Districts face penalty if they don’t follow rules for levies

School leaders, including Everett’s, seek a veto of a punishment provision in the levy bill.

Everett schools Superintendent Gary Cohn (Olivia Vanni / Herald file)

Everett schools Superintendent Gary Cohn (Olivia Vanni / Herald file)

OLYMPIA — A last-minute move by lawmakers to ensure school districts spend local levies properly by potentially punishing those that don’t isn’t sitting well with a few leaders of public schools in Snohomish and King counties.

And they are looking to Gov. Jay Inslee for help.

At issue is a single sentence in a bill to raise the cap on how much districts can collect from voter-approved property tax levies. Superintendents and school board directors around the state applauded passage of Senate Bill 5313 because it will provide additional resources for their districts.

But when they read a line in the final section of the bill, their smiles disappeared.

It laid out a means for the state schools superintendent to reduce the amount a district can collect in levies if an audit finds the district had spent some of its local property tax revenues on basic education rather than enrichment programs as required by law.

This past week, an alliance of Puget Sound school districts, a Democratic representative from Issaquah, and Everett schools Superintendent Gary Cohn each wrote the governor to urge him to veto the section containing the penalty language.

“I know from experience that if the intention is to change school district behavior or protect school district funds, this provision will not achieve these goals,” wrote Rep. Lisa Callan,D-Issaquah, a former school board member. “Punishing districts by withholding funding will only hurt students.”

In separate letters, Cohn and the School Alliance argued the language is unconstitutional.

School districts are empowered by the state constitution to levy taxes and the Legislature has authority to cap the total amount to be collected. But once voters approve a levy, neither the state auditor nor the state schools superintendent can lower the amount, they contended.

“We tell voters what the levy is going to do and what it is going to be spent on and someone later says that some expenditures are not enrichment and are basic education and you’ve got to pay it back,” Cohn said in an interview. “I understand the good intention but that’s crazymaking.”

Sen. Lisa Wellman, D-Mercer Island, chairwoman of the Senate education committee and the bill’s prime sponsor, said Friday that the verbiage received thorough review by policy staff and legislative lawyers.

“It is constitutional,” she said. “While we may need additional clarification, I think the public wants transparency and accountability. And I don’t think there is accountability without a penalty.

“It is harsh. That’s the price for refusing to correct your mistake,” she said. “I think for many reasons that it would be a very negative thing to do to veto this provision.”

This is another flare-up as lawmakers, Inslee and leaders of 295 school districts wrestle with the overhaul to the state’s funding of public schools driven by the Supreme Court’s decision in the McCleary case.

In 2017, lawmakers passed legislation which changed how districts budget and account for state and local tax dollars in the coming years. It also imposed a hard cap on what districts could collect from local levies.

Under the bill, the state auditor is now required to review how districts spend their levy money. As part of a regular financial audit, they will look to see if those dollars are spent on enrichment programs as outlined in state law. These new rules begin this school year.

If an audit finds monies spent on a basic education program — which the court said is the state’s responsibility — it would result in a finding. Findings will be sent to the Superintendent of Public Instruction as well as lawmakers.

There are no consequences for districts which misspend money in this manner under current law.

This year, with Senate Bill 5313, lawmakers raised the levy cap, which school leaders like Cohn very much wanted.

They also revised the audit process to put in consequences. Districts will get one year to clear up any audit findings. If they aren’t fixed, the auditor is to tell the state superintendent who would take steps to lower the district’s levy for the following year.

The bill’s final language didn’t surface until April 26, two days before adjournment.

As of Friday, state Auditor Pat McCarthy was still evaluating the bill and did not have a position on the contested provision.

A spokeswoman for the Office of the Superintendent of Public Instruction said the potential penalty should not be a concern so long as the Legislature continues to fully fund basic education through the prototypical school model.

Inslee received veto requests May 7 from Callan and the School Alliance whose members include Everett, Lake Stevens, Bellevue, Issaquah, Lake Washington, Mercer Island, and Tahoma school districts. Cohn submitted his letter May 8.

“The provision is in conflict with the Constitution, improperly seeks to impose a penalty, and will adversely impact school districts statewide and the students that they serve,” wrote Jake Kuper, chief financial officer for Issaquah School District on behalf of the alliance.

Wellman said the penalty language is in response to Democratic colleagues who wanted districts held accountable if they misspent levy dollars.

“This gives us and the public a degree of assurance that the monies are being spent not on basic education but on enrichment to basic education or other things that are allowed,” she said. “I would absolutely say it sends a very bad message to the public if it is vetoed.”

Jerry Cornfield: 360-352-8623; jcornfield@herald net.com. Twitter: @dospueblos.

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