School Funding Primer

How Is Funding Allocated to Schools?

Most of the large state entitlement programs (basic education, special education, learning assistance, and bilingual) are paid through state apportionment formulas. At a simple level of understanding – state funding is based upon the number of reported student FTE, and the number of funded staff positions derived using legislative established staffing ratios. Additionally, the funding formula provides for MSOC (materials, supplies and operating costs) for all non-staffing costs.

State funding to a district will fluctuate in response to its actual reported student enrollment throughout the school year. The historic use of staff experience as a factor for salary funding is no longer present in the funding formula.

SHB 2242 CHANGES

The Salary Allocation Model was discontinued for the 2018–19 school year. Beginning in 2018–19, the funding allocation levels for staff were established at the following amounts to be adjusted for inflation from 2017–18:

Certificated Instructional Staff (CIS): $64,000
Certificated Administrative Staff (CAS): $95,000
Classified Staff (CLS): $45,912

Minimum CIS salary levels are set at $40,000. CIS with five years of experience must earn at least $44,000, with a maximum of $90,000. These values are adjusted for regionalization and Implicit Price Deflator inflation.

The average basic education allocation per full-time student was $6,906 as of June 2018.

BASIC EDUCATION FUNDING FORMULA

Beginning in September 2011, a new funding model for Washington public schools was adopted based upon a prototypical school model. Within this model school-level funding to the district is provided based upon assumed staffing ratios for the operation of a school of a particular size. This model is based upon prototypical school sizes defined by grade band level and student FTE as follows:

Category	Elem (K-6)	Mid (7-8)	High (9-12)
Basic Enrollment (FTE)	400	432	600

The staff funded is generated based upon this prototypical formula model. Grade level takes precedence over any school classification that the grade is part of and, the model is scalable such that a school will generate the prototypical staffing based upon its proportionate size to the prototypical model. I.E. an elementary school of 200 will generate half the prototypical funding, a school of 800, twice.

School Level Staffing - Teacher Units - are allocated based upon a class size with formula consideration of teacher planning time. The following chart details the funded class size per teacher unit by grade level, CTE and Skill Centers. Lower class sizes are provided in grades K–3 for high poverty districts district GT 50%. Districts are required to staff at the lower class size for K–3 poverty enhancement.

This calculation of class size makes allowances for teacher planning periods and is complex. OSPI provides Q & A and some tools on its School Apportionment division website to help districts with this calculation.

Grade Level	Class Size (Basic Ed)	High Poverty Class Size
K	19.00	17.00
1	21.00	17.00
2	22.00	17.00
3	22.00	21.00
4	27.00	n/a
5–6	27.00	n/a
7–8	28.53	n/a
9–12	28.74	n/a
7–8 Career and Technical Education	26.57	n/a
9–12 Career and Technical Education	26.57	n/a
Skill Centers	22.76	n/a

School Level - Other School Staffing - The funding formula also provides allocations for other school staffing positions based upon enrollment within the prototypical school model. The following chart shows the funded FTE of each staffing position per the prototypical school size.

Other School Staffing	Elem (K-6)	Mid (7-8)	High (9-12)	Staff Type*
Prototypical Enrollment	400	432	600	Student FTE
Principals	1.253	1.353	1.880	CAS
Teacher Librarians	0.663	0.519	0.523	CIS
Guidance Counselors	0.493	1.216	2.539	CIS
School Nurses	0.076	0.060	0.096	CIS
Social Workers	0.042	0.006	0.015	CIS
Psychologists	0.017	0.002	0.007	CIS
Teaching Assistance	0.936	0.700	0.652	CLS
Office Support	2.012	2.325	3.269	CLS
Custodians	1.657	1.942	2.965	CLS
Student & Staff Safety	0.079	0.092	0.141	CLS
Parent Involvement	0.0825	n/a	n/a	CLS

District-level funding is intended to provide staffing positions and cover costs related to the operation of the entire school district, not just a particular school or program. This type of funding is generated through the three main categories of districtwide support, central administration, and MSOC–materials, supplies, and operating costs. Districtwide Support - Funding is allocated by staffing position at the following levels, based upon total district enrollment without respect to grade level:

Districtwide Support	All Grades	Staff Type
Base Enrollment	1,000	Student FTE
Technology	0.628	CLS
Facilities, Maintenance, and Grounds	1.813	CLS
Warehouse, Laborers, and Mechanics	0.332	CLS

Central Administration - Staffing units total 5.3% of staffing units generated as K–12 teachers, school level staffing, and districtwide support. The percentage is not applied to staffing enhancements.

After total units are calculated by using the 5.3%, they are separated into certificated administrative staff and classified staff at a ratio of 25.47% of the total and 74.53% of the total respectively.

The following chart illustrates how the funding for central administrative staffing is derived:

Central Admin	Percent	Staff Type
Total Central Admin	5.3%	n/a
Percent Certificated Admin	25.47%	CAS
Percent Classified Staff	74.53%	CLS

MATERIALS, SUPPLIES, AND OPERATING COSTS (MSOC)

The funding model provides an allocation to cover these costs at a specific rate per student. The Legislature annually sets the funding level for MSOC in the budget bill. Funding is provided in seven specific categories of Technology, Utilities and Insurance, Curriculum and Textbooks, Other Supplies and Library Materials, Instructional Professional Development (CLS and CIS), Facilities Maintenance, and Security and Central Office. The basic ed rates for the 2017–18 school year are as follows:

Basic Ed - MSOC
Total Per Student FTE	$1,223.36
Technology	128.58
Utilities and Insurance	349.35
Curriculum and Textbooks	138.04
Other Supplies and Library Materials	293.07
Instructional Professional Development (CIS/CLS)	21.35
Facilities Maintenance	173.07
Security and Central Office	119.90

RCW 28A.150.260 says that the state allocation formula “shall be for state allocation and equalization purposes only and shall not be construed as mandating specific operational functions of local school districts . . .” School districts retain responsibility for determining staffing levels. However, districts are held to a standard of employing at least 46 certificated instructional employees per 1000 students. School districts negotiate employee salaries and benefits in local negotiations with its employees. However, state law limits average base contract salaries for certificated instructional staff to the state allocated salary.

OTHER PROGRAM FUNDING

State Special Education allocation per student is based on 96.09% of the district’s basic education allocation per student age 3–21. This funding is provided for up to 13.5% of a district’s basic education population. Special education safety net funding is provided to districts that can demonstrate financial need due to high-cost individual students.

The large federal compensatory programs (programs for disadvantaged or special need students) are also funded through formulas.

Many of the smaller state and federal programs are funded through competitive grants. Districts must apply for competitive grants. Applicants are scored and awards are made selectively. Successful applicants claim reimbursement for expenses incurred in providing the program.

When Does the State Distribute Funding to Schools?

The state distributes funding monthly based on apportionment formulas and reimbursement claimed through the grants management process. The State Treasurer, who is the banker for the state, electronically transmits funding to each county treasurer for each of the school districts headquartered in each county. The county treasurers are the bankers for the school districts.

State funding is calculated based upon the annual reported student enrollment and factors for a school year and paid to districts over twelve months based upon a legislative payment schedule. RCW 28A.510.

How Do School Districts Raise Local Money?

ARTICLE 7 OF THE STATE CONSTITUTION AND CHAPTER

84.52 RCW grant school districts the authority to levy local property taxes. School districts may run a levy for a particular fund a maximum of two times in a calendar year. Unsuccessful levies may be resubmitted in subsequent years.

School district levies are of four fund types:

1. Excess General Fund levies are one-to-four-year levies used for day-to-day operations of the school. Such levies historically were labeled “maintenance and operation (M & O) levies.” Under SHB 2242, the law for levy and LEA was rewritten to reflect the following:

M & O levies have been renamed “Enrichment levies.” Beginning September 1, 2019, these levies may be used only to “enrich the state’s statutory program of basic education.”
Effective for the 2019 tax year, levy capacity is capped at $1.50/$1,000 of assessed valuation. District levies are further limited to collecting only $2,500 per student, if the $1.50/$1,000 generates a higher value.
The transition for legislative changes to levies and LEA will impact districts.

Local Effort Assistance is state money paid to eligible districts to supplement voter-approved excess General Fund levies. These payments help school districts that have lower levy collection per student due to low property valuations.
Debt Service Fund levies are multi-year levies used to pay principal and interest on general obligation bonds sold to finance school construction and remodeling. Voter approval of a bond issue authorizes the sale of bonds and the levy of taxes over the life of the bonds, which is often 15 to 30 years. Tax revenues are deposited in the Debt Service Fund.
Transportation Vehicle Fund levies are one- or two-year levies used to pay for school buses or other school transportation equipment.
Capital Project Fund levies are one-to-six-year levies used to pay for school construction or remodeling.

STATE EQUALIZATION AND TAX RELIEF

The legislature provides local effort assistance to school districts with low property value. These monies, known as LEA, provide state funding to increase the number of dollars from local levies to $1,500 per student when the $1.50/$1,000 is inadequate to reach this level. Districts qualify for an amount determined by the difference between $1,500 per student and the amount raised with a $1.50/$1,000 levy. Eligible districts must assess a tax of at least $1.50/$1,000 to receive the maximum allowable.

EXAMPLE:

District’s $1.50/$1,000 tax rate = $1,400 per student
State will provide additional funding at $100 per student.

LEA is not considered "Basic Ed" funding. Continued funding levels and calculation methodology is subject to continued legislative support.

MAJORITY PASSAGE

In order to receive voter approval, the levy must receive a majority of "yes" votes.

ELECTION DATES, EXCEPTION

Levy elections must be held on specific dates (with exceptions for acts of God):

The second Tuesday in February;
The fourth Tuesday in April;
The first Tuesday in August; and
The first Tuesday after the first Monday in November. (general election)

SUBMISSION

Beginning with Enrichment Levy elections for 2020 and beyond, districts must submit a levy expenditure plan to OSPI for approval before submitting the levy measure to their voters.

Levy ballot issues must be submitted to county auditors in the format they require at least 46 days prior to the election date.

CERTIFICATION OF AMOUNTS

Levy amounts must be certified annually to the county legislative authority by the board of directors for districts of the first class and by the ESD superintendent for districts of the second class.

NON-VOTED DEBT

Within the constraints of debt limitation, non-voted debt may be authorized by the board.

How Does the State Help Pay For Construction?

The state assists school districts with the costs of construction and modernization of buildings used for instructional purposes. The state does not pay for school district administrative buildings, stadiums, or other non-instructional facilities, nor does the state pay for land purchases.

State assistance varies with the amount of assessed valuation for property tax purposes in each school district. The more wealth (property value) per pupil the district has, the lower the percentage of state assistance. The minimum state matching percentage is 20%. The percentage of state assistance is applied to a cost allowance per square foot. The legislature through OSPI sets the area cost allowance.

What Are the Sources of State Money for School Construction?

Proceeds from the sale of timber on Common School Trust Lands are dedicated for state school construction matching payments. In recent years, these revenues have been insufficient and the legislature has found it necessary to appropriate money from other sources. Some of the additional monies have come from the state General Fund or from state-issued general obligation bonds.

Who Is Responsible for Financial Management of Schools?

The locally elected school district board of directors is ultimately responsible for the financial management of a school district. School boards hire a superintendent that oversees the day-to-day management of the school district.

School districts operate within the constraints of:

Laws passed by the U.S. Congress
U.S. Department of Education regulations implementing federal law
Laws and budgets passed by the Washington State Legislature
OSPI and SBE regulations implementing state and federal law

The complexity of school finance arises from the number of programs funded and from the many reporting, accounting, and audit requirements of each program. Since 2013–14, OSPI has administered:

16 formula-driven state programs funded through the apportionment process
30 state grant programs
13 federal grant programs
7 interagency grant programs
3 private grant programs
Numerous programs funded under contracts between OSPI and school district

School districts prepare an annual budget for public review and comment by July 10 of each school year. Budgets must be formally adopted by the school board before the beginning of the school year (September 1). Upon adoption, the budgets are submitted to OSPI.

School districts account for all revenues and expenditures using standard account codes defined in the Accounting Manual for Public School Districts in the State of Washington (http://bit.ly/SchApp).

NOTE: This manual is for 2017–18. At the time we printed this handbook, OSPI had not yet released the 2018–19 version. All expenditures are identified by program, activity, object, and revenue source. Districts submit annual financial reports to OSPI.

The Washington State Auditor examines school district accounting practices and compliance with state and federal requirements for receiving funding.

Nine regional ESDs help OSPI implement state and federal policies and collect information from school districts. ESDs also assist school districts by providing cooperative services that are more efficiently performed regionally. ESD programs and cooperatives allow districts to eliminate duplication of services, realize significant savings, and receive special program funding that might otherwise be unavailable to them.

References

Superintendent Handbook