New state formulas create confusion about intent
By Marcy Stamper
School administrators have their own homework this year as they try to figure out how education will be funded under a new law that alters formulas for teacher compensation and local levies, and lowers class sizes.
The Legislature passed the law in a rush to meet a deadline to comply with a 2012 state Supreme Court order requiring the state to fully fund basic education. The Supreme Court still has to review the new law to determine if it complies with its mandate.
The main changes in the law are how much money the state will provide to school districts and how much districts can collect through voter-approved levies — and what those levies can pay for.
“There are some changes I’m not certain we fully understand yet, and I’m not certain the Legislature fully understands what the impacts are,” said Methow Valley School District superintendent Tom Venable, who spent two days this week going over details of the law with the district’s financial team.
The Supreme Court ruling, known as the McCleary Ruling, comes out of a lawsuit filed in 2007 by a coalition of parents and school districts. The majority of school districts across the state, including the Methow Valley, ultimately joined the suit.
Starting in the 2018-19 school year, local levies will be strictly limited to “enrichment” and can’t be used to raise money to pay for basic education. But school officials say it is not clear how enrichment and basic education are defined.
Officials in some districts have expressed concerns that levies will only be allowed for extracurricular activities and athletics. But Lisa Dawn-Fisher, chief financial officer for the state Office of Superintendent of Public Instruction (OSPI), said that’s not true.
Basic education is covered by state formulas for staff (including teachers, counselors and nurses) and for supplies, based on the number of students, Dawn-Fisher said.
If a district wanted to use a levy to add more teachers, or to have a full-time nurse — anything beyond the basic staffing model — that would be considered enrichment, she said. Buying extra computers or art supplies also would likely be deemed enrichment.
In addition, enrichment dollars could be used to lower class size. The state formula sets teacher-student ratios for each grade, but a district could run a levy to hire additional teachers or to add subjects, according to Dawn-Fisher.
Despite that explanation, even legislators have had trouble differentiating basic education and enrichment. In briefings about the new law, legislative staffers continued to express confusion. Dawn-Fisher said they told her: “We tried to define enrichment. But it’s really, really hard — it’s like nailing Jell-O to the wall.”
Originally, local levies were designed to raise money for extras based on community values, said 12th District state Sen. Brad Hawkins (R-Wenatchee). He said legislators worked hard to increase state education funding while preserving local control, and that he expects future levies to be used for extras like clubs and athletics.
The state superintendent’s office likely will produce a list of qualified enrichments for 2018. It also will have to approve levies before districts put them to voters in the future, said Dawn-Fisher.
All but nine of the state’s 295 school districts rely on funding from levies.
The $1.8 million levy approved by Methow Valley voters in 2016 runs through 2020. That money will still be collected — up to the limit allowed by law — but can only be spent on enrichments starting in the 2018-19 school year.
Currently, the Methow gets enough funding from the state to pay for 36 certificated staff, and uses the levy money to pay for another 12, said Venable. The state allocation makes up 68 percent of the district’s current budget, with another 10 percent from federal sources, leaving almost a quarter of the budget to be covered through the levy. The district also pays for professional development, robotics and construction classes with the levy, said Venable.
The new law also establishes a new salary range for teachers, with first-year teachers starting at $40,000 and the top end of the scale at $90,000.
In the Methow Valley, the average teacher salary is $59,000. First-year teachers here earn about $37,000 and those at the top of the schedule get close to $68,000, said Venable. So the district will have to come up with more money to comply with the minimum starting salary by 2018.
Hurried passage
Part of administrators’ frustration and confusion over the new law is because the Legislature drafted the bill at the last minute.
“The Legislature adopted a budget that was presented to the public 36 hours before adoption,” said Venable. “As the superintendent of a school district, I would have appreciated an opportunity to review the budget and weigh in, given the implications. I didn’t see anything until they signed off, which is no different than 295 other superintendents.”
“It was a huge hurry — we didn’t get to look before it passed,” said Dawn-Fisher of the state superintendent’s office. “It’s somewhat unusual in my career, for a bill of that magnitude or that complicated, not to know what’s going on.”
State school officials received a final draft of the legislation just hours before it was passed, but that was not enough time even to read the 121-page bill, much less analyze it, she said.
However, because many provisions won’t take effect until the 2018-19 school year, Dawn-Fisher said there will be an opportunity for clarification during the 2018 supplemental session of the Legislature.
New taxes, new levy formula
The law increases the portion of the state property tax that is earmarked for school by 81 cents per $1,000, bringing it to $2.70. Local districts still will be able to seek approval of levies of up to $1.50 per $1,000 in valuation, or $2,500 per student, whichever is less.
In districts where $1.50 per $1,000 valuation brings in less than $2,500 per student, the state will make up the difference, but only up to $1,500 total per student, according to Dave Arp, executive director of administrative services for the North Central Educational Service District.
“Levy reform is not so much about generating revenue, but about creating a more equitable system across the state,” said Wenatchee’s Hawkins. “So if you’re in Brewster or Bellevue, you’ll still get the same money from the state.”
Inequities in school funding can be seen in the current levies in Okanogan County, where in 2016 people in the Pateros School district were paying almost $4 per $1,000 of assessed value — but raising only $664,000. By comparison, in the Methow, with higher overall property values, a tax rate of $1.36 per $1,000 brought in $1.75 million.
But it’s still unknown what this will mean for individual taxpayers. “This is a whole new paradigm and a whole new structure for funding,” said Arp. “To compare what we’re paying today, versus what we’re paying tomorrow — there are so many variables.”
Confusion about law
Districts are also confused by the so-called regionalization provision, which allows some districts to pay teachers more to compensate for higher housing costs based on comparisons with neighboring districts. In the North Central Educational Service District, three school districts were granted the extra money — Wenatchee, Stehekin and Moses Lake — said Venable.
“It’s not clear how it was determined,” he said. “They haven’t spent time in the Methow Valley.”
Venable anticipates getting more money from the state, but less from the local levy in the future. Increased enrollment will help — there are 25 new students at the elementary school and 15 new students at Liberty Bell, bringing total enrollment to a little more than 600. But that might not be enough to cover increased costs, particularly for salaries.
“The Legislature says they have fully complied and funded basic ed,” he said. “To me, that would mean there’d be no need for a school district to run a levy.”
Hawkins said passage of the law represents significant progress, but not a complete solution. “I do believe the levy reform will help,” he said. “I don’t believe it’s all over and done with.”
As educators and financial experts study the law in detail, there are likely to be more aspects in need of elucidation. Among the most pressing are how the state will calculate the number of students, since that fluctuates throughout the year, and how the state will define enrichment, said Arp.
“But the highest, biggest question mark is whether the Supreme Court is going to accept this as a solution,” he said.
