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Published in Print: May 13, 2015, as Wash. State Lawmakers In Aid Fight

Washington State Lawmakers Clash on K-12 Funding

Washington Gov. Jay Inslee, a Democrat, speaks at a teachers' rally in Olympia a few days before the launch of a special legislative session dominated by the issue of education funding. Lawmakers must come up with a plan to increase K-12 spending in order to satisfy a state high court ruling.
Washington Gov. Jay Inslee, a Democrat, speaks at a teachers' rally in Olympia a few days before the launch of a special legislative session dominated by the issue of education funding. Lawmakers must come up with a plan to increase K-12 spending in order to satisfy a state high court ruling.
—Ted S. Warren/AP

Special Session Bares Rifts On K-12 Funding Strategy

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Washington state lawmakers are struggling in a special session to agree on a strategy to pay for basic education. But as they try to build a system that bridges deep partisan divides over tax policy, they must also resolve to what extent greater state aid for K-12 will lead to reduced financial and political clout for local districts and union leaders.

Looming over the process that began April 28 is the state supreme court, which held the state in contempt last year over its failure to satisfy a 2012 decision that ordered legislators to reform and increase K-12 spending by 2018. Lawmakers must make significant strides toward meeting that mandate this year, or face court sanctions.

As states like Washington look at how to overhaul their funding formulas to smooth out inequities, there's a corresponding tension between state officials and local K-12 leaders about the strings that come along with greater support for some districts.

"What the districts really want is the increased commitment without increased control. But that's not going to happen," said Michael Griffith, the senior school finance analyst for the Denver-based Education Commission of the States. "Now I hear it constantly [from state lawmakers]: We're willing to spend more money, but we want to know what we're going to get for our money."

Broader debates about the proper relationship between the sources of school funding and authority over K-12 have been in the spotlight nationally since at least the 1973 U.S. Supreme Court ruling in San Antonio Independent School District v. Rodriguez. In that case, the court held that using local property taxes as a basis for financing schools was not unconstitutional.

The political landscape in Washington state is sufficiently complex that as lawmakers there push their own solutions and resist those from the other party, "we have Democrats complaining about Republicans raising taxes," said Frank Ordway, the chief lobbyist for the League of Education Voters. The Seattle-base group supports full-day kindergarten and charter schools.

Trends and Roadblocks

Recently, states in general have shown limited appetite for pushing school funding burdens onto their local districts.

From 1991 to 2011, on average, the percentage of total spending on public schools coming from local tax sources dropped by 5 percentage points, according to Jennifer Schiess, an associate partner at Bellwether Education Partners, a consulting firm based in Washington, D.C.

"The general trend over the last 20 years or so has been reduced reliance on local taxes in school funding—but it's not a dramatic trend," said Ms. Schiess in an email, citing data from the National Center for Education Statistics.

That doesn't mean the shift is easy in individual states. An Illinois bill introduced during the state's previous legislative session by Democratic Sen. Andy Manar would have altered the influence of property taxes by redistributing funds from wealthy to poor districts. But that bill has so far failed to pass, and it faces an uncertain future in this session.

And officials in Pennsylvania, faced with huge funding gaps between rich and poor districts because of property-tax disparities, are trying to craft a new funding system that might dramatically affect some districts' budgets, creating clear winners and losers in local school financing that could instantly divide lawmakers.

There, as in Washington state, any tax hike to pay for Democratic Gov. Tom Wolf's proposed spending increase for K-12 must first pass muster with GOP lawmakers.

Basic Obligations, More Revenue

The Washington state high court's 2012 ruling in McCleary v. State of Washington said that the state had fallen short of providing adequate resources for basic education. The court specifically called on lawmakers to meet prior commitments to fund class-size reductions in grades K-3, to provide full-day kindergarten, and to increase support for transportation needs and schools' materials and operating costs. Lawmakers increased basic K-12 spending by $982 million in the state's 2013-15 budget, but it did not satisfy the court.

The special session is set to last 30 days, although Gov. Jay Inslee, a Democrat, can extend it. The state uses biennial budgets. Complicating the matter is that control of the legislature is split, with Democrats holding the House of Representatives and Republicans the Senate.

Washington currently has no tax on personal income or capital gains, and Democrats, including Gov. Inslee, want to change that in order to resolve the school funding fight.

The House Democrats' budget plan, released in March, includes a new 5 percent tax on capital gains as part of a blueprint for increasing K-12 spending by $3.2 billion for the 2015-17 biennial budget. Of that amount, $1.4 billion would be earmarked for K-3 class-size reduction and other obligations under McCleary. Gov. Inslee also proposed a new capital gains tax of 7 percent in his 2015-17 budget.

State Rep. Ross Hunter, a Democrat and the lead budget writer in the House, stressed in an April 30 hearing that he is more narrowly focused on adequate funding for basic K-12 education as called for in the McCleary ruling, and not on broader issues in play like setting basic teacher salaries at the state level.

"I view our need to comply with the state constitution as the state funding basic education. I don't think the court is requiring us, nor do I think it's a good idea, to limit communities from providing additional services," Mr. Hunter said.

The Democrats' plan also includes a cost-of-living pay increase for K-12 teachers, to the tune of $154 million, and would pick up a share of local school employees' health-care costs.

'Fundamentally Inequitable'

But Republicans who run the state Senate and want no part of a new tax on capital gains or income are exploring a change to the relationship between existing local and state taxes designated for schools, in order to meet the state's K-12 obligations to all districts.

In part, their budget proposal relies on $3 billion in estimated additional revenue generated from the state's existing tax system over the 2015-17 budget period. About $1.3 billion of that funding would go toward satisfying the McCleary ruling.

Republican Sen. Bruce Dammeier argued that state lawmakers must no longer shove 30 percent or more of the funding responsibility for schools onto districts, since in such a system, wealthy districts and local unions drive up teacher pay in their districts, while teacher salaries elsewhere fall far behind.

Mr. Dammeier's plan for changing local levies is technically revenue-neutral. But it would increase the state's common schools levy while simultaneously lowering state property taxes, and moving what the senator says would be $1.5 billion in new revenue for the state into the K-12 budget. Roughly 40 percent of districts, many of them relatively wealthy, would effectively experience a tax hike in Mr. Dammeier's plan.

And he said that requiring basic teacher compensation to be set at the state level, with possible enhancements for teachers in certain areas with high costs of living, would help lawmakers fulfill their obligation to fund basic education that includes fair and reasonable teacher salaries.

"Our system is fundamentally inequitable right now," Mr. Dammeier said. "Our students' education is not supposed to be dependent on their zip code."

But the 86,000-member Washington Education Association has decried plans to set teacher compensation at the state level, calling it an attack on local control of schools.

Getting the Votes

Any plan to satisfy McCleary and fix school funding should ensure a net revenue increase, but also shore up the state's control over basic education funding, such as changes to how local property taxes work, according to state Superintendent of Public Instruction Randy Dorn.

Mr. Dorn has his own plan to satisfy McCleary that would create $2.2 billion in new spending.

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"I'm not promoting one or the other," he said of the competing House and Senate tax plans. "I'm just happy if we can get new revenue."

Yet Mr. Dorn's plan would also ask the court to extend the deadline for meeting the requirements of the McCleary ruling to 2021. And Mr. Ordway of the League of Education Voters cautioned that the court will likely not tolerate anything less than "specific and real" commitments in any budget deal.

"Neither one of them really want to do the things that are hard for their party politically," Mr. Ordway said.

Vol. 34, Issue 30, Pages 1,20-21

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