HOUSE BILL REPORT

HB 1197

BYRepresentatives Grimm, Holland, Ebersole, Betrozoff, Taylor, Cole, Hine, Bristow, Brough, Dellwo, Brekke, Rayburn, Wang, Jacobsen, P. King, Nelson, Todd, Unsoeld and Locke

Revising provisions governing school capital projects.

House Committe on Ways and Means

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (22)

      Signed by Representatives Grimm, Chair; Bristow, Vice Chair; Allen, Appelwick, Basich, Belcher, Braddock, Brekke, Ebersole, Hine, Holland, Locke, Madsen, McLean, McMullen, Niemi, Peery, Rust, Sayan, H. Sommers, Sprenkle and Taylor.

Minority Report:  Do not pass.  (3)

      Signed by Representatives Fuhrman, Nealey and Schoon.

House Staff:Janet Peterson (786-7143)

AS REPORTED BY COMMITTEE ON WAYS AND MEANS MARCH 7, 1987

BACKGROUND:

The Common School Construction Fund provides state matching grants for eligible school district construction projects, as administered by the State Board of Education.  Currently, the revenue source for this fund is income from school trust lands administered by the Department of Natural Resources--primarily timber sales and leases of property.  Since the 1983-85 biennium, timber revenues for this fund have been at approximately half the level reached in 1979-81, first as a result of defaults on timber contracts and then as a result of lower bids on new timber sales.  At the same time, anticipated enrollment growth and aging facilities have increased local school district demand for state construction monies.

For both years of the 1985-87 biennium, eligible school construction projects have exceeded the funding capacity of the Common School Construction Fund.  A backlog has developed which, as of February 10, 1987, totalled $304 million in unfunded projects which already have both State Board of Education approval and local matching funds.  New projects will be added to this backlog as school districts continue to pass bond levies to raise the local share of construction costs.  By comparison, the school trust land revenue is projected to provide only $95 million for school construction during the 1987-89 biennium.

SUMMARY:

SUBSTITUTE BILL:  The bill is contingent on voter approval of the constitutional amendment in House Joint Resolution 4220.  It authorizes $155 million in state bonds, and implements the 15 year state property tax of 40 cents per $1000 assessed valuation which is contained in the proposed constitutional amendment.

Forty-four percent of the additional state property tax are to be deposited in the Permanent School Fund, an endowment fund generating interest earnings for school construction projects.

Remaining proceeds of this property tax would be dedicated to:  (1) reimbursing the general fund for debt service on the $155 million in general obligation bonds; and (2) increasing the cash available in the Common School Construction Fund for school construction projects.

Regarding allocations for school projects, any rule changes by the State Board of Education which could potentially increase state costs would have to be expressly ratified by the Legislature in a capital appropriations bill.  The current maximum funding rate for new construction ($75.10 per square foot, adjusted for inflation) is put into statute.  Vocational Technical Institute projects, other than projects submitted prior to July 1, 1987, would need a specific legislative appropriation, but would not require local matching funds.  The 90 percent state "supermatch" for desegregation projects is eliminated after January 1, 1992.  Finally, districts could not qualify for new buildings simply as a result of redesignating their current facilities' grade level spans within the past five years, unless the State Board found that the district's needs could not be met through modernization or replacement of facilities.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  Vocational Technical Institute projects submitted between now and July 1, 1987, would not require a specific legislative appropriation of state funding.  The additional state property tax levy is imposed on the same property tax base as regular property taxes.

Fiscal Note:      Requested March 7, 1987.

House Committee ‑ Testified For:    Larry Swift, Washington State School Directors Association; Harry Petersen, State Board of Education; Dianne Campbell, School Facilities Cost Advisory Board; Bruce Mrkvicka, Office of the Superintendent of Public Instruction; Jim Hanson, Evergreen School District; Wendy Flint, Evergreen School District Board of Directors; Jerry Hosman, Bethel School District; Tom Brandon, Pasco School District; Duanne Zinger, Tacoma School District and Roy Duncan, Shoreline School District.

House Committee - Testified Against:      Tim Strege, Council of Vocational Technical Institutes and Dan Organ, Yakima School District.

House Committee - Testimony For:    School districts are currently anticipating delays of up to ten years or more for needed construction projects, without supplementation of existing Common School Construction Fund revenues.  A major influx of additional revenues is needed.  If the state cannot provide money for modernization of schools, buildings will deteriorate to the point where they need to be replaced.  The bill represents both a short-term and a long-term solution to school construction funding needs.

House Committee - Testimony Against:      Vocational Technical Institutes need funding for new facilities.  The desegregation "supermatch" has provided unique opportunities for improving racial balance in schools by means of school construction.