as follows:
     (1) Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
     (a) "Prior tax collection year" means the year immediately preceding the year in which the local effort assistance shall be allocated.
     (b) "Statewide average ((fourteen)) local effort assistance percent levy rate" means ((fourteen)) the percent specified in (f) of this subsection of the total levy bases as defined in RCW 84.52.0531 (3) and (4) summed for all school districts, and divided by the total assessed valuation for excess levy purposes in the prior tax collection year for all districts as adjusted to one hundred percent by the county indicated ratio established in RCW 84.48.075.
     (c) The "district's ((fourteen)) local effort assistance percent levy amount" means the school district's maximum levy authority after transfers determined under RCW 84.52.0531(2) (a) through (c) divided by the district's maximum levy percentage determined under RCW 84.52.0531(((5))) (6) multiplied by ((fourteen)) the percent specified in (f) of this subsection.
     (d) The "district's ((fourteen)) local effort assistance percent levy rate" means the district's ((fourteen)) percent specified in (f) of this subsection levy amount divided by the district's assessed valuation for excess levy purposes for the prior tax collection year as adjusted to one hundred percent by the county indicated ratio.
     (e) "Districts eligible for local effort assistance" means those districts with a ((fourteen)) local effort assistance percent levy rate that exceeds the statewide average ((fourteen)) local effort assistance percent levy rate.
     (f) Applicable percents for the purposes of (b), (c), (d), and (e) of this subsection are:
     (i) For calendar years 2013 and 2014, fourteen percent;
     (ii) For calendar year 2015, thirteen and one-half percent;
     (iii) For calendar year 2016, thirteen percent; and
     (iv) For calendar year 2017, twelve and one-half percent.
     (2) Unless otherwise stated all rates, percents, and amounts are for the calendar year for which local effort assistance is being calculated under this chapter.

Sec. 6   RCW 28A.500.030 and 2010 c 237 s 6 are each amended to read as follows:
     Allocation of state matching funds to eligible districts for local effort assistance shall be determined as follows:
     (1) Funds raised by the district through maintenance and operation levies shall be matched with state funds using the following ratio of state funds to levy funds:
     (a) The difference between the district's ((fourteen)) local effort assistance percent levy rate and the statewide average ((fourteen)) local effort assistance percent levy rate; to
     (b) The statewide average ((fourteen)) local effort assistance percent levy rate.
     (2) The maximum amount of state matching funds for districts eligible for local effort assistance shall be the district's ((fourteen)) local effort assistance percent levy amount, multiplied by the following percentage:
     (a) The difference between the district's ((fourteen)) local effort assistance percent levy rate and the statewide average ((fourteen)) local effort assistance percent levy rate; divided by
     (b) The district's ((fourteen)) local effort assistance percent levy rate.
     (3) Beginning with calendar year 2007, allocations and maximum eligibility under this chapter shall be fully funded at one hundred percent and shall not be reduced.

NEW SECTION.  Sec. 7   Sections 1 and 2 of this act take effect September 1, 2013.

NEW SECTION.  Sec. 8   Sections 3, 5, and 6 of this act take effect January 1, 2014.

NEW SECTION.  Sec. 9   Section 4 of this act takes effect January 1, 2018.

NEW SECTION.  Sec. 10   Sections 3, 5, and 6 of this act expire January 1, 2018.