Budget and Taxes

Republican levy proposal looks good

One key component of any McCleary solution has to be the State taking responsibility for funding basic education.  Currently, school district’s rely upon their local levies to fund among other things, 5,000 classified employee FTEs that should be funded by the state.  Additionally, levies fund a portion of basic education salaries that should be funded by the State.  With that in mind, it is clear that local levies have to go down (only remaining use would be for “enrichment”) and State funding would have to go up.

As you can see from this document, the Senate levy proposal accomplishes that goal, fully funding all 5,000 FTEs and basic education salaries.  And it goes one step further: it equalizes all school district levy funding across the state.  In other words, no longer is there the property poor / property rich school district issue since all will be treated the same.

While there still are some problems with other features of the Republican’s McCleary solution that we are trying to change, at least they got this one right!

 

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Senate budget appears

It’s only a couple minutes old but as with any Budget there are positives and negatives.  Unfortunately, there appear to be more negatives than positives.

Regarding state employee and higher education contracts, nearly all, except Teamsters correction contract and Washington State Patrol, were not funded.  Instead higher education employees will be provided a $500 per year salary increase effective July 1, 2017, and July 1, 2018.  On the other hand, the union coalition bargaining agreement on health insurance was fully funded.

On the bleaker K 12 side, the Senate budget repeals the Initiative 732 salary increase instead providing a 2.3% salary increase effective September 1, 2017.  Further, insurance funding would not change staying at $780 per month for the 2017-18 school year.

What’s important to realize is that there isn’t funding for a salary or insurance increase the second year of the budget since this is the year when the Senate republican McCleary solution, SB 5607, takes effect (see my previous entry about the bill).  Sorry to get complicated but starting September 1, 2018, school districts would receive increased state funding based upon the National IPD (implicit price deflator).  The IPD usually runs about 1% below the Seattle CPI (consumer price index) – the current measure for our annual salary increases. The way their proposal works is that when this IPD increase goes into effect in September 2018, we will have to negotiate with the school district how much of this increased funding goes for salary or insurance benefit increases starting September 1, 2018.

One positive with their proposal (looking hard for a silver lining), really not this proposal, but their McCleary solution: the state will be funding the additional 5,000 classified employee FTEs that are currently funded by local levies.

And another good point is that the pension plan was fully funded with an additional $246 million set aside to pay for the unfunded liability.

As I spend more time on this proposal, I will update as needed.

Update #1 – Good news…The Senate fully funded PSE’s paraeducator bill, SB 5070 at a cost of $2.3 million!

Update #2 – Good news…they used $700 million from the “rainy day” fund to buy down the PERS 1 unfunded liability.

 

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Inslee signs levy cliff bill

With a crowd of school district supporters observing, Governor Inslee signed the levy cliff bill, SB 5023.  In addition to delaying the levy cliff one year (to calendar year 2019), it adds in “accountability measures” designed to ensure local levies do not fund basic education costs.

Here is the accountability language: “Beginning in calendar year 2018, to ensure M&O levies are not used for basic education programs, school districts must provide a report to OSPI detailing the programs and activities that will be funded through the proposed levy.  OSPI must approve the report before a ballot proposition can be submitted for voter approval.   
Enrichment beyond the state-provided funding in the omnibus appropriations act for basic education programs is a permitted use of M&O levies.”

Now we wait to see if the legislature can come up with a McCleary solution that will permanently take the pressure off local levies to fund basic education.

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$740 million found

This morning, the Economic Revenue Forecast Council (ERFC), approved an updated forecast of state revenue.  And it’s all good news because the Washington State economy is performing better than expected.  Since the last forecast 3 months ago, the State is expected to receive an additional $247 million through June 30, 2017, $303 million through June 30, 2019, and $188 million through June 30, 2021.

With that final forecast, the House and Senate budget writers can finish up their work and present their budgets.  The Senate is expected to introduce their budget next Monday, the 20th, and the House the following Monday, the 27th.

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Levy cliff waiting for Governor Inslee signature

With an uncharacteristic bending of the rules, the House ignored all the steps of the legislative process and approved ESB 5023, the levy cliff bill on a 87-10 vote.  What’s unusual is that the Senate approved the bill last night and 15 hours later the House approved it.  Normally, it takes at least a day to assign the bill to a committee, have a public hearing, vote in committee, etc., which usually takes a couple of weeks.  It shows how important it was to get the issue resolved as quickly as possible.  I expect Governor Inslee to sign the bill within the next couple of days.

I wish they would treat PSE’s paraeducator bill or insurance bill the same way (just dreaming).

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We’re not going over levy cliff

The good news on Wednesday was that, as Doug announced, the paraeducator bill (SB 5070) passed the Senate without amendments. As well, in an odd turn of gamesmanship, the levy cliff bill (ESB 5023) was brought forward by the Republicans; but more on that in a moment.

What was most interesting was watching the battle for status quo play out over the paraeducator bill. What many may not know is that not all education stakeholders are on board with SB 5070. In fact there are two very powerful lobby groups, one education labor union and one state wide labor union, that are working in direct opposition of our efforts and interests. Status quo is about power, those who have the power fight for status quo, those who don’t work for change. I admire those senators who resisted in the fight for status quo and stood up for paraeducators across our state. Doug and I watched this battle play out right in front of us when several senators changed their votes from “Yay” to “Nay” after receiving a sign from the opposition labor unions observing the debate. Fortunately there was strong bipartisan support and the effort was thwarted.

ESB 5023 was an entirely different situation, remember the gamesmanship earlier. In the proverbial eleventh hour the Republicans brought forward the levy cliff bill, a Democrat bill. By all appearances the Democrats were caught off guard by this maneuver. Then it got weird. While all 10 pages of the bill were being read out loud each party left the floor to caucus and were gone for an hour. Doug had warned me that odd things were often done at the last minute but even he had not seen this before. By all appearances this was a move by Republicans to extend an olive branch to Democrats and end the session in a strong bipartisan manner by bringing up the Democrat’s bill. In the end it provided a great PR moment and a necessary bill passed 48-1.

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Another McCleary solution surfaces

Senator Mark Mullet, along with Senators Takko and Hobbs, has sponsored their own solution to the McCleary Supreme Court decision.  SB 5825 is an attempt to be a midpoint between the House and Senate solutions (see earlier entries on HB 1843 and SB 5607).

According to Senator Mullet it would:

1)      Every district would have permanent local levies.

2)      Doubling of LEA (local effort assistance).

3)      Districts can go out for an extra $1,000 per pupil in excess levies but they must submit to OSPI a plan to ensure they are not for basic education.

4)      Per Pupil model that is a hybrid approach that still uses some prototypical school inputs.

5)      Starting teacher salary of $45k

6)      Universal hold harmless clause – nobody can go backwards.

7)      Guarantees $11,500 per pupil between state and local  (we exclude the federal part as we have no control over those dollars)

Though the bill may not get a hearing, it is likely to affect some of the discussions from this point forward.

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Housing allowance for classified employees?

As I mentioned in an earlier entry, Senate Republicans did something unusual that I can’t recall happening before.  Over the years, I have seen numerous teacher housing allowance bills.  When I would ask why they didn’t include classified employees, I would get a variety of responses but normally it was, “after we get it for the teachers, we will try to get it for classified employees”.   Well, right out of the gate, Senate Republicans included us in their housing allowance bill, SB 5534!  The bill would grant employees, certificated and classified employees, full time and part time (a pro-rated portion) a $10,000 housing allowance if the average residential value in the school district is above the statewide average.

Though this may affect only a couple school districts, and not that many classified employees, it is refreshing to see that Senate republicans think about classified employees while drafting a bill rather than an afterthought when I come to complain and it is too late to fix it.

The bill passed the Senate Ways and Means committee on a split vote and is next going to the floor for a full Senate vote.

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McCleary testimony – snowed in

I was unable to testify at last Monday’s House Appropriations committee hearing on HB 1843/SB 5607 because I was snowed in.  Below is what I sent to committee members after the hearing which captures what I would have said on behalf of PSE’s 30,000 classified employees had I been at the hearing:

PSE signed in support of both bills because each of them have positive impacts on classified school employees.

What we like in 1843:

• Increasing the classified employee salary allocation
• Professional development for classified employees

What we would like to see changed in 1843:

• Change the classified employee basic education funding formula so that the state, not local levies, are paying for 5,000 classified employee FTEs (see this chart).
• Change levy system to promote levy equity

What we like in 5607:

• The state will be fully funding classified employee services (5,000 FTE are currently funded by local levies)
• Implementing a comprehensive paraeducator development program
• More flexibility to hire paraeducators as teachers
• Housing allowance includes classified employees
• Implements the 3:1 insurance payment ratio so that employees with families pay $3 for every $1 a single employee pays
• Levy changes that promote levy equity

What we would like to see changed in 5607:

• 3 year implementation of 3:1 insurance ratio so that in the first year it would be 5:1, second year, 4:1, and third year, 3:1.
• Use the Seattle CPI (consumer price index) as the inflation index rather than the National IPD (implicit price deflator).
• Include an insurance inflation factor that reflect premium increases.
• The requirement that school expenses for compensation not go beyond 80% will harm classified employees since teachers will consume whatever capacity school districts have to spend money. Change this so that classified employees are not left out of staffing, salary, or benefit capacity.

Yesterday, the Appropriations committee voted 1843 out of committee on a partisan vote of 18-15.

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Robust McCleary debate

House appropriations committee members got an earful during the nearly 3 hour hearing on the House and Senate McCleary solutions.  Make no mistake, it is very difficult to compare and contrast the two competing proposals.  The best part of this early release of the opposing solutions, is that we, and legislators, will have plenty of time to discuss and debate the differences over the next 75 days.

Positive classified employee features of the House proposal are:

….increased allocation for salaries from $33,898 to $54,084 in equal increases (19.8% increase each year) over the 2017-18, 2018-19, and 2019-20 school years.  Starting again in 2020-21, the COLA is reinstated.

….professional development days: one day in 2017-18, two days in 2018-19, four days in 2019-20, six days in 2020-21, and ten days in 2022-23.

Concerns with House proposal:

….no change to the classified employee staffing formula.  As a result, school district local levies will continue to fund 5,000 basic education classified employee FTEs.

….no change to levy equity (property poor school districts will continue to struggle).

….no funding source is included in the bill.  A separate tax bill (or in this case, several new tax bills) must be passed to fund any or all of the House proposal.

If you are interested in my analysis of the classified employee impacts in the Senate solution, go to this earlier entry.

Here is a good “side by side” analysis completed by House staff of the major differences between the House and Senate solutions.

If you don’t have anything to do for three hours, here is the hearing on the competing solutions:

 

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