School Funding Update

1. School Funding Update Outlook for Next 3 School Years is Bleak but Legislature Considering Landmark Legislation as Next Step in Finance Reform

2. What impact will state budget deficits and exhausted levy funding have on schools? Budget Deficit Impacts

3. State Fiscal Outlook for 2009-11 Biennium Source: SWM * It should be noted that these are estimated budget problems based on available information. In some cases, information for prior fiscal periods might not be comparable.

4. New Problems for 2010 Legislature • Only 15months left in biennium after session ends Source: OFM

5. Governor’s Proposed Cuts for 2010-11 School Year

6. Cumulative Budget Reductions for 2010-11 School Year(Governor Proposed Book 1)

7. Next Steps for 2010 Legislature • $2.6 billion deficit will be adjusted • Next revenue forecast is February 12 • Caseload forecast that same week • No cuts to schools in 2009-10 school year are proposed by Governor in Book 1 or Book 2 • Complete Guess: Senate budget the week of February 15 • House budget week following

8. Additional 2010-11 Budget Cuts will Cause Significant Financial Distress

9. 2011-13 Biennium Outlook for State • State economy is on track to rebound but slowly • State must: • Replace 1-time federal stimulus and other 1-time funding used this biennium, not available next biennium (about $3 billion out of $33.4 billion state budget) • Restore cuts to I-728 and I-732 over 4 years, beginning in the 2011-12 SY ($560 million per year once fully restored) • Increase employer pension contributions (roughly $350 million per year increase over current biennium contributions) • State funding for K-12 will be impacted by all above hurdles; outlook for 2011-12 is bleak

10. TRS Rates Double in 2011-12 Employer Rates for Certificated and Classified Staff Pension Contributions School Year (*Projected by State Actuary in October 2009)

11. All Translates to Terrible Impact for 2011-12 • Levies will increase by about $120 million • But, if pension rates increase as projected by the State Actuary, levy funds will incur $83 million cost • NERC/ Transportation Costs Increase Faster than State Revenue • Others also • ARRA funds for Special Education/Title I are gone • $178 million reduction from 2010-11 • COLA? • Health benefits inflation, 6-11%

12. 2011-12 Holds Even More Upheaval

13. What impact with Quality Education Council legislation have on schools? Quality Education Council Recommendations

14. QEC January 2010 Recommendations • Do not decrease funding in 2009-10 • Specifics of new formula adopted • 3-year phase-in of Transportation, beginning 2011-12 • 3-year phase-in of NERC, beginning 2011-12 • 7-year phase-in of Full-day Kindergarten • 5-year phase-in of K-3 Class Size to 1:15, beginning 2011-12 • 3-year phase-in of Early Learning for at-risk 3&4 year olds, beginning 2011-12 • Other recommendations in report: http://www.k12.wa.us/QEC/default.aspx

15. Recommendation #2: New Funding Formula • Fills the funding values into the structure adopted in 2009 • Cost neutral translation or “Baseline” • Specifies the amount of funding in common-sense categories for prototype schools • OSPI will allocate resources to districts, much the same way as today • Report enrollment, scale prototype funding up or down, send the money to the district

16. “Baseline” takes Current Law Formula Below and… Per 1,000 Students • 49 Certificated Instructional Staff (CIS) (K-3) • 46 CIS per 1,000 (4-12) • 16.67 Classified Staff • 4 Certificated Administrative Staff (values above represent the Basic Education Act funding level, some values are enhanced in the operating budget (K-4 CIS and Classified))

17. Translates Old Funding Levels into the New Structure

18. QEC Recommendations 3-7