Legislative Preview2012

WSU Superintendents’ Certification ProgramOlympia, January 6, 2012

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2011 Legislative Session Review

2011-13 Budget Outlook

2011 Special Session Review

2012 Regular Session Preview

WASA Legislative Platform

Legislative Session Preview—2012

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Budget, Budget, Budget

2009-11 budget (ending June 30, 2011):◦ Projected shortfall: $1.4 billion

2011-13 budget:◦ Projected shortfall before 2011 session: $4.6

billion◦ Projected shortfall end of 2011 session: $5.1

billion

2011 Legislative Session Review

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Transfer federal “EduJobs” funds to General Fund ($208 million)

Eliminate K-4 Class Size Enhancement, Feb. ‘11 ($39.4 million)

Reduce education reform ($9.2 million) OSPI reductions ($3.7 million)

Total Savings = $588 millionK-12 Education Reductions = $257.5

million

2010 “Early Action” Budget

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Eliminate K-4 Class Size, Sept. ‘10-Jan. ‘11 ($25.4 million)

Safety Net Adjustment ($24.8 million) Food Service Funding ($3.0 million) Summer Voc. Skills Centers ($1.8 million) Schools for Blind/Deaf ($1.0 million) OSPI admin & program funding ($2.7 million)

Total Savings = $367 million

K-12 Education Reductions = $58.62 million

2011 “Early Action” Budget

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Suspend I-728 ($860.7 million) Plan 1 Uniform COLA ($275.3 million) Suspend I-732 ($265.7 million) K-12 Salary Reduction ($179.0 million) K-4 Class Size Enhancement ($169.6 million) National Board Bonus ($61.1 million) Student Assessment System ($50.5 million)

Total Savings = $4.6 billionK-12 Education Reductions = $1.8 billion

2011-13 Budget

REDUCTIONS:

Suspend I-728, Student Achievement Fund $-861

Suspend Plan 1 Retirees’ COLA -275

Suspend I-732 COLA -266

Eliminate K-4 Class Size Reduction -223

K-12 Salary Reductions -179

National Board Bonus Program Changes -61

Assessment Program Changes & Savings -51

ALE Funding Adjustment -41

Limit Running Start FTEs to 1.2 -6

Reduce Food Service Funding -6

All Other Reductions <$5 Million -37

Total Reductions, Including Compensation:

$-2,006

The K-12 budget was reduced from the Maintenance Level by a net $1.8 billion

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INCREASES:

K-3 Class Size in High Poverty Schools $34

New Funding Formula Hold-Harmless 25

Kindergarten Phase-in 5

Transportation Enhancement 5

IT Academy 4

Teacher and Principal Evaluation Pilots 3

PASS Act (Drop-out Prevention) Program 3

2011 Session Bills & Other Increases 3

June 2011 Apportionment (less contingency fund)

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Total Increases from Maintenance Level $196

Net Policy Changes: $-1,810

The K-12 budget was reduced from the Maintenance Level by a net $1.8 billion

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FY 2009-13 Budget SolutionsThe Legislature has addressed $18 billion in budget shortfalls since the start

of the “Great Recession”—with the largest share being reductions in spending

Source: Office of Financial Management, 11/11

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FY 2009-13 Budget Reductions

Source: Office of Financial Management, 11/11

2012 Budget Outlook

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Slower than expected economic recovery• June Rev. Forecast: $560 million less revenue• Sept. Rev. Forecast: Another $1.4 billion down• Nov. Rev. Forecast: Another $122 million down

Budget adopted with $743 million in reserve.Following three downward revisions in revenue projections, projected shortfall is $1.4

billion. Caseloads continue to riseMedical Assistance: 3.2% per year

K-12 Enrollment: 1.1% per yearK-12 Special Ed: 1.7% per year

TANF enrollment: 2.0% per year

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State Budget-driver:K-12 Enrollment

Source: Office of Financial Management, 12/11

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State Budget-driver:Public Higher Education Enrollment

Source: Office of Financial Management, 12/11

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State Budget-driver:Medical Assistance Caseload

Source: Office of Financial Management, 12/11

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State Budget-driver:Prison Inmate Population

Source: Office of Financial Management, 12/11

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State Budget-driver:Medical Costs

Source: Office of Financial Management, 12/11

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2012 Budget Outlook

Source: Office of Program Research, 12/11

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Dr. Arun Raha, Washington’s Chief Economist:

“The economy is off life-support, but still in intensive care.” (Nov. 2010)

“The national economy remains fragile…and recent geopolitical developments have cast yet another shadow over the economic recovery.” (March 2011)

“We will see stronger growth in the second half of 2011 as oil prices stabilize, Japanese supply chains are restored and rebuilding picks up.” (June 2011)

“We no longer expect growth to pick up momentum later this year—instead the most likely scenario is an extended period of muddle-through.” (Sept. 2011)

Evolving Economic Conditions

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Dr. Arun Raha, Washington’s Chief Economist

“We are in the fragile aftermath of the Great Recession, where a return to normalcy seems like a mirage in the desert — the closer we get to it, the further it moves away.” (Oct. 2011)

“Data releases since the September forecast have been mildly encouraging, but only because expectations were so low....Our current economic forecast is very similar to our September forecast, with the same muddle-through conditions expected for the rest of the biennium, along with a high degree of downside risk.” (Nov. 2011)

Evolving Economic Conditions

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On Aug. 8, Governor Gregoire instructed her agency directors to submit 5 percent and 10 percent “reduction options”◦ 10% across-the-board = $1.7 billion

2012 Supplemental Budget submittals are also limited to:◦ Non-discretionary changes in caseloads;◦ Necessary technical corrections; and◦ Additional federal/local funding expected to be

received in the remainder of the biennium

2012 Supplemental Budget

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2011 Special Session Sept. 22 – Governor Gregoire announces

that she will call legislators in for a Special Session, beginning Nov. 28:

Projected shortfall to address, with “healthy” reserves = $2.0 billion

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“Once again, we are facing a shortfall....My only option is across-the-board cuts, and that option is unacceptable. Solving this budget crisis will require the Legislature to act.”

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Total 2011-13 Budget = $32.0 billion

63% of the Budget is constitutionally/legally protected (includes: Basic Education, Medicaid and debt service) or is “difficult to get to”

“Targetable” reductions available = $8.7 billion

A $2.0 billion reduction would be a 23% cut of unprotected funding

2012 Supplemental Budget

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Over 60% of the Budget is Constitutionally/Legally Protected

Source: Office of Financial Management, 10/11

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K-12 “Basic Education” vs. “Non-Basic Education”

93% of the K-12 portion of the biennial operating budget is “protected” Basic Education funding

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K-12 “Basic Education” vs. “Non-Basic Education”

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K-12 Budget Reduction Alternatives & Governor’s “Preferred Choices”

Source: Governor’s Office, 10/11

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Proposed solution: $1.7 billion savings + $600 million reserve

K-12 reductions = $370 million

Governor’s 2012 Supplemental Budget Request

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Governor’s Proposed Revenue Package (Referendum to the People)

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Policy changes/reductions = $226 million Maintenance level reductions = $97 million Fund transfers = $106 million Unclaimed property = $51 million

Total Savings = $479.7 million K-12 Education Reductions = $74.9

million◦ ($54 million policy + $20.9 million maintenance)

2011 “Down Payment” Budget

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Short (60-day), “non-budget” session◦ Main focus = Budget, Budget, Budget

$1.5 billion budget solution needed

Obstacles:◦ 60% of budget protected from cuts◦ 2/3 majority necessary for revenue enhancements◦ McCleary education funding decision◦ Election year

2012 Regular Session

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No further reductions to K–12 education

No mid-year reductions to the K–12 portion of the budget

No reduction in LEA funding—and no changes to LEA formula/structure

Any K-12 reductions must be fair and equitable

WASA’s Budget Message

33Source: Office of Financial Management, 12/11

34Source: OFM, 12/11

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Education Policy Issues Likely to be Addressed:

Teacher/Principal Evaluation Pilots and statewide expansion

Modifications to Local Effort Assistance formula

Changes to Alternative Learning Experience formula

Implementation of a new Transitional Bilingual Instructional Program (TBIP) funding formula

2012 Regular Session

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1. Create a revenue-neutral “swap” of local levies for the state Common School Levy (aka State Property Tax)—and use the new BEA model to drive out the new funding to schools

2. Allow growth greater than the current 1% restriction on the Common School Levy

3. Reset local levy caps at $2500 per student

4. Make local levies reliable by making them permanent (with automatic adjustments for COLAs and enrollment growth)

Rep. Hunter K-12 Funding Plan

www.rosshunter.info (Nov19 & Nov 30)

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Rep. Hunter K-12 Funding Plan

Source: Rep. Ross Hunter, 11/11

2012 Legislative Platform

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It is the paramount duty of the state to make ample provision for the education of all children residing within its borders without distinction or preference on account of race, color, caste, or sex. (§ 1)

The legislature shall provide for a general and uniform system of public schools. (§ 2)

Constitution of the State of WashingtonArticle IX - Education

Constitutional Paramount Duty

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Support continued implementation of the basic education finance system (HB 2261); support adopted funding phase-in schedule (HB 2776)—with full and equitable funding by 2018

Oppose further K-12 cuts—including changes to or reductions of LEA. As economy recovers, re-investment in K-12 funding should be first priority

WASA Legislative Platform

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An educated citizenry is critical to the state’s democracy; a well-educated population is the foundation of our democracy, our economy, and the American dream

Public education plays a critical role in promoting equality, operating as the great equalizer; public education provides unprivileged citizens with the tools they need to compete on a level playing field with citizens born into wealth or privilege

WASA’s Message

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Education plays a critical role in building and maintaining a strong economy; public education builds the well-educated workforce necessary to attract more stable and higher wage jobs to the state’s economy

Washington’s duty to education is constitutionally declared to be its paramount duty

In summary: Public education is a wise “investment” in the future

WASA’s Message

Resources

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WASA: www.wasa-oly.org

Education Associations:◦ WSSDA: www.wssda.org◦ AWSP: www.awsp.org◦ WEA: www.washingtonea.org◦ PTA: www.wastatepta.org

Education Agencies:◦ OSPI: www.k12.wa.us◦ SBE: www.sbe.wa.gov◦ PESB: www.pesb.wa.gov

Legislative-related:◦ Legislature Homepage: www.leg.wa.gov◦ Governor’s Homepage: www.governor.wa.gov◦ LEAP (Budget info): http://leap.leg.wa.gov/leap/default.asp

Websites

Questions?

The prophetic oracular sphere from Tyco®

Daniel P. SteeleAssistant Executive Director,

Government Relations825 Fifth Avenue SEOlympia, WA 98501

360.489.3642

dsteele@wasa-oly.org

WSU Supts’ Program 2012