Budget Development Timeline

  • Development of the next fiscal year budget is a complicated process that spans the course of an entire year


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    Budget History

    From 2008 through 2011, the great recession resulted in nearly $17 million in cuts to vital district programs. In 2012, the McCleary case changed the climate when the Washington Supreme Court found the state had not complied with its constitutional duty to fully fund K-12 public education by 2018. As a result, additional cuts were avoided for 2012-13 by drawing down reserves by about $2 million to maintain instructional programs in anticipation of new funding in 2013-14. 
    During the 2013-15 biennium, the legislature provided additional state funding allowing program restorations and enhancements. The initial funding provided by McCleary focused on increasing discretionary dollars in the areas of materials, supplies, operating costs, and student busing in order to address the significant shortfall requiring districts to use local levy dollars to get students to and from school. However, the adopted budget did not keep pace with the McCleary implementation schedule established by the legislature under SHB 6211. On September 11, 2014, the Washington State Supreme Court held the legislature in contempt for not fully funding education under the McCleary decision, but held off imposing sanctions until at least the end of the 2015 legislative session. "Sanctions and other remedial measures are held in abeyance to allow the state the opportunity to comply with the court’s order during the 2015 legislative session."
    On January 12, 2015, the 64th Washington State Legislature convened its 2015 regular session. Following 176 days and three special sessions, the legislature finally adjourned providing the final influx of Materials, Supplies, and Operating Costs (MSOC) funding and continued progress toward kindergarten through third grade class size reduction and full-day kindergarten. The state did not begin addressing the unconstitutional use of local levies to fund employee salaries and benefits. While the 2015 legislature acknowledged its obligation for compensation and capital funding for classroom space, it has delayed action until the 2017-19 biennium. Without full state funding for salaries, school districts have little levy capacity to invest in class size reductions and, furthermore, they do not have the classroom space to add teachers.
    On August 13, 2015, the court issued another order acknowledging the progress that had been made, yet clearly identifying the state's failure to fulfill the obligation of McCleary, including the constitutional obligation to fully fund employee compensation, noting, "This leads to the matter of [personnel] costs, for which the state has wholly failed to offer any plan for achieving constitutional compliance. As this court discussed in McCleary, a major component of the State’s deficiency in meeting its constitutional obligation is its consistent under funding of the actual cost of recruiting and retaining competitive teachers, administrators, and staff." 
    On October 6, 2016, the court issued its latest order in the McCleary case. The order continues the $100,000 per day sanction, to be placed in a dedicated account for the benefit of basic education. The order reprimands the legislature for its failure to comply with either the McCleary decision or the subsequent orders, and it summarizes the history of McCleary and the state’s efforts at compliance. The court cited the creation of the Education Funding Task Force in the 2016 session to gather information and to provide recommendations to fully fund basic education, as an example of an inadequate response because the legislature did not provide any details on how it will achieve its identified goals. The court directed the legislature to explain not just what it expects to achieve by the 2018 deadline, but to define in complete detail how it will do so, and within 30 days after the adoption of the 2017-19 budget, the legislature must file a report summarizing the actions taken during the 2017 session. 

    Legislative Impact on 2017-18 Budget Development

    In their 2016 order the Court acknowledged progress towards fulfilling the requirements of HB 2261, but in contrast, the order stated that “on the subject of personnel costs, the State had wholly failed to offer any plan for achieving constitutional compliance. “They called upon the legislature to address “its consistent underfunding of the actual cost of recruiting and retaining competent teachers, administrators, and staff.” In other words, it is unconstitutional to use local levy dollars to pay for basic education salaries. Accordingly, school districts are looking to the state to define basic education and provide rules on how we can spend local levy dollars to provide additional supports such as pre-school, summer school, remedial supports, and other instructional enhancements in addition to the traditional activity and athletic programs. This would provide school districts and local bargaining units with a “rulebook” to work together locally to modify existing labor agreements.
    To our dismay, the current proposals from the House and Senate are actually weakening the definition of basic education, and one even eliminates the prototypical school model. To compound the issue, they both move away from the current salary allocation model and further contemplate a different levy structure. This collectively leaves the 295 school districts in a holding pattern of uncertainty until the 2017-19 biennial budget is adopted. The writing on the wall suggests that rather than providing a “rulebook,” every district will need to work through this extremely complex transition at the local level.

    Legislative Outcomes - EHB 2242 and E2SSB 6362 Impactful to Everett - Monumental changes in K-12 funding has varying impacts from district to district

    Court rules end to McCleary, districts disagree
    The most significant shortfall is special education funding. Districts are mandated by state and federal law to provide essential services, while state funding continues to fall well below actual costs. Other shortfalls include the full funding of the prototypical allocation model, transition to School Employees Benefit Board, transportation, and substitute teachers.
    State did not define Basic Education (BE) and eliminated Salary Allocation Model (SAM)
    The legislature strictly prohibited the use of local levy funds for basic education costs, but failed to provide a rulebook. To make matters worse, they eliminated the SAM, which is a statewide common schedule that defines teacher compensation based upon education and years of experience. 295 school districts across the state will need to negotiate their own unique SAM and define BE with their local bargaining units.

    State did not fix new levy formula which cuts Everett too deep                                                                                            EHB 2242 defined the local levy authority to be the lesser of $2,500 per student FTE or $1.50 per $1,000 of assessed property value, creating a significant impact to large Puget Sound districts that have moderate property values, as well as to some small rural districts. In addition, the state capped the levy growth rate at a level that will not keep pace with local inflationary costs. For 2018-19, half of the levy is funded under the old formula, creating a surplus of levy dollars of over $17 million. After that, the levy does not keep pace with local inflationary costs, leading to significant budget shortfalls.

    Salary funding phase down creates four-year structural deficit                                                                                            While the legislature eliminated the SAM, they also recognized the higher cost of living in more urban areas. Accordingly, they created a regionalization factor allocating more salary dollars to urban areas. For some areas, mainly around the King and Snohomish County line where salary costs are the highest in the state, they provided a temporary bump of six percent, raising the total factor to 24 percent, only to be cut back to 18 percent of the next four years.