Governor unveils supplemental budget request

Recommends cutting four school days and $151 million in levy equalization, half-penny sales tax increase

Saying she never thought she would be recommending cuts to the very fabric of our state, Gov. Chris Gregoire announced today a $2 billion all-cuts supplemental budget request and a proposal to increase sales tax by half a penny for three years.

The supplemental operating budget for public schools shows a total of $873.5 million in program eliminations and reductions, and payment shifts for savings in the current biennium. The majority of the changes would affect the 2012-13 school year or the 2013-14 school year.

The governor’s proposal still includes $151 million in cuts to local effort assistance (LEA), beginning in January 2013. Her budget also suggests a one-time adjustment of percentage reductions that would have a greater effect in July 2013 than in the spring months of the 2012-13 school year.

Saying she had been persuaded by those who talked with her about not increasing class sizes, the governor reluctantly is recommending cutting the school year from 180 days to 176 days, for a savings of nearly $100 million to the state. By cutting days, state funding for school employee salaries would be reduced by 2.2 percent, while transportation and MSOC would be reduced by a proportional amount.

The governor’s proposed spending plan also shifts the June 30, 2013 apportionment payment by one day, to July 1, 2013, thereby mitigating the impact in the current biennium, and shifting the obligation to the 2013-15 biennium.

Similar to last session, the budget includes a $10 million “financial contingency fund” for school districts that meet certain hardship criteria caused by the apportionment shift and apply to OSPI for a loan that must be repaid in the following year.

The governor indicated she wants the Legislature to act on the supplemental budget in the special session that begins November 28, and to enact her referendum to the people on a half-penny sales tax increase as written.

Her sale tax proposal would direct an estimated $411 million of the new money raised to K-12 education, to buy back school days and LEA. The sales tax would also restore higher education funding. The goal would be to ask voters in a March election and begin collecting revenue immediately.

In addition, $41 million in new revenue would be directed to public safety, while $42 million would help restore program funds for long-term care and the developmentally disabled.

On the balance sheet

In addition to cutting days and LEA and the apportionment shift – which account for two-thirds of the changes to K-12 funding – the governor’s supplemental budget request includes the following cuts or shifts:

• $48.9 million shifting bus depreciation payments from October to August
• $19.9 million in cuts to employee health benefits, from $768 to $745 per month
• $11.7 million in changes to student enrollment reporting, by adding a June count and excluding from the enrollment count students who have accumulated over five days of consecutive unexcused absences
• $8.5 million by reducing the amount of each national board bonus from $5,000 to $4,000
• $4.3 million by reducing the number of teachers in high schools with 300 or fewer full-time students from nine to a minimum of eight instructors
• A number of reductions or full-blown eliminations to programs targeting dropout prevention, STEM skills building, CTE and literacy, for example
• Many “adjustments” based on changes to enrollment, pension costs, payment shifts, and projections that are proposed to be updated in the supplemental budget
• $160 million in cuts to the state’s four-year colleges and universities and community colleges 

On the plus side of the balance sheet, all-day kindergarten and K-3 class size reductions were spared, as was the existing teacher/principal evaluation pilot project. Small investments also were made, including $250,000 for Project Lead the Way and $450,000 in aerospace training. In addition, slots for three- and four-year-olds enrolled in the state’s early learning program were maintained. 

Click here for a detailed description of the governor’s budget proposal and list of proposed changes to the 2011-13 biennial operating budget. The link titled “Superintendent of Public Instruction” contains the overall review of budget changes. For a detailed explanation of what is being proposed, click on individual links and read the associated budget notes that follow the budget numbers.

And on the revenue side of the equation

In addition to the temporary half-cent sales tax proposal, the governor provided the Legislature with a list of revenue options. This list includes $59 million she said would require only a simple majority to pass and $282 million that would require a two-thirds majority vote of the legislature to pass.

The governor referenced reviewing 150 different alternatives, and said she has provided her best thinking on what is doable and recommended to get done in December. She suggested that some options – such as increasing business & occupation taxes or adding sales tax to services – would keep businesses from hiring employees.

“The last time we raised sales tax was in 1983, with a Republican governor and a recession that wasn’t as long or as deep as the one we are in today,” said Gregoire. She said the cuts being proposed don’t reflect our values, and she hoped voters would step up to pay a half a penny more to invest in the future.

For a list of the governor’s proposed revenue alternatives, click here.

WSSDA response

On November 10, WSSDA Executive Director Jonelle Adams sent a letter to the governor outlining the priorities adopted by the board in October and early return responses from a survey of school directors from across the state.

“We are dismayed and disappointed that LEA is still on the table for such huge cuts,” said Adams.

“Our members have said repeatedly this is a critical lifeline for their districts and the loss of this very flexible funding will hurt districts with higher populations of our most needy and vulnerable students.”

Adams also indicated that most survey respondents didn’t support the property-tax scaled approach to cuts to LEA, and said the association will be talking with districts about the impact of the proposed one-time payment adjustments and other options to the proposed cut.

As to the half-cent sales tax increase, Adams noted that the majority of funding would be used to buy back school days and LEA, which are school director priorities, and she anticipated a conversation with the WSSDA Board of Directors in the near future regarding a response.

“We recognize the Governor Gregoire has tried to mitigate the impacts on school districts while faced with an unprecedented budget challenge,” said Adams. “We appreciate her leadership in avoiding mid-year or retroactive cuts to this school year, and hope the legislature will follow this course if they propose cuts to public school funding.

“We will continue to provide input on the supplemental budget as it is discussed by the Legislature and to make school district priorities clear in those discussions.