AN ACT Relating to investing in the state's paramount duty to fund K-12 education and build strong and safe communities by modifying the state and local property tax authority and adjusting the school funding formula; amending RCW 84.52.0531 and 28A.500.015; creating a new section; and providing an expiration date.

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

Sec. 1. RCW 84.52.0531 and 2022 c 108 s 3 are each amended to read as follows:

(1) Beginning with taxes levied for collection in 2020, the maximum dollar amount which may be levied by or for any school district for enrichment levies under RCW 84.52.053 is equal to the lesser of ((two dollars and fifty cents))$2.50 per ((thousand dollars))$1,000 of the assessed value of property in the school district or the maximum per-pupil limit. This maximum dollar amount shall be reduced accordingly as provided under RCW 43.09.2856(2).

(2) The definitions in this subsection apply to this section unless the context clearly requires otherwise.

(a) ((For the purpose of this section, "inflation"))"Inflation" means the percentage change in the seasonally adjusted consumer price index for all urban consumers, Seattle area, for the most recent 12-month period as of September 25th of the year before the taxes are payable, using the official current base compiled by the United States bureau of labor statistics.

(b) "Inflation enhancement" means:

(c) "Maximum per-pupil limit" means:

(i) ((Two thousand five hundred dollars))Through the 2030 calendar year:

(A) $2,500, as increased by inflation, plus inflation enhancements defined in (b) of this subsection, beginning with property taxes levied for collection in 2020, multiplied by the number of average annual full-time equivalent students enrolled in the school district in the prior school year, for school districts with fewer than ((forty thousand))40,000 annual full-time equivalent students enrolled in the school district in the prior school year; or

(((ii) Three thousand dollars))(B) $3,000, as increased by inflation plus the inflation enhancement defined in (b)(i) of this subsection, beginning with property taxes levied for collection in 2020, multiplied by the number of average annual full-time equivalent students enrolled in the school district in the prior school year, for school districts with ((forty thousand))40,000 or more annual full-time equivalent students enrolled in the school district in the prior school year.

(((c) "Open for in-person instruction to all students" means that all students in all grades have the option to participate in at least 40 hours of planned in-person instruction per month and the school follows state department of health guidance and recommendations for resuming in-person instruction to the greatest extent practicable.))(ii) Beginning with the 2031 calendar year, $5,035, as increased by inflation beginning with property taxes levied for collection in 2032, multiplied by the number of average annual full-time equivalent students enrolled in the school district in the prior school year.

(d) "Prior school year" means the most recent school year completed prior to the year in which the levies are to be collected((, except as follows:

(ii) In the 2023 calendar year, if 2019-20 school year average annual full-time equivalent enrollment is greater than the school district's 2021-22 school year average annual full-time equivalent enrollment and the school district was open for in-person instruction to all students by the beginning of the 2021-22 school year, "prior school year" means the 2019-20 school year)).

(3) For districts in a high/nonhigh relationship, the enrollments of the nonhigh students attending the high school shall only be counted by the nonhigh school districts for purposes of funding under this section.

(4) For school districts participating in an innovation academy cooperative established under RCW 28A.340.080, enrollments of students attending the academy shall be adjusted so that each participant district receives its proportional share of student enrollments for purposes of funding under this section.

(5) Beginning with propositions for enrichment levies for collection in calendar year 2020 and thereafter, a district must receive approval of an enrichment levy expenditure plan under RCW 28A.505.240 before submission of the proposition to the voters.

(6) 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.

(7) Beginning with taxes levied for collection in 2018, enrichment levy revenues must be deposited in a separate subfund of the school district's general fund pursuant to RCW 28A.320.330, and for the 2018-19 school year are subject to the restrictions of RCW 28A.150.276 and the audit requirements of RCW 43.09.2856.

(8) Funds collected from levies for transportation vehicles, construction, modernization, or remodeling of school facilities as established in RCW 84.52.053 are not subject to the levy limitations in subsections (1) through (5) of this section.

Sec. 2. RCW 28A.500.015 and 2022 c 108 s 4 are each amended to read as follows:

(1) Beginning in calendar year 2020 and each calendar year thereafter, the state must provide state local effort assistance funding to supplement school district enrichment levies as provided in this section.

(2)(a) For an eligible school district with an actual enrichment levy rate that is less than ((one dollar and fifty cents))$1.50 per ((thousand dollars))$1,000 of assessed value in the school district, the annual local effort assistance funding is equal to the school district's maximum local effort assistance multiplied by a fraction equal to the school district's actual enrichment levy rate divided by ((one dollar and fifty cents))$1.50 per ((thousand dollars))$1,000 of assessed value in the school district.

(b) For an eligible school district with an actual enrichment levy rate that is equal to or greater than ((one dollar and fifty cents))$1.50 per ((thousand dollars))$1,000 of assessed value in the school district, the annual local effort assistance funding is equal to the school district's maximum local effort assistance.

(c) Beginning in calendar year 2022, for state-tribal education compact schools established under chapter 28A.715 RCW, the annual local effort assistance funding is equal to the actual enrichment levy per student as calculated by the superintendent of public instruction for the previous year for the school district in which the state-tribal education compact school is located, up to a maximum per-student amount of ((one thousand five hundred fifty dollars))$1,550 as increased by inflation from the 2019 calendar year, multiplied by the student enrollment of the state-tribal education compact school in the prior school year.

(3) The state local effort assistance funding provided under this section is not part of the state's program of basic education deemed by the legislature to comply with the requirements of Article IX, section 1 of the state Constitution.

(4) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.

(a) "Eligible school district" means a school district where the amount generated by a levy of ((one dollar and fifty cents))$1.50 per ((thousand dollars))$1,000 of assessed value in the school district, divided by the school district's total student enrollment in the prior school year, is less than the state local effort assistance threshold.

(b) ((For the purpose of this section, "inflation"))"Inflation" means((, for any school year, the rate of the yearly increase of the previous calendar year's annual average consumer price index for all urban consumers, Seattle area, using the official current base compiled by the bureau of labor statistics, United States department of labor))the implicit price deflator for the previous calendar year using the official current base, compiled by the bureau of economic analysis, United States department of commerce.

(c) "Maximum local effort assistance" means the difference between the following:

(i) The school district's actual prior school year enrollment multiplied by the state local effort assistance threshold; and

(ii) The amount generated by a levy of ((one dollar and fifty cents))$1.50 per ((thousand dollars))$1,000 of assessed value in the school district.

(d) "Prior school year" means the most recent school year completed prior to the year in which the state local effort assistance funding is to be distributed((, except as follows:

(ii) In the 2023 calendar year, if 2019-20 school year average annual full-time equivalent enrollment is greater than the school district's 2021-22 school year average annual full-time equivalent enrollment, "prior school year" means the 2019-20 school year)).

(e) "State local effort assistance threshold" means ((one thousand five hundred fifty dollars))$1,550 per student, increased for inflation beginning in calendar year 2020.

(f) "Student enrollment" means the average annual full-time equivalent student enrollment.

(5) For districts in a high/nonhigh relationship, the enrollments of the nonhigh students attending the high school shall only be counted by the nonhigh school districts for purposes of funding under this section.

(6) For school districts participating in an innovation academy cooperative established under RCW 28A.340.080, enrollments of students attending the academy shall be adjusted so that each participant district receives its proportional share of student enrollments for purposes of funding under this section.

(1) At a minimum, the work group's analysis must include:

(a) Impacts of changes to per-pupil funding formulas and local revenue;

(b) Compensation factors described in RCW 28A.150.412;

(c) Funding distribution trends resulting from the prototypical school funding formula;

(d) Impacts of economic disparities on communities' access to resources for schools; and

(e) Current formulas that benefit specific populations of students including, but not limited to, the learning assistance program, local effort assistance, and small school funding.

(2) The superintendent of public instruction must use the work group's analysis conducted under subsection (1) of this section to consider options for revising state and local school funding formulas. By November 1, 2025, and annually thereafter through 2027, the superintendent of public instruction shall report the work group's progress and any proposed options to the education and fiscal committees of the legislature. The reports must include, but are not limited to, the following topics:

(a) Options for revisions to the funding formula that address system and resource inequities;

(b) Options that address state, local, and regional needs;

(c) The potential adoption of student weights to direct additional funding to students most in need;

(d) Modifications to state and local tax authority for schools; and

(e) Metrics for monitoring and accountability related to equitable access to resources.

(3) The superintendent of public instruction may determine the size, membership, and meeting frequency of the work group. The work group must include representation from education and community partners that are demographically and geographically diverse including, but not limited to, groups representing educators, school and district administrators, labor unions, families, students, community partners who support groups disproportionately impacted by inequities, the department of revenue, and legislators.

(4) This section expires December 1, 2027.

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