Temporary levy solution creates new problems for schools

OLYMPIA — A much-celebrated bill preserving local taxing authority for school districts is expected to become law this week in spite of provisions that are unclear and may prove unworkable unless fixed.

Gov. Jay Inslee on Wednesday is slated to sign the legislation delaying a planned cut in school levy rates for one year, thus ensuring the state’s 295 school districts can collect all of their voter-approved revenue in 2018.

While the bill’s passage drew cheers from Republican and Democratic lawmakers, the governor and many educators, its new rules for tracking the collection and spending of local levy dollars next year already are causing mild headaches for superintendents and district finance officers.

“It’s become clear that there are a few provisions in the language that need to be addressed because the state and local school districts accounting systems can’t adapt by Jan. 1,” said Everett schools Superintendent Gary Cohn. “We’re grateful that the Legislature recognized the need to put off the levy cliff for a year while they work on a McCleary solution which provides a lot of relief for a lot of districts.”

McCleary is the landmark case in which the state Supreme Court found public schools inadequately funded and gave the Legislature and the governor until September 2018 to remedy the situation. That remedy must end school districts’ reliance to cover the costs of basic education, chiefly salaries of teachers and administrators, that are the responsibility of the state.

In the levy cliff bill, a provision aimed at satisfying the court’s concerns on local levies is proving to be imperfectly worded.

It requires levy dollars be segregated from state and federal funds starting Jan. 1, 2018, but doesn’t make clear whether districts must also stop spending the money on basic education Jan. 1 if the state isn’t paying its share.

Republican lawmakers say yes, Democrats say no and a spokeswoman for the governor’s office said they don’t know.

“The belief is this school year is local money would be kept local for those enhancements that are not basic education,” Senate Majority Leader Mark Schoesler, R-Ritzville, said Monday. “Obviously we want to end the dependency on local levies for salaries, class sizes and other parts of basic education. I hope we did what we sought to do.”

But Sen. Christine Rolfes, D-Maury Island, who helped negotiate the final language, said districts don’t need to change how they spend the money until the state fully covers its obligations. The intent, she said, is to get districts to account for the money in a way that is more transparent to the public.

“I think any headaches we create are very specific to the accounting offices and we’ll be able to work through it,” she said.

Jaime Smith, executive director of communications for Inslee, said there are “differing opinions” on what the language does and doesn’t do and their office has not come to a conclusion.

“It has raised a lot of questions,” she said, noting lawmakers may have to “circle back” and fix it as they work through a broader education funding agreement.

Bill Keim, executive director of the Washington Association of School Administrators, said confusion with the accountability language is understandable because it is the result of hard bargaining to get the bill passed.

“It isn’t real clear at this point,” he said. “Given what we know, we think it is OK to spend local levy dollars the same way.”

Meanwhile, the same provision directs the superintendent of public instruction and state auditor to “develop guidance for districts to carry out this requirement.”

But schools chief Chris Reykdal told district leaders in a letter Friday he won’t provide the requested direction — at least not yet.

“I’m reaching out today to let you know that, for now, you shouldn’t expect guidance from OSPI on the levy accountability parts of the bill,” he said. “That language was important to get the bill passed, but it’s only step one in a much larger conversation. We expect to send you formal guidance once the final McCleary solution has been established.”

On Monday, he said what’s required is patience. Lawmakers need to better define basic education, which the state will cover, and enrichment, which is what local levies can be spent on. They also need to spell out their expectations for accounting practices before systems are changed.

“At this point I don’t want to exercise a lot of energy on something that is going to be worked out,” he said. “There is no McCleary solution in the world that doesn’t revisit the issue.”

State auditor Pat McCarthy said last week she, too, is awaiting clarification from lawmakers before her office can offer direction to districts.

A second provision in the bill could threaten the ability of school districts to go to voters in February 2018 to approve another round of the local taxes, known as maintenance and operation levies. Such levies are expiring in 15 districts in Snohomish County next year and it is likely all will want to go to voters.

Under the bill, school districts will be required to prepare a report for the Office of the Superintendent of Public Instruction detailing how local levy dollars are to be used. The superintendent must approve those reports before districts can submit a ballot measure to a county auditor.

But districts cannot do much until lawmakers make a bunch of decisions, such as the maximum-allowed levy rate, and identifying the programs eligible for that funding. The longer lawmakers take to work it out, the less time district officials have to get those reports done.

There are deadlines. To get a measure on next February’s ballot, resolutions must be sent to county auditors by Dec. 15. It’s unclear how long it will take to get reports turned in and approved. If the superintendent’s office decides to adopt formal rules to govern the process, it could further compress the timetable.

“The main goal (of the bill) is to get certainty to the school districts and we’ve done that,” Smith said. “There’s certainly a lot of headaches to be resolved.”

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