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.
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:
School districts that receive authorization from the SPI 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.
(In support) This bill resulted from discussions with the Tacoma School District. The district indicated that the assistance resulting from the bill would be helpful. The intent of the bill is to allow school districts that are close to binding conditions to sell the property and avoid entering into binding conditions. There is no fiscal impact from the bill, other school districts are also interested in the process it establishes, and the bill includes sufficient controls.
Some school districts are in jeopardy of falling into binding conditions, including the Tacoma School District. The Tacoma School District had to cut $70 million from its budget during the last two years. Their superintendent indicated that it would be good to have the flexibility to sell the property before entering into binding conditions, rather than doing so afterwards. Additional funding is necessary as state funding doesn't meet the needs of all school districts, but this bill might help school districts manage through difficult budgetary times.
(Opposed) None.
(Other) The proactive approach of the bill is appreciated. While the bill provides relief to school districts with a fund balance of 3 percent or less, a 6 to 8 percent threshold would be more appropriate. School districts should not be forced to liquidate resources to offset insufficient funding for basic resources. Rather than relying on temporary measures, school districts need increased funding, especially for materials, supplies, and operating costs.
(In support) Representative Jake Fey, prime sponsor; and Charlie Brown, Tacoma Public Schools.
No new changes were recommended.
(In support) School districts across the state are experiencing financial difficulties as costs continue to rise. These costs are going up much more quickly than what state funding has been able to provide to school districts over the years. School districts are doing their best to meet these challenges and make reductions to the extent they can. This bill was brought forward at the request of the Tacoma School District.
Given these difficulties, this bill is intended to enable school districts on the edge of entering binding conditions from having this situation occur and to provide some financial flexibility as an alternative. The requirements in the bill are the same as those in current law for schools in binding conditions to sell property. This mechanism will provide financial relief to districts in financial difficulty, while also providing guardrails on the real property sale authorization process the bill creates. The Office of the Superintendent of Public Instruction will provide oversight through guidance and rulemaking.
(Opposed) None.
Representative Jake Fey, prime sponsor; and Charlie Brown, Tacoma School District.