Here in the fall of 2022, a series of teacher strikes and budget cuts in schools across Washington State have made it clear the legislature’s solution to the McCleary crisis has failed.
While legislators are busy blaming school districts and teachers’ unions, a closer analysis shows the legislature itself is to blame. In 2017 the legislature adopted a new education funding plan that fails to actually fund the elements of a basic education, prevents districts from making up that shortfall themselves, and effectively imposes a spending cap set so low that it creates a structural revenue shortfall for districts across the state.
The shortcomings of the 2017 education funding plan were predicted by many. Despite persistent calls for change, particularly as a result of the pandemic, the legislature has refused to act. The result is a financial crisis in school districts across the state.
What follows is an analysis of how the McCleary case came about, how the legislature resolved it, how its many shortcomings were predicted and have since come to pass, and then suggestions about how to truly fix public education funding in Washington State. This is not meant to let school districts off the hook in their bargaining. Districts can and should still bargain contracts that are fair to teachers even within a system rigged against our public schools.
Since the resolution of the McCleary case, many new families have entered the public school system in Washington State, and may not be familiar with the basics of how we got here. So we’ll take a quick trip down memory lane.
In 2007, the McCleary family of Chimacum (near Port Townsend) sued Washington State, claiming that the state was failing to fulfill its constitutional paramount duty to provide ample funding for public education. Like many districts in the state, Chimacum was dependent on passage of a local levy to fund basic educational needs like teachers, support staff, materials, and building maintenance. Like many districts in the state, Chimacum’s levies routinely failed, thanks in part to an absurd requirement that 60% of voters approve levies. Many levies fail even with 50-59% of voters saying yes.
Their case reached the Washington State Supreme Court in 2011, and in early 2012 they ruled in favor of the McCleary family. The Court ordered the state legislature to provide billions more in funding for the public schools. They said that the legislature had to fund the full cost of a “basic education” as defined by the legislature – which includes materials, supplies, and teacher salaries sufficient to recruit and retain educators.
The legislature added smaller amounts of funding and hoped the Supreme Court would be mollified, with many legislators in both parties arguing the Supreme Court had no authority to impose such an order. The Court wasn’t fooled, and ordered the legislature to actually comply with the decision by April 30, 2014. The legislature refused.
In the fall of 2014, tired of the legislature’s refusal to act, the Supreme Court held the legislature in contempt of court. The Court later imposed a $100,000 per day fine on the legislature. The legislature refused to pay. Observers were openly wondering whether the Supreme Court would order legislators to be jailed.
Also in 2014, voters approved Initiative 1351, which mandated small class sizes for all grades, and minimum staffing ratios to ensure there are nurses, counselors, and social workers in every school. The initiative wrote these rules into the state’s legal definition of a basic education. But still the legislature did not act to comply with the Supreme Court’s ruling.
In the fall of 2015 Seattle teachers were forced to strike in order to win a contract from Seattle Public Schools that would provide better pay for educators and improved support services for students. Recognizing that the root problem was the legislature’s failure to comply with the McCleary decision, and believing that grassroots pressure was necessary, a group of parents founded Washington’s Paramount Duty to force the legislature to act.
WPD’s goal was to make the legislature adopt new, progressive revenue to add billions more in funding for the public schools. WPD proposed closing corporate tax loopholes and taxing the rich, including a capital gains tax, as revenue sources to provide the necessary funding. In the summer of 2016, WPD co-founder Summer Stinson and Kathryn Russell Selk submitted an amicus brief to the Supreme Court urging them to suspend more than 600 corporate tax breaks if the legislature failed to comply with the Court’s orders in the McCleary case.
WHAT THE LEGISLATURE DID
In June 2017, after more threats from the Supreme Court, after two special sessions, and after the state government very nearly shut down, the legislature finally adopted its plan to comply with the McCleary decision, in ESHB 2242. Since control of the legislature was split – Democrats held the State House, whereas Republicans had a majority of one in the State Senate – the final plan was an awkward and ultimately unworkable amalgam of Democratic and Republican proposals.
The core of the legislature’s McCleary solution was to implement a Republican demand for a so-called “levy swap.” Originally proposed by failed Republican candidate for governor Rob McKenna in 2012, this involves enacting the largest statewide property tax hike in state history, in exchange for capping local levies. In effect, local property tax revenue was taken by the state, and then returned to districts to cover some of the costs of basic education. This only works if the state provides enough funding to the districts to amply fund the full range of student needs and operational requirements.
Critics charged that this would not actually happen in practice, and the result would be a massive tax hike on residents in large cities without any new funding for public education. In fact, a 2011 report by the state’s Levy and Local Effort Assistance Technical Working Group gave the levy swap their only “not recommended” rating out of the four proposals considered.
By plowing ahead with a levy swap anyway, the legislature put districts in an impossible position. As we’ll see, they did not fully fund the actual costs of providing a basic education. But they also capped how much districts could raise by local levies. The result is to cap school district spending at an amount below which districts can actually meet their legal and constitutional obligations to students.
The legislature’s solution also included a demand from corporate education reformers, who had allies among key members of the Democratic legislative caucuses, that the way teachers were paid and given benefits would change. The old system, a so-called “staff mix” that reimbursed districts for the teachers they had, was replaced by a new model that was more restrictive, designed to hold down teacher pay, and penalized senior teachers. Teacher benefits were also centralized into a new state system known as the School Employees Benefit Board.
Teachers and many parents were concerned that this would lead to a teacher shortage as it would be harder than ever for salaries to cover the cost of living, which was already rising before the coronavirus pandemic and the subsequent spike in inflation.
The legislature also maintained a cap on spending for special education services. The state caps the amount of money it will pay school districts for special education services at 13.5% of the overall student population. If more students than that require special education services, which after all are mandated under federal law, the district must fund it themselves. By 2022, at least 15.5% of students in Seattle Public Schools were receiving special education services.
Effectively, districts like Seattle run a deficit to meet the needs of students protected under federal law. The legislature has given school districts a financial incentive to systematically refuse to provide these services. Seattle Public Schools is facing numerous lawsuits to force services to be provided, and the federal Department of Education has opened an investigation into the Seattle district’s failure to provide special education services.
We do not argue that these failures are justified by the state’s own refusal to properly fund special education. However, the state’s refusal is a major cause, and utterly indefensible.
ESHB 2242 also eliminated Initiative 1351, and instead maintained minimum staffing ratios for nurses, librarians, and family support workers that were too low to ensure every school would have those educators in the building.
Soon after the legislature’s McCleary solution was signed into law, it became clear to many that the solution was not only inadequate — it would leave many districts worse off than before. School districts in Tacoma, Seattle, Olympia, as well as smaller districts such as Bethel, all claimed as early as August 2017 that the legislature’s solution left them poorer than if the legislature had done nothing at all.
Larry Nyland, who was superintendent of Seattle Public Schools at the time, warned prophetically that “the state budget would result in budget deficits for Seattle schools, restrict Seattle school officials use of state funding, and fail to fully pay for teachers’ salaries and services for special education and English Language Learner programs.”
WPD’s Stinson and Selk submitted another amicus brief to the Supreme Court in the summer of 2017, urging them to reject the legislature’s solution as inadequate. The brief argued that the legislature’s solution failed to adequately fund public schools, failed to provide for teacher retention (which the Supreme Court had ruled was part of basic education), failed to provide resources for English language learners and special education, and did not rely on regular and dependable tax sources.
Five years later, it is clear that these concerns have all become reality.
Unfortunately, the Supreme Court in 2018 washed its hands of the matter. After an initial ruling requiring the legislature to add more funding to pay for the new salary allocation model, and after the legislature acted to comply, the Court dismissed these concerns, ruled that the legislature was now in compliance with the court order, and terminated their jurisdiction – meaning the case was now officially closed.
LEGISLATURE ABANDONS ITS PARAMOUNT DUTY
By the spring of 2019 the teacher shortage predicted in the summer of 2017 had materialized. Shortages were becoming acute for special education instructors, with blame placed on districts for cutting pay and benefits for such educators — just as many observers had warned would happen back in 2017 when the legislature enacted its McCleary solution.
But the legislature was reluctant to make changes to the solution it had adopted in 2017 — even after Democrats regained control of the State Senate and expanded their majorities in the State House. In early 2019 WPD led a statewide mobilization to force the legislature to avoid a “levy cliff” – a reduction in the amount each school district could raise in its local levy. It took a huge mobilization just to get the legislature to prevent delivering another cut to school budgets just one year after adopting their McCleary solution.
In early 2020, as problems with the legislature’s McCleary solution mounted, even the Seattle Times editorialized against “McCleary fatigue” and urged legislators add more funding for our schools, particularly eliminating the special education spending cap. Of course, the legislature did not act to remove that cap.
Even before the pandemic hit in early 2020 the legislature’s McCleary solution was falling apart. The pandemic provided the final blow to the education funding system and sent public school finances into a tailspin.
The first public schools to close in the country due to the pandemic were in Washington State, led by the Northshore school district. By late March public schools across the state closed due to the need to stop the spread of the virus. Eventually, schools across the state began experiencing a decline in enrollment. While researchers are still assessing the causes of the decline, and exactly where students went during and after the pandemic, initial data from across the country suggests some moved to other states, some went to private or charter schools, some were home schooled, and some remain unaccounted for.
In March 2020 Congress passed the first pandemic stimulus and created the Elementary and Secondary School Emergency Relief Fund, known as ESSER for short. The 2020 bill gave schools across America $13 billion in funding. In December 2020 Congress passed a second stimulus bill which created ESSER II, allocating $54 billion for schools. Finally, in March 2021, Congress passed the American Rescue Plan, which allocated $122 billion for schools. These ARP ESSER funds did include a requirement that 20% of the funds be used to help students catch up academically.
These funds were intended as supplemental dollars to help address the numerous impacts to schools of the pandemic, and were not intended to backfill money lost due to declining tax revenues or declining enrollment. However, federal law did not prevent such backfilling, and Washington State legislators chose to use some of it for backfilling rather than ensure all of it went to address pandemic impacts on schools and students. And this money will run out by spring 2024.
There was one major bright spot in education funding during the most intense months of the pandemic. With T’wina Nobles winning a State Senate seat in Pierce County in 2020, the State Senate had a majority to pass a capital gains tax, and did so in early 2021. WPD’s advocacy helped make this proposal happen, as we had been advocating for it from the start in 2015.
The capital gains tax generates $500 million per year, half of which is deposited in the state’s Education Legacy Trust Account, and the other half goes to early childhood programs. The state chose to delay collection of this tax until 2023, owing in part to legal challenges from billionaires and Republicans.
A judge in rural Douglas County ruled the capital gains tax was unconstitutional in early 2022, but the state has appealed it to the Washington State Supreme Court. It is possible, perhaps likely, that the Supreme Court will uphold the tax. An effort by opponents to put the capital gains tax on the statewide ballot was abandoned once polling showed the tax was widely popular among the electorate.
Given the delays in collecting the capital gains tax revenues and the ongoing legal battles, Washington’s public schools have not yet seen any proceeds from the tax. They could have used it, as the expiration of pandemic stimulus funding restored the structural revenue shortfalls that existed for most districts prior to 2020.
Reeling from lost enrollment, and with finances already weakened by the legislature’s 2017 McCleary solution, school districts pleaded with legislators in early 2022 to provide relief by backfilling the money lost to declining enrollment.
Senate Ways and Means Committee Chair Christine Rolfes refused. Telling reporters she decided to “meet the districts halfway” Rolfes essentially forced schools to begin making budget cuts even as the impacts of the pandemic on students and teachers was becoming clear.
The legislature did provide more funding in the 2022 session to provide more nurses, counselors, social workers, and psychologists at Washington State public schools. HB 1664 is a small step in the right direction, yet still shows how the legislature systematically underfunds basic priorities. For example, the legislation provides funding for 0.5 FTE (full-time equivalent) of a full time nurse at each elementary school in the state:
WHERE WE STAND TODAY
Here in 2022, the state legislature fails to cover the cost of a basic education. A recent analysis from Seattle Public Schools demonstrated this vividly:
SPS is not alone. The state is failing to fund actual costs in many other districts too.
Going into the 2022-23 school year districts across Washington — large and small, urban and rural, east and west — have been facing cuts and/or teacher strikes as a result of the legislature’s failure to fund our public schools. Districts that have faced budget cuts include:
Perhaps most damningly, districts are once again finding themselves forced to make sweeping budget cuts due to the failure of their local levies. Marysville had to cut $13 million out of a $185 million budget after voters twice failed to renew a local district operating levy.
Even Chimacum was looking at budget cuts, 15 years after the McCleary family first filed suit.
Districts are also having to make choices that pit students and families against each other in competition for scarce and insufficient resources. Some districts, like Seattle, now have a financial incentive to try and limit the number of students receiving special education services that they are entitled to under state law. As programs of all kinds are slashed and staffing cut, this also has the effect of driving more families away from the public school system.
However, some legislators still claim that our schools are swimming in money. State Senator Reuven Carlyle, who represents northwest Seattle and serves on the powerful Senate Ways and Means Committee, said at the beginning of the 2022 Seattle teachers strike that “Per pupil funding has increased to $12,344 from $8,070.”
That may seem like a large increase. But it merely brings Washington State to the middle of the pack, and we are still being significantly outspent by other states, particularly in New England. According to the US Census Bureau, Washington State ranks 17th in per pupil education spending. New Jersey spends $20,670 per pupil. New York spends $25,519 per pupil, roughly $10,000 more than we do here in Washington State — despite our state being home to some of the world’s largest companies and richest people.
Overall, what the legislature has done is effectively create a spending cap on public education that is far below what is required to actually educate the 1 million children of this state who are enrolled in public schools. They are pushing a growing number of families into the private school system. Unless the legislature fixes this broken system, they will succeed in turning public education into the equivalent of our health care system: a barebones public safety net for those without money or privilege, but where everyone else is expected to pay out of pocket to get their needs met privately.
HOW DO WE FIX THIS?
Several proposals are floating out there that the legislature should adopt in the 2023 session to help address this crisis:
- Wealth tax: State Rep. Noel Frame has proposed a tax on intangible financial assets of more than $1 billion. The most recent version of this proposal, HB 1406, would put money into a fund to be used to reduce taxes for low income households. It’s possible that the legislature could be pushed to include K-12 public education as part of the allowed use of wealth tax revenues.
- Fix the overall tax structure: Rep. Frame also led the creation of the Tax Structure Work Group, which is reviewing the state’s entire tax structure. This fall they are scheduled to present proposals that the legislature could adopt in their 2023 session. Depending on the proposals adopted, the legislature could generate billions of dollars more for public education. In 2016, Sen. Carlyle famously stated that Washington State would generate $10 billion more per year if we had Idaho’s tax system.
- Eliminate the cap on special education funding: While this would not fix the problems of public education funding overall, eliminating the 13.5% cap on special education funding would certainly help district budgets, while achieving the more important goal of ensuring students get services to which they are guaranteed under federal law. Several legislators are expected to propose a bill raising or eliminating the cap in the 2023 session, but details have not yet been finalized.
- Expand the capital gains tax: The legislature could easily raise the capital gains tax rate to bring in more revenue and thus more funding for public education.
- Close corporate tax loopholes: Washington State has created hundreds of tax loopholes for big corporations, worth tens of billions of dollars. Closing these would generate more money for public schools as well, with the exact amount depending on which loopholes are closed.
We wish that providing the basic facts laid out in this article to legislators would be sufficient to force them to act. But as the history of the McCleary case and its aftermath shows, it’s not. A majority of the state legislature, including members of both parties, are fundamentally opposed to fulfilling their constitutional requirement of amply funding our public schools. These particular legislators have proven they will resist doing so no matter the impact to our schools.
Seven years of experience has taught us that advocacy is necessary, and it is not sufficient. We believe the crisis facing our schools will not be resolved until the composition of the legislature is changed. Representatives and Senators who refuse to provide the additional funding needed for our schools need to be replaced with those who will. There is also a gubernatorial election in 2024. Jay Inslee is likely to retire, and the people of Washington State will elect a new governor. Education funding must become a central part of that campaign.
Thankfully, change is already happening. Legislators like Reuven Carlyle, a longtime opponent of ample funding for public education, are retiring. Carlyle’s likely successor in the Senate, Rep. Noel Frame, was a leader in getting the capital gains tax approved in 2021, and led the way in the creation of the Tax Structure Work Group.
A combination of persistent advocacy to the legislature as well as a dedication to electing legislators who will fully fund our schools is the only way out of this accelerating crisis facing public education across Washington State.