The Democrats who control the Washington state Legislature want to allow public schools to raise more money from local property taxes, but opponents say the proposals could resurrect the funding inequities that led to the McCleary case.
Two years ago, legislators restricted the amount that school districts can collect through local operating levies, a law known as the “levy lid.” In return, lawmakers raised the state property tax rate to pay for a sharp increase in K-12 funding. The state Supreme Court, which ruled in 2012 that the school-funding system was unconstitutional, ended its oversight of the case last year.
School districts collected about $2.6 billion through maintenance and operation levies, now called enrichment levies, in 2018. This year, due to the levy lid, the total is expected to plummet to $1.6 billion, according to nonpartisan legislative staff.
“We went down really hard, really fast,” Sen. Lisa Wellman, the Mercer Island Democrat who is chairwoman of the Senate education committee, said Wednesday. “It really caused a great deal of tumult out in the districts. I wish we could say that when it comes out of the Legislature that it’s perfect, but we know that it rarely is.”
Supporters and opponents of raising the levy lid have clashed over interpretations of the court’s McCleary decision and its aftermath.
Chris Reykdal, the state Superintendent of Public Instruction, has said the Legislature made a policy decision in 2017 by adopting the levy lid. There was no court “mandate to reduce local levies,” Reykdal said, stressing the state’s task was to fully fund a basic education.
A conservative think tank, the Washington Policy Center, has accused Reykdal of misrepresenting the high court’s actions. The nonprofit group has cited parts of the McCleary decision, including: “Districts with high property values are able to raise more levy dollars than districts with low property values, thus affecting the equity of a statewide system. Conversely, property-poor districts, even if they maximize their local levy capacity, will often fall short of funding a constitutionally adequate education.”
SB 5313, which is pending in the Senate, would enable the 295 school districts in 2021 to collect up to $800 million more per year through operating levies.
Tacoma Public Schools supports the bill, said Superintendent Carla Santorno.
If the Legislature does nothing this year, the district’s levy collections — plus the amount that it receives from the state to ease the property-tax burden of districts with lower property values, called “levy equalization” — will drop from $65 million in the 2018-2019 budget to $43 million in 2019-2020. That would mean “significant reductions to balance the budget,” most likely affecting staffing, said Rosalind Medina, the district’s chief financial officer.
If SB 5313 is passed, Tacoma Public Schools would be able to collect an additional $14.5 million, for a total of $57 million, Medina said.
The increase would be due to how the Legislature defines the maximum local levy that school districts can collect. Current law defines the levy lid as the lesser of $1.50 per $1,000 of assessed valuation or $2,500 per pupil.
SB 5313 would change that definition to the lesser of $2.50 per $1,000 of assessed valuation or $2,500 per pupil. Districts with 9,600 students or more, such as Seattle, could collect up to $3,000 per pupil.
House Democrats also want to raise the levy lid.
Their plan, which is tied to the proposed operating budget for 2019-2021 released Monday, would define the maximum local levy as either 20 percent of the district’s state and federal funding or the lesser of $3,000 per pupil or $1.50 per $1,000 of assessed valuation.
Levy equalization funds from the state also would be provided under the House Democrats’ plan.
As of Wednesday afternoon, House Democrats had not released the text of their bill — HB 2140 — or how much additional local dollars that districts could generate per year.
At a committee meeting Monday on the budget, Kim Mead, president of the Washington Education Association, told House members: “Thank you for restoring local school district levy flexibility by returning to a percentage-based formula, which allows voters to address specific student needs.”
Medina, the chief financial officer of Tacoma Public Schools, said it appeared that the House Democrats’ proposal would provide the district with the “bulk of the levy that we are requesting. We will likely be supportive of this bill.”
Melissa Gombosky — a lobbyist representing the Spokane, Evergreen and Vancouver school districts — said it appeared that the House Democrats’ plan would not penalize certain districts as SB 5313 would by reducing levy equalization dollars in 2021.
Republican legislators said the formula changes in the Senate bill would apply pressure on many districts to raise property taxes.
Under current law, a district that levies the maximum $1.50 per $1,000 of assessed valuation is guaranteed $1,500 per pupil. If a small rural district can generate only $400 per pupil, the state will use its tax funds to fill the gap.
In 2021, a district that decides to stay at the current $1.50 rate would be guaranteed $1,260 per pupil instead of $1,500 — a $240 cut under SB 5313. By contrast, a district that raised taxes to levy the maximum $2.50 per $1,000 of assessed valuation would be guaranteed $2,100 per pupil.
The state would save $35 million in the upcoming two-year state operating budget on levy equalization spending, according to a nonpartisan legislative report.
Sen. John Braun, R-Centralia, said the Senate bill is “unfair and inequitable.”
“The sheer notion that we have a bill in front of us that will encourage an increase in local levies and in doing so will save the state money ... if nobody finds that somewhat ironic or maybe even offensive, I’d be surprised,” he said.
Of the 295 districts, 176 would lose state levy equalization funding in 2021 if they stay at the current levy rate, which for most is $1.50 per $1,000 of assessed valuation.
Among them would be Ferndale School District, which is about 10 miles north of Bellingham. It would lose about $500,000 in levy equalization funds in 2021.
The district doesn’t want the Legislature to take any action this year on the levy lid, but it may be a losing battle, said Mark Deebach, assistant superintendent for business and support services.
“It’s the smaller districts that may not have the political voices to be heard in Olympia,” he said.
Gombosky — the lobbyist representing the Spokane, Evergreen and Vancouver school districts — recently told a Senate committee that the three districts are opposed to SB 5313. The districts successfully have asked their voters to approve the $1.50 levy, she said.
“They followed the law and the direction that you provided in the McCleary bill. Now, this bill would penalize those districts by lowering the equalization rate if they keep that commitment to voters — or they would be asked to go back out to voters to ask for additional levy dollars. We’re not sure how our communities would respond to that,” Gombosky said.
Liv Finne, director of the Center for Education Reform at the Washington Policy Center, a nonprofit conservative think tank, said the House and Senate proposals defy the McCleary decision by enabling school districts to collect significantly more through local enrichment levies.
“The bill would turn back the clock and reintroduce the inequity in school funding to the benefit of wealthy school districts, leaving students in property-poor districts with proportionately less money -- exactly the unfairness problem the McCleary case was supposed to solve.
“This kind of behavior, switching decisions every two years, threatens the trust that the people have in the Legislature and undermines support for public schools,” said Finne, who added that voters will face local property tax increases.
In February, the Washington Association of School Administrators called on the Legislature to spend $246 million in the upcoming two-year state budget to get 115 school districts, including Tacoma Public Schools, to a financial break-even point and change how the state provides funding for teachers. The group’s executive director, Joel Aune, said no lawmaker pursued the proposal.
Aune said the group’s position on lifting the levy lid has not changed since the legislative session began in mid-January.
“WASA would be supportive of a modest increase in levy capacity for school districts, as long as there’s an increase in levy equalization to maintain the level of equity across the state. We also feel very strongly that in any levy increase for school districts, there needs to be some guardrails around that, in terms of protections for that money as we get into collective bargaining,” he said.