The capital budget is the fund we use to make long-term investments in (mostly) physical things that are going to be around for a while. School construction, new buildings for colleges and universities, park acquisition, stuff like that. Just like your home mortgage, some of these investments are done on borrowed money.
The state constitution limits the amount of debt service that can be paid to 9% of “general state revenue,” so this puts a limit on the total that can be borrowed. I think this is a quite reasonable limitation.
There are useful investments in the budget passed this year, like hundreds of millions in new K-12 school construction funds. These are critical if we want to have the space needed for additional classrooms to accommodate smaller class sizes. There are also a number that are more fun, like a $1 million contribution to Bellevue’s “Imagination Playground”, a facility built to be accessible to all kids, especially including those with disabilities. It’s a project being spearheaded by the Bellevue Rotary. There are also contributions to two Boys and Girls club facilities in Bellevue – the new fieldhouse in Hidden Valley and the rebuild of the main clubhouse on 100th Ave. Kirkland gets some help building the cross-Kirkland corridor, and Redmond gets funding to complete the downtown park and help Hopelink with its integrated services center. You can see a map of these projects here.
Without contributions like these from the state, projects like these would be unaffordable by local governments and non-profits. I’m glad that we were able to pass a Capital Budget this year after fulfilling our constitutional obligation to fun McCleary and other social services.
Thank you again for letting me represent you in Olympia. It’s an honor and a privilege, though I feel much less privileged when the session runs into July. We finished our work Friday morning June 10th, passing a transportation spending bill and bills that allow the state to take out bonds based on the revenue. We also passed a small bill changing high school graduation requirements, the centerpiece of a disagreement in the Senate over initiative 1351 (class size reduction.) The graduation bill delays the imposition of the science standards for two years, allowing 2000 kids who met all the graduation requirements other than passing the biology end of course exam to graduate. It does NOT make a number of other changes I took issue with when they came up earlier in session.
In the last week of June we passed the 2015-17 operating budget, my particular responsibility in the Legislature. It’s reasonably straightforward and didn’t need to take us until the end of June to resolve, but the Republican Senate was unwilling to compromise on their all-gimmicks, no revenue strategy until the very end. In the last few days we came to an agreement that is a true compromise – the House conceded to the use of more financial shortcuts than we would have preferred and the Republican Senate agreed to close $350 million of tax loopholes. I didn’t get everything I wanted, and there are some elements of the deal that are distasteful. I think the same is true for the Senate Republicans. Had we gone past June 30th the state would have gone into a partial shutdown, including laying off doctors and nurses, shutting childcare facilities for 50,000 kids (which would cause 30,000 low-income single moms to lose their jobs or depend on sketchy care), and other bad things.
Chris Vance has a lot to say in this article on Crosscut that I agree with, but more that I don’t.
He is right that the Legislature didn’t address the compensation element and still needs to. I expect the court to have something to say on this soon.
However, he and Superintendent Dorn remain confused about the scope of class-size reduction requirements the court specifies. He seems to believe that the court is requiring class size reductions in grades 4-12. They are not.
The Legislature created many advisory groups to provide input for the decisions it would make on class size investments, compensation, etc. These groups, while often providing valuable advice, do not make decisions that become part of the definition of “basic education.” If they did we would be spending prodigious amounts of money indeed. The Legislature reserves for itself the definition of basic education, and, based on inputs from several advisory groups, made those changes in HB 2776 in 2010. This created requirements for lower class sizes in K-3, all-day Kindergarten, a transportation funding formula that was based on expected costs, and maintenance and supplies funding. The court Specifically insisted that the Legislature fund the definition in that bill. We have done so. Both House Democrat and Senate Republican budgets funded a rational phase in of these investments, and provide adequate funding in the 2017-19 biennium to finish the job before 2018. The final budget does as well.
I agree with Mr. Vance that compensation for basic education employees is a responsibility of the state, not of local districts, and that significant structural changes will need to be made to how funding goes out to address the problem. I proposed HB 2239 this year that created a plan to work this out, with an court-enforceable deadline of 2018. The Senate Republicans refused to take up the bill, and did not send their proposal over to the House. This might lead one to believe that they are choosing to ask the court to be more aggressive in forcing resolution.
The remaining problem is about $3.5 billion a biennium, not $5 billion a year. Much, but not all of this is already being paid by taxpayers and a large part of the problem could be resolved with a wrenching property tax change that would be close to revenue-neutral at the state level, but cause significant tax increases in urban areas and corresponding decreases in rural areas. Not surprisingly, this has been resisted by urban areas who suggest a more balanced way of addressing the problem using capital gains or some other mechanism in addition to some of the property tax changes I and others have proposed over the years.
You may have read in the press that the Legislature got a budget done by midnight on June 30th, allowing the state to continue providing unemployment assistance, Medicaid, childcare, public schools, college classes, and all of the other things that we have decided to do collectively. I am frustrated that we were unable to come to an agreement more quickly, but pleased that we got it done. I’ll write more about the budget and what’s in it over the next few weeks.
However, we have work to do before we sign off. The Senate is high-centered on I-1351. I predicted that it would be difficult to come to a 2/3 vote on this issue and was proven correct by Tuesday night’s activities. Melissa Santos has a reasonable summary in the Tacoma News Tribune.
[UPDATE 5/20/15 10:30 PM We will be on TVW. You can find it on their website or click here.]
As I mentioned in my last blog post and newsletter, I think it’s necessary to discuss the details about levy reform in detail and in public.
Tomorrow, we are hosting a work session on K-12 levy and compensation reform. This session will be a chance for staff to present data on levy issues and for Legislators to discuss, in full public view, this information. While there will be no formal public testimony accepted during the session, we will welcome follow-up feedback from attendees.
Based on the work session and subsequent public feedback, I hope that we will be able to come to joint conclusions that reflect a larger consensus. Bipartisan support of a solution to this issue will be crucial for moving anything forward, and this won’t be achieved without the input and understanding of the public as well.
Thursday, May 21 10:30 a.m. House Hearing Room C Washington State Capitol, Olympia
To learn more about these issues, check out my blog here and here for some lengthy discussions on the topic.
Two recent articles in the Seattle Times point out one of the remaining key elements of resolving the McCleary “problem”, and it’s a BIG element. Most estimates have the size of the problem at about $3,000,000,000 to $3,500,000,000 ($3 – $3.5 billion) a biennium.
State in ‘weird place’ trying to alter reliance on school levies. This article talks about the politics involved, but doesn’t bring up all the weirdness with school funding formulas, in particular “levy equalization” paid to well over 200 districts (of 295) because their property values are lower than the core central Puget Sound districts. It also doesn’t address the “small school factor” that results in some very small school districts getting $50,000 per student.
Last week the Appropriations committee held a hearing on the second half of the McCleary decision; the requirement that the state fund adequate compensation, not local taxpayers. The hearing took over 3 hours and is super-interesting. You can watch it on TVW here.
This sounds terrifyingly dull, but it wasn’t. Anytime you talk about property taxes and use numbers like three and a half billion dollars you get people’s attention. We had a briefing on three Senate bills and a proposal by yours truly that isn’t drafted as a bill. The bills wind up being 70 pages long and we are not close enough to having agreement to spend the effort drafting legislation – I’d rather agree on policy first and then draft a bill. The drafting is a lot of work for staff that are all working on budget right now. I’m not a fan of random work.
Bruce Dammeier introduced a bill (SB 6109) that does many, many things. It’s AN implementation of a levy swap, but has a lot of restrictions in it that make it unattractive to urban districts. Bruce implements a regional compensation model.
Christine Rolfes has a bill (SB 6104) that does many of the same things, but also funds initiative 1351. It’s profoundly expensive and depends on the capital gains tax to pay for part of it. Christine does not do regional comp.
Jim Hargrove (SB 6103) uses property tax to shift some payments for compensation to the state, making major changes to property tax.
My proposal is very focused on dealing with the compensation problem, without making a lot of changes to how teachers are paid, restrictions on use of levies, etc.
The House bill we had a hearing on (HB 2239) makes no actual changes in law, other than a judicially enforceable schedule of making the decisions that need to be made. The schedule would lead to the new financing system being in place for the 2018-19 school year, just in time to comply with McCleary. The decisions could be made more quickly, but it would be difficult to get the buy-in if we do.
I’m not sure what our next step should be at this point. We need to have some public hearings to determine the financial parameters of the actual problem. I will attempt to schedule some meetings. We may choose to use a smaller room and have them be option for all the members of Appropriations to attend, or some other way to have a more interactive hearing. More to come.
One of the issues that is tangentially budget-related that needs to be addressed during this special session is that of high school graduation requirements and the assessments that we are asking our kids to take. We’ve gone through many changes over the past few years in our efforts to settle on a set of graduation requirements that work. In addition, we’re struggling to deal with one of the leftovers from the Bush administration, the “No Child Left Behind” act, which mandates a certain amount of testing.
Our goal is to ensure that students learn enough material in core subjects to be able to succeed in the 21st century, and to ensure that our schools are both offering a curriculum that leads to this level of accomplishment, but also focused on ensuring that all kids get there.
Current graduation requirements can be found here. As you can see from this graphic snippet from the site, there are different requirements for every graduation class. This is because the State Board of Education (SBE) has a goal of not changing the requirements for a class once they start high school.
I’ve been swamped with email on education issues and want to consolidate my responses to a number of popular questions as I think it’ll give a better sense of what my positions are on your issues. I’m hearing about:
Basic Education funding, including ensuring that we adequately fund our McCleary obligation.
Funding and implementation of Initiative 1351
The “waiver”, or making use of state-wide assessments for evaluations of teachers.
Senate cuts to teacher retiree benefits. In particular, a 27% cut to the Medicare subsidy, a flat dollar amount that’s part of the retirement benefit for teachers.
Testing and our graduation requirements. There are a number of proposals to change (reduce) the amount of testing we do. I address this in a different post.
I write this on Tuesday April 21st. At this point I do not expect that the Legislature will agree on a budget before the regular session ends on Sunday April 26th. The Seattle Times published a lot of articles this weekend about the budget, and I’m structuring this newsletter around them. The first article in the collection discusses in detail all the press conferences that the two sides had all week. We’ve had a number of meetings between the two negotiating teams to try to set up the framework for talks, but we’re not making much progress.
I think it’s mostly about the different approaches the two sides take to the budget. The House Democrats look at the various categories of spending and make recommendations about what we think the state should invest in, then work back to figure out how much revenue we need based on that. This is a balancing decision, and lots of desired spending doesn’t get done in the budget proposal. The Senate Republicans make a decision that they won’t vote for taxes (except for roads) and try to deal with the huge increase in required K12 spending by cutting everything else and using a lot of one-time gimmicks. This results in many bad outcomes.
I made a proposal that both sides work through all the areas where we have significant differences and resolve the details of what we want to purchase. The Senate suggested we set a dollar limit (theirs) and work within that. The limit was low enough that it prevents making reasonable decisions. We are at a temporary impasse.