The state Supreme Court ruled Wednesday that the Legislature is still out of compliance with its Jan. 9, 2014 order in the McCleary case on school funding, because the salary component of EHB 2242 (the education funding bill enacted this year) will not be fully implemented until the 2019–20 school year—after the Sept. 1, 2018 deadline for full implementation of the program of basic education.

Still, there’s a lot of good news, from the state’s perspective. Although the order concludes that the phase-in of new salaries misses the deadline, the Court writes in the order that it “is satisfied that the new salary model established by EHB 2242 provides for full state funding of basic education salaries sufficient to recruit and retain competent teachers, administrators, and staff” (page 40). Additionally, the Court concludes that the state is adequately funding the formulas for materials, supplies, and operating costs; pupil transportation; all-day kindergarten; K–3 class size reductions; and categorical programs. For these components, “the State has satisfied the court’s mandate” (p. 37).

Also: “At this point, the court is willing to allow the State’s program to operate and let experience be the judge of whether it proves adequate” (p. 37).

Some other notes from the order:

• Plaintiffs had argued that funding the prototypical school model doesn’t mean the state is funding actual costs of districts. The order states, “this court has approved the prototypical school model formula and has consistently used it as a benchmark. If the state is appropriating funds to fully implement that model by the deadline date, the court cannot say it is not meeting its constitutional obligation or complying with this court’s mandate” (p. 26).
• Additionally, “the court generally agrees with the State as to the framework of the prototypical school model and what the State must do to fulfill its constitutional duty. ESHB 2261 is not designed to dictate reimbursements to school districts for their actual expenditures on the components of basic education” (p. 26).
• The Court notes, “the State is correct that full state funding of school capital costs is not part of the program of basic education constitutionally required by article IX, section 1” (p. 33).
• The Court does not fault the Legislature for repealing I-1351: “this court in McCleary did not hold that reduction in all class sizes is constitutionally required” (p. 33).

The reason the Legislature is phasing in the salary component is that the new property tax system couldn’t be in place in time for SY 2018–19. To that, the Court responds,

The State does not dispute, indeed it concedes, that there is enough money in the state’s Near General Fund to fully pay for the program of basic education, including salaries. Nor does it dispute that sufficient revenue will be collected to provide full funding. Whether that is achieved by September 1, 2018, is wholly within the legislature’s discretion in making taxing and spending decisions. The court has been clear and consistent that while the constitution empowers the legislature alone to write the budget, in doing so it must meet its “paramount” obligation first. (p.42-43)

Some amici had argued that the new property tax system would not be dependable and regular because the growth limit is lifted for four years but then reinstated, which could “eventually leave that source of funding inadequate” (p. 38). The Court notes, “That revenue source is not the only one from which the State may draw” (p. 38). Further, “Neither in the court’s latest order nor in any other order has the court suggested that the State must establish specific revenue sources dedicated only to K-12 public education, and neither did the court so hold in McCleary” (p. 38).

The Court retains jurisdiction in the case and continues the $100,000 a day sanctions. (See footnote 17 on pages 43-44: “Sanctions must remain separate and unexpended in the event the court reduces the sanctions to judgment, which it reserves the right to do.”) This is done “with the expectation that the State will enact measures to achieve full compliance during the regular 2018 legislative session. If such measures are not enacted by the end of the regular session, the court will immediately address the need to impose additional remedial measures” (p. 43-44).

The emphasis there is in the original, and the Court further specifies that the Legislature must file its report to the Court on what it accomplished during the session by April 9, 2018.

The Court suggests that the Legislature will have to come up with about $1 billion during the 2018 session in order to fully fund salaries by Sept. 1, 2018. Opportunity Washington has a roundup of reactions and writes, “Notably missing from the early responses is any sense that lawmakers can easily find a billion dollars or so to comply with the court’s deadline.”

As The News Tribune (TNT) notes, the time frame is probably too short to enact a new tax, and it may be politically difficult to use reserves. Including the September revenue forecast (see p. 69), the 2017-19 unrestricted ending fund balance is expected to be $1.211 billion and the rainy day fund is expected to have another $1.162 billion. According to the TNT story, state Superintendent Chris Reykdal “floated the idea that lawmakers could simply do nothing and eat the daily fines.” The November revenue forecast (to be released on Monday) will give us a better idea of just how difficult it will be to comply with the Court’s order.