State Supreme Court rules that lawmakers have not yet fully complied with McCleary school-funding mandate.

The state Supreme Court has issued its decision on the latest (and not yet last) round of the McCleary school-funding lawsuit. The 48-page ruling includes the usual litany of background, progress reports, and legislative review. And much of it reads like the state has made its case, but falls about a billion dollars short in compliance according to the court’s timeline.

We’ll get to it eventually, but let’s begin, as the court did, with a review of what’s been accomplished to date.

It essentially comes down to a matter of timing, identified in the first page of the ruling.

…over the past several years the State has made significant progress in fully funding the program of basic education, including by amply funding most of its components. Further,the 2017 legislature enacted a funding system that, when fully implemented, will achieve constitutional compliance according to the benchmarks that have consistently guided judicial oversight. However, bits own admission, the State will not meet the established deadline of September 1, 2018, as to all components.

So,

Until the State enacts measures that fully implement its program of basic education by the September 1, 2018 deadline, it remains out of compliance. The court will retain jurisdiction, continue to impose daily sanctions,and reserve all enforcement options to compel compliance with its decision and orders.

After that, a series of findings that the state has met key benchmarks. In the section reviewing compliance with the “discrete components of basic education,” the court finds:

MSCOCs (materials, supplies, operating costs): 

The court concludes that the legislature has met the formulas for MSOCs called for by SHB 2776, and thus it is adequately funding that component of basic education. (page 29)

Transportation. 

The State is funding pupil transportation in accordance with the statutory fomula,and thus it is in compliance with the requirements of  McCleary. (Page 30)

All-Day Kindergarten (including the court’s rejection of the notion that the Legislature’s failure to adopt a capital budget played a role in McCleary).

Plaintiffs additionally urge that the State has not accounted for the capital costs of additional class space needed for all-day kindergarten,hoth as to all-day kindergarten and reduced K-12 class sizes, discussed below. But in McCleary, this court did not address capital costs or suggest that capital expenditures are a component of basic education for purposes of article IX, section 1, such that the State must fully fund capital costs attendant to the basic education program. Though classroom space is obviously needed to maintain all-day kindergarten and reduced class sizes, capital costs have never been part of the prototypical school allocation model, and it is not solely a state obligation under the constitution… 

Based on the standards reeognized in the court’s decision and order, the State is adequately funding this component of basic education in accordance with SHE 2776 and ESHB 2261. (Page 31, 32)

K-3 Class Size Reductions

In disputing that the State has fully funded class size reductions, plaintiffs again focus on capital expenditures for the necessary additional space. But as discussed, 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.

The court concludes the State has implemented K-3 class size reductions in accordance with the formulas and benchmarks of ESHB 2261 and SHB2776. (Page 33)

Categorical Programs.

The eourt concludes that the State is adequately funding categorical components of the basie education program in accordance with ESHB 2261 and SHB 2776. (Page 36)

Summary Statement regarding basic ed components:

In sum, with respect to the components of basic education addressed above,the State has satisfied the court’s mandate to fully fund the program of basic education established by ESHB 2261 in accordance with the formulas and benchmarks set forth in SHB 2276 and this court’s orders. The legislature’s actions as to these components are not perfect, but the legislature has acted within the broad range of its policy discretion in a manner that “achieves or is reasonably likely to achieve” the constitutional end of amply funding K-12 basic education. McCleary, 173 Wn.2d at 519. 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.

Revenues:

The parties agree that under the State’s revenue forecasts, adequate funds will be available to fully fund basic education after the limit on the state property tax is restored. Indeed,the State acknowledges that there is sufficient money in the General Fund now to fully pay for basic education ifthe legislature chooses to make the necessary appropriations.

While the existing legislation provides no guarantee that the State will continue to adequately fund basic education from existing revenue sources, such is the nature of the legislative process. The court presumes the legislature will do its job until it demonstrates otherwise. The court therefore will not further evaluate whether the legislature has enacted sufficient revenue sources. (Pages 38, 39)

Salaries (and here’s the rub):

The court 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. This is consistent with the standards established for constitutional compliance. 

But EHB 2242 and the 2017-19 budget fund only half of the salary inerease called for by the new model by the 2018-19 school year, deferring full funding until the 2019-20 school year. (Pages 40, 41)

And, therefore,

As things stand today, the salary allocation model enacted in EHB 2242 complies with the State’s obligation to fully fund K-12 basic education salaries, but it will not be implemented by September1, 2018. The State thus remains out of full compliance with its constitutional duty under article IX, section 1. Accordingly, the court will retain jurisdiction to ensure full constitutional compliance by the established deadline, and it will maintain the sanction of $100,000 per day” 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. Of course, the most natural remedy lies with the legislature, which can fulfill its constitutional obligation by fully implementing the program of basic education by the beginning of the 2018-19 school year. (Pages 43, 44)

Compliance is a heavy lift. 

The State acknowledged in oral argument that funding half the salary increases for the 2018-19 would cost about $1 billion, and that this amount constitutes the difference between what is appropriated for the 2018-19 school year and what must be appropriated for the 2019-20 school year (about $2 billion) to provide full funding of the increases. And plaintiffs acknowledged at argument that the State’s current estimates align, at least on the low end, with the $2.1 to 2.7 billion per year estimated in the JTFEF report. Thus, by all relevant estimates, it appears EHB 2242 and the 2017-19 budget fall short by about a billion dollars in fully funding the salary increases by the 2018-19 school year.

Expect much more on this as lawmakers head into the 2018 session. It’s unclear what happens if the Legislature decides to let the deadline slip and continues on a course that achieves full compliance one school year later.