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Friday, June 30th, 2017

State budget analysis roundup: NPI partners offer critiques based on what we know so far

Today is the final day of Washington State’s current fiscal year. State lawmakers must either pass an operating budget by the end of the day or find a way to buy themselves more time to continue hammering out a budget (which most are loathe to do), or else state government will have to shut down.

With details about the agreement reached by the Legislature’s majority caucuses (the House Democrats and Senate Republicans) finally available, interested citizens and organizations can finally see the specifics of what’s being proposed. Here is a roundup of reaction offered by NPI’s partners based on what we know so far.

Washington’s Paramount Duty:

While the legislature’s proposed education funding plan includes a significant increase in funding for our public schools, it falls well short of what is required by the courts and the constitution.

This deal runs a serious risk of failing to meet those requirements, failing to meet the pressing needs in classrooms across the state, and relies on unstable funding sources. If this deal passes, it may not mean the end of the McCleary case – this year, this decade, or this generation.

In 2016 Washington’s Paramount Duty estimated the cost of fully funding public education – specifically, the basic education promised by the legislature in 2009 in bills ESSB 2261 and 2776 – to be about $8 billion a biennium. Legal counsel for the McCleary plaintiffs estimated the sum was $10 billion a biennium, with at least $5.6 billion needed just for the next school year alone in order to meet requirements for materials and operations, teacher salaries, and smaller class sizes.

The deal legislators reached this week would provide an extra $7.3 billion over the next four years. This is less than half the money required to fulfill the constitutional and court-enforced right to a fully and amply funded education.

This deal also undermines the voter-approved initiative to reduce class sizes, providing that smaller class sizes would only become part of a basic education requirement if the legislature chooses to fund it. This is circular logic, and flies in the face of evidence and common sense that students learn better and have all their needs met when teachers can provide more attention to them in a classroom with fewer students.

We have already heard from parents and teachers across the state who are concerned that the sweeping changes to teacher pay would make it even more difficult to attract and retain good teachers in our schools. Capping teacher pay at $90,000, as well as the elimination of the “staff mix” model and limits on bargaining, combine to limit the ability of teachers to make a living and remain as residents of our own communities.

The McCleary case was never about reforms to the way teachers are paid. We see no reason for these risky changes to be made, certainly not with so much haste and so little public scrutiny.

We are also troubled by the methods used to pay for this half measure. The Supreme Court held that education funding must be regular and dependable. A property tax increase does not meet that standard, especially when the legislature maintains a 1% cap in future years on property taxes. This has the effect of eroding the property tax revenues that go to schools, meaning it’s no longer regular or dependable.

The legislature’s decision to limit local levies is another risky move. If the legislature fails to adequately fund basic education, or if districts’ costs rise above what legislators are willing to pay, those districts will be facing significant cuts, undermining the intent of the McCleary decision.

More importantly, using the property tax to fund schools is regressive and hurts the poor and the working families for whom a public education is particularly important. Many families will be unable to pay these costs, especially at a time when housing costs in many Washington cities are rising fast.

Washington State is home to some of the world’s richest individuals – and yet we have the most regressive tax system in the United States. The legislature’s decision to make poor people pay without asking the rich or big businesses to pay more is unconscionable, particularly when the same budget deal opens millions in new tax breaks for business.

We understand that legislators are worried about a government shutdown. We are too. On the other hand, it is hard to believe that avoiding a shutdown now is worth the price of continuing to underfund our schools and make poor people pay more in housing costs for years to come.

Students across Washington State are asked to attend schools that don’t have heat in the winter, that don’t have new textbooks, that don’t have a full-time nurse on duty, that don’t have librarians or new books, or counselors to help guide them to college or a career.

It’s not clear that this deal will fully address these and other urgent needs, particularly since there are no provisions for capital expenditures in this budget. We urge the legislature to urgently address capital requirements for schools by passing a bill that provides the $2 billion necessary to ensure children across Washington attend schools that are safe, secure and have the capacity to accommodate the lower class sizes that voters have voted for and that we know provide a better learning environment for all students.

Legislators may be exhausted and tired after a few weeks of work. But parents are exhausted and tired after years of unpaid work to plug the gaps in funding for our underfunded public schools caused by legislators’ dereliction of their duty. We call on legislators to reject this deal and fix it to address the issues we have identified above. If they pass this education funding plan, we will have no choice but to urge the Supreme Court to reject it and order the legislature to do better.

The Washington Budget & Policy Center:

Legislative leaders have agreed to a spending plan to fund state services for the next two years – and as such, they may avoid a state shutdown – but they have left a lot of important work undone. Notably, lawmakers have passed up an historic opportunity to address our state’s broken tax code, and instead have relied too much on unsustainable fund transfers and budget gimmicks that will threaten the economic strength of the state in the future.

The budget deal includes some investments in critical programs, but it falls short of meaningfully strengthening many of the state’s most important long-term investments.

Instead of creating a budget that enacts much-needed revenue reform, lawmakers have cobbled together a budget that makes progress toward fulfilling a mandate from the state Supreme Court to strengthen our K-12 schools. But the final budget agreement does this by relying too heavily on irresponsible accounting tricks, like drawing down the state rainy day fund and shifting funds between accounts, that will leave the state on shaky ground in future years.

Lawmakers propose to raise new resources for schools with a small increase in the state property tax. But it is disappointing that no actions were taken to offset higher property tax bills for lower- and middle-income homeowners and renters who, under our current tax code, pay up to seven times more in state and local taxes as a share of their incomes than the richest Washingtonians.

In addition to the property tax changes, lawmakers agreed to eliminate wasteful tax breaks – including the bottled water sales tax exemption and a sales tax break for oil refineries – and close off legal loopholes that allow out-of-state businesses to avoid paying sales taxes and business taxes. But they also added or extended 13 other tax breaks that will take money out of communities in favor of special interests and leave fewer resources for future investments. Now is the time to clean up the tax code to clear out wasteful tax breaks, not add more.

Central to legislators’ budget negotiations was compliance with the state Supreme Court’s order to fund public schools by the end of this legislative session. The school funding plan included in the final budget deal overhauls the state’s teacher pay system and will invest an additional $7.3 billion in public schools over the next four years. It remains to be seen whether the compromise will be sufficient to satisfy the court’s order to amply fund public education.

It appears that severe cuts to many important priorities that improve the lives of Washingtonians with low incomes may have been largely avoided. If so, that’s a good start. However, the deal doesn’t do enough to strengthen many of the programs that allow people with middle and low incomes to thrive – and in particular many people of color who, because of systemic racism, are denied equal access to opportunity. Unless state lawmakers take significant steps toward reforming our tax code to enact equitable and sustainable revenue sources, meaningful improvements to community investments will continue to be difficult.

If lawmakers can get the budget signed by the governor in time, they may narrowly avoid a state government shutdown; but either way, the result is a makeshift budget that doesn’t address the unsustainability, inequity, and inadequacy of our tax code. Especially with the threat of huge federal cuts on the horizon, state lawmakers must ensure the budget protects the well-being of Washingtonians.

In 2018, lawmakers will have another chance to lift up Washington’s communities and build a brighter future for our kids. To do that, they’ll need to get serious about cleaning up our tax code to raise state resources in an equitable and sustainable way.

Washington Education Association:

WEA members, allies, kids and dogs rallied on the Capitol steps in Olympia Thursday in support of funding for schools and services.

Legislators released a summary of their new education funding plan Thursday, and while it represents progress, it falls short of amply funding our students’ K-12 public schools as required by the Supreme Court’s McCleary decision.

WEA budget lobbyists are analyzing the new education budget, and it will take time to provide a detailed analysis. Based on summary information provided by the Legislature, here are key points:

It fails to amply fund K-12 schools by the Sept. 1, 2018 deadline set by the Supreme Court, although it does increase K-12 funding by about $7.3 billion over four years.

  • Despite the current educator shortage, it delays funding for competitive educator salaries. While it substantially increases state-funded base pay for educators over four years, it only has a 2.3 percent COLA the first year. It eliminates the salary allocation model in 2018-19, and it will require school districts to negotiate new salary schedules with their employee unions. It also funds additional salary in districts with housing costs that exceed the state average.
  • It creates a new state-run health care system for school employees, eliminating local bargaining over health benefits. The per-employee state health care allocation will increase to the same amount legislators and state employees receive. Beginning in 2020, a coalition of school employee unions will negotiate health benefits with the governors’ office.
  • It delays funding for smaller class sizes in grades 4-12 and for additional support staff as required by Initiative 1351, but it funds smaller class sizes for career and technical classes and a few other specialized programs, adding staff positions.
  • It reduces local voter-approved school levies, limiting the ability of school districts to meet the unique local needs of their students. Planned levy expenditures must be approved by the state before districts can ask voters for approval, and the state will audit how levy money is spent.
  • The new plan restricts bargaining for additional educator pay beyond state-funded base pay. This is an issue that needs more review to determine the impact. A legislative summary says, Supplemental contracts may only be used for defined enrichment activities and the hourly rate under the supplemental contract may not exceed the hourly rate provided to that same instructional staff under the basic education salary.”
  • In 2018-19, locals are prohibited from bargaining more than a COLA unless their average salary is less than the statewide average.
  • It increases funding for the Learning Assistance Program, special education and other programs that benefit the students who need the most help.
  • It funds three days of professional development, but restricts how many half-days school districts can schedule.

The education budget document is over 120 pages long and was released Thursday afternoon. It’s complicated, and there are good parts and bad parts. We’ll post further information as we get it.

This post will be updated with further analysis throughout the day.

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