Washington State
House of Representatives
Office of Program Research
BILL
ANALYSIS
Education Committee
HB 2551
Brief Description: Maintaining the financial solvency of school districts.
Sponsors: Representatives Fey and Leavitt.
Brief Summary of Bill
  • Allows boards of directors in school districts meeting fund balance and other requirements to sell real property of the district if authorized by the Superintendent of Public Instruction.
Hearing Date: 1/26/26
Staff: Ethan Moreno (786-7386).
Background:

School district boards of directors have exclusive control of all property, both real and personal, belonging to the district.  Boards of directors, subject to applicable requirements, may purchase, lease, receive, and hold property in the name of the school district, and rent, lease, or sell district property.  With limited exceptions, the proceeds from any sale of school district property must be deposited into the district's debt service fund, capital projects fund, or both.

 

Legislation enacted in 2025 permits boards of directors in school districts that are in binding conditions (districts with negative fund balances and subject to additional financial requirements) to sell real property of the district if authorized by the Superintendent of Public Instruction (SPI).  The legislation also established new provisions governing the proceeds resulting from an authorized sale.  The SPI may grant the authorization only if specified requirements are met, including demonstration by the school district that the sale is necessary to restore financial stability and prevent adverse impacts to student learning. 
Summary of Bill:

The board of directors of a school district with an estimated ending fund balance for the fiscal year equaling 3 percent or less of its estimated total revenues for the same fiscal year may request authorization from the Superintendent of Public Instruction (SPI) to sell real property of the district.  The SPI may grant the authorization only if the school district demonstrates that:

  • the sale is necessary to restore financial stability;
  • the sale is necessary to prevent adverse impacts to student learning; and
  • the proceeds from the sale will be used only for alleviating or concluding the financial burdens that caused or significantly contributed to the inability of the school district to assure its financial solvency.

 

School districts that receive authorization from the OSPI for the sale of real property are exempted from provisions that generally require the proceeds from a sale of school district property to be deposited to their debt service fund, capital projects fund, or both.

 

The Office of the Superintendent of Public Instruction must adopt rules to implement the real estate sale authorization process.  The rules must include provisions to ensure transparency and accountability, and to verify that the use of the proceeds from a sale aligns with the terms of the authorization.  The rules must also prohibit school districts from receiving an authorization to sell real property under this process, or under provisions authorizing real estate sales by school districts in binding conditions, more than once during a five-year period.

 

Additionally, the real estate sale authorization provisions do not exempt school districts from complying with applicable requirements governing the sale of real property acquired through or under threat of eminent domain.
Appropriation: None.
Fiscal Note: Requested on January 22, 2026.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.