Politics & Government

Washington Supreme Court says state not done yet with McCleary education order

A small group of demonstrators stand on the steps of the Temple of Justice and in view of the Legislative Building as they advocate for more state spending on education prior to a hearing before the state Supreme Court Wednesday, Sept. 3, 2014, in Olympia, Wash. (AP Photo/Elaine Thompson)
A small group of demonstrators stand on the steps of the Temple of Justice and in view of the Legislative Building as they advocate for more state spending on education prior to a hearing before the state Supreme Court Wednesday, Sept. 3, 2014, in Olympia, Wash. (AP Photo/Elaine Thompson) AP

The McCleary saga continues.

Washington’s Supreme Court ruled Wednesday lawmakers must do more to meet the long-running education decision by a Sept. 1, 2018 deadline, despite billions in new state spending and other reforms approved for K-12 schools by the Legislature earlier this year.

The 2017 changes — along with others since the original landmark 2012 order — appear to be enough to meet the court’s demands in fully funding public schools but simply won’t come soon enough, the justices said.

In response, the court will retain jurisdiction in the case and ask for full implementation of the K-12 schools plan by the 2018 deadline. The state also will remain in contempt of court and keep paying a $100,000-a-day fine over lawmaker’s failure to achieve full compliance with McCleary.

As one of the last remaining tasks to meet McCleary, the court had ordered the state to take on the full cost of teacher and other school administrator salaries that have been paid for in part by local levies for years.

In the 2017 legislative session, lawmakers raised a state property tax to do so, while restricting how much local levies can be raised for basic education. Altogether, lawmakers in 2017 approved $7.3 billion in new state spending over four years as part of its tax shift aimed at satisfying the court order and boosting money for K-12 schools.

The Legislature’s changes are phased in, however, as most of the money is expected to kick in for the 2019-2020 school year.

State Sen. Christine Rolfes, a Democrat from Bainbridge Island and newly-chosen chairwoman of the chamber’s Ways and Means fiscal committee, told media on Wednesday the plan was implemented the way it was in order “to have an orderly progression of revenue increases and an ability for the schools to absorb all the policy changes that were going on.”

The court agreed with the state that the remaining details of the program for full state funding of K-12 education “are in place.” Just not in time.

“The program of basic education cannot be said to be ‘fully implemented’ by September 1, 2018, when it puts off full funding of basic education salaries until the 2019-20 school year,” according to the court order, which was signed by all nine justices.

The high court’s decision throws a wrench into the plans of the state, which had argued lawmakers should be largely out from under the court’s microscope. It’s not immediately clear how much money legislators plan to come up with to meet the ruling — or if they plan to do so at all.

The court seemed to suggest the state is roughly $1 billion short for 2018.

The justices said the state also must comply by the end of a 60-day legislative session beginning in January in which lawmakers typically make small tweaks to the existing two-year budget approved in odd-numbered years.

What lawmakers plan to do to meet the ruling will take shape over the coming weeks. The way forward will hinge largely on Democrats, who now own slim majorities in the House and Senate after winning a special election in Seattle’s Eastside suburbs last week.

State Superintendent Chris Reykdal, formerly a Democratic representative, said coming up with a billion dollars is a tough task. He said the complex property-tax plan is already in motion and districts have planned for the amount of money promised by the Legislature. It’s tough to alter that setup across a whole state retroactively, he said.

“You can’t exactly speed that up,” Reykdal said in an interview with The News Tribune and The Olympian.

Any new tax would take time to collect, Reykdal said, meaning it might not even be possible to enact one and raise enough money in time to help the state meet its 2018 deadline.

He suggested using a short-term budget fix, such as diving into general-fund reserves or the state’s so-called “rainy day fund” as one way to pay for the McCleary fix. The state sets aside money in the rainy-day fund to deal with emergencies that might arise.

The state currently has about $1 billion in traditional reserve accounts and another $1.4 billion in its rainy-day fund, which has limitations on its use.

Even using that would have political hurdles.

Rolfes said using the rainy-day fund generally requires approval from 60 percent the Legislature. That means Democrats would need GOP votes to use money from the account.

Senate Republican Leader Mark Schoesler on Wednesday took an early stance against using the rainy-day fund.

“Rainy days are for downturns in the economy, natural disasters, not the Supreme Court,” he said.

Rolfes said Democratic lawmakers haven’t talked about what they want to do. She said the state has “options,” but she said an increase in property taxes is “off the table.”

The property-tax increase approved in the 2017 budget was largely championed by Senate Republicans. Several Democratic lawmakers pushed back against tax increases in their district, including areas in and around Seattle.

Most people will eventually see a tax cut under the current plan because of the restriction in local levies. But initially, virtually all homeowners in the state would see a property tax increase in 2018.

That’s because that year, the plan increases the statewide property tax by about 81 cents per $1,000 in assessed property value. The part of the new law that helps reduce local property-tax levies doesn’t take effect until one year later.

Rolfes said the state does have some “wiggle room” to meet the new McCleary ruling with an unexpected $500 million from a better-than-expected state revenue forecast in September.

Gov. Jay Inslee has previously advocated for replacing some of the property taxes with revenue from new taxes, such as a tax on carbon emissions. On Wednesday, he didn’t hint at his preferred approach to the new McCleary order, saying in a statement he shared “the court’s disappointment that the Legislature did not meet its self-imposed 2018 deadline for fully funding basic education.”

Reykdal also floated the idea that lawmakers could simply do nothing and eat the daily fines. The court said if lawmakers don’t act by the end of the 2018 regular session, the justices “will immediately address the need to impose additional remedial issues.”

That could include extreme measures, such as shutting down the school system.

Reykdal predicted that wouldn’t happen.

“I can’t imagine the court tries to do something more dramatic than they’ve done already,” he said.

Rolfes, however, said she doesn’t “want to risk that option.”

Much of court order was interpreted by lawmakers as a victory. The coalition of parents, education groups and school districts that sued the state over the constitutional mandate to fully fund public schools had argued the state fell short in other areas besides meeting the 2018 deadline, such as special education funding.

Due to the restrictions in local levies, some school districts have even argued they were better off under the old way of funding teacher salaries.

“As the court noted, the plan the Legislature adopted, but for the timing, will meet constitutional requirements,” Inslee said.

The court also did not ding the Legislature over its failure to pass a construction budget for the first time in modern memory. That capital budget is expected to have $4 billion in construction projects, including roughly $1 billion for public schools intended to reduce class sizes as required by McCleary.

Though it has bipartisan support, the capital budget fell through over a partisan divide on rural water rights.

The court noted the 2015 two-year operating budget and the 2016 supplemental budget had money to begin school construction. The justices also suggest capital projects are not part of the constitutional requirement to fully fund public schools.

Still, Rich Wood, a spokesman for the Washington Education Association, said he is “glad that the court retained jurisdiction.” He said his union has been pointing out for months the new budget approved by lawmakers in 2017 didn’t meet the 2018 deadline.

He said students deserve a fully funded K-12 system, and fast.

“They can’t wait any longer for that,” he said.

Walker Orenstein: 360-786-1826, @walkerorenstein