Senate & House Conference Budget and Legislation for K-12 Education

1. Senate & House Conference Budget and Legislation for K-12 Education 2009-11 Biennium 2009-10 and 2010-11 SY 2009 Supplemental, 2008-09 SY April 30, 2009 Office of the Superintendent of Public Instruction

2. Big Picture View of Budgets Preliminary OSPI Analysis of Conference Budgets

3. Formula or Statewide Allocations: Statement of Change Preliminary OSPI Analysis of Conference Budgets

4. I-728 Reduction Preliminary OSPI Analysis of Conference Budgets

5. *Governor’s proposed Budget Compensation Preliminary OSPI Analysis of Conference Budgets

6. State Pensions Preliminary OSPI Analysis of Conference Budgets • Conference Budget saves $575.2 million across state government and $339.4 million in K-12 • Phases in adoption of new funding method for Plan 1 liabilities; • Changes salary growth assumptions; • Delays adoption of new mortality tables until 2011-13 biennium.

7. Pensions Rates Employer Contribution Rates Employee Contribution Rates, by plan Small adjustments may occur due to misc. legislation not yet signed. Preliminary OSPI Analysis of Conference Budgets

8. Levy Lid & Levy Equalization Preliminary OSPI Analysis of Conference Budgets

9. Levies and Equalization Policy Debate Preliminary OSPI Analysis of Conference Budgets • Ensure that reductions in I-728 and I-732 are included in levy base, change sunset date • Allow mid-cycle elections • Increase Levy Lid by 4%-points, no more than 35% • Levies passed through 2011 • Reduce levy equalization by 15% (prorate) • Do not increase equalization to reflect higher lid

10. Three bills that passed only 1 chamber Preliminary OSPI Analysis of Conference Budgets

11. Levy Equalization Funding Reduction Preliminary OSPI Analysis of Conference Budgets

12. What is next? Preliminary OSPI Analysis of Conference Budgets

13. What to assume? Preliminary OSPI Analysis of Conference Budgets Cannot predict legislative action w/ regard to levies and equalization Not financially prudent to assume that levy lid will be increased when developing RIF notices Not financially prudent to assume no or zero reduction in equalization Assuming the worst-case results in more RIF’s; few good options this year Revenue is lower than projected; may be forced to push $60 million LEA reduction elsewhere (possibly in K-12)

14. Use of American Reinvestment and Recovery Act (ARRA) Funds Preliminary OSPI Analysis of Conference Budgets

15. ARRA Funds 4 Types of ARRA in Budget • Fiscal Stabilization • Title I • IDEA • Ed Technology Other ARRA Education Programs • Homeless/ McKinney-Vento • School Improvement Preliminary OSPI Analysis of Conference Budgets

16. How will ARRA Fiscal Stabilization funds impact district in the 2008-09 School Year? Preliminary OSPI Analysis of Conference Budgets • Stabilization funds replace state funds for I-728 and General Apportionment • Note: • Districts will not be required to base expenditures on time and effort, if elect to use under Impact Aid • Districts will need to track all expenditures separately for ARRA funds, and this does mean moving expenditures

17. Distribution of ARRA Funds $ in Thousands Preliminary OSPI Analysis of Conference Budgets

18. Distribution of Fiscal Stabilization Funds *Most will be expended through General Apportionment. Preliminary OSPI Analysis of Conference Budgets

19. Why 2008-09 School Year? Preliminary OSPI Analysis of Conference Budgets Initial guidance from U.S. ED. indicated that must expend in sequence, beginning with 2009 ARRA requires proportionality; must allocate between in K-12 and Higher Education Reluctance by Legislature to use against General Apportionment in 2009-10 Need federal resources in state budget in FY 2009

20. How will system use ARRA funds in 2008-09 SY? Preliminary OSPI Analysis of Conference Budgets • State will apply for resources by 5/5/09 (est.) • State will apply on behalf of districts by 5/5 (est.) • More later • JV payroll of all I-728 CIS and most General Apportionment CIS to program 13 or available sub-program • No time & effort required, if used under Impact Aid Program • Revenue to be paid under account 6113 (new) • F-196 reporting under program 13 (new)

21. How many staff, from where? We will give you more specifics as soon as we can… Preliminary OSPI Analysis of Conference Budgets

22. Districts Must also Apply Preliminary OSPI Analysis of Conference Budgets • i-Grants application is pre-populated • Declare using ARRA Fiscal Stabilization funds for purposes consistent with Elementary and Secondary Education Act • Strongly encourage: Title VIII, Impact Aid, Section 8003 • Most flexible program in ESEA, any expenditure is eligible (except those expressly not allowed by ARRA) • On-system by 5/1 (estimate) • Superintendents electronically sign by 5/5 • Please

23. Reporting Requirements for 2008-09 SY Expenditures Preliminary OSPI Analysis of Conference Budgets • Even though using the resources under “Impact Aid” provisions, and just-about any expenditure is allowable, still must report use of federal ARRA • October 2009, expected date of reporting guidance • I-728 reporting should be straight-forward • We will collect reports via i-Grants and will populate report as much as we can • Do not yet know if need to identify individual teachers to ARRA funds, or a portion of all teachers is acceptable

24. ARRA IDEA Funding and Flexibility Provisions Preliminary OSPI Analysis of Conference Budgets

25. Unprecedented Increase in IDEA Preliminary OSPI Analysis of Conference Budgets $221 million for 2009-10 and 2010-11 Could allocate some in 2008-09, but difficult issues with safety net eligibility mid-cycle Begins in 2009-10, giving a bit more planning and thoughtful use of resources While the Legislature assumed 50/50 split, the appropriation is a biennial appropriation; OSPI intends to award all IDEA money in FY 09-10

26. Flexibility of IDEA is not universal Preliminary OSPI Analysis of Conference Budgets • IDEA permits districts to consider 50% of any IDEA increase as local money in the MOE calculation • Effectively permits a district to replace local levy funds with part of the IDEA increase • District must be in “Meets Requirements” status or “determination” in order to use this flexibility • 2007-08 data  November 2008 “determination”  drives flexibility for 2009-10 school year  via MOE calculation in 2011 • 122 districts “Meet Requirements”; 173 do not

27. How to gain flexibility, any district? Preliminary OSPI Analysis of Conference Budgets • No easy way out of this---federal guidance is absolutely explicit • Any district not in “Meets Requirements” SEA must prohibit the district from using 50% of the increase in the MOE test • Tried to implement best of two years (apply November 2008 or 2009 determination to 2009-10 SY)---can’t do it • OSPI eliminate carry forward cap • Districts pay careful attention to new MOE calculation worksheets

28. How to gain flexibility if one of 122? Preliminary OSPI Analysis of Conference Budgets • OSPI considering allocating full grant in 2009-10, not split between two years • 50% of full allocation is eligible for exclusion from MOE calculation • Instead of 50% of the first year amount; 0% of 2nd year amount • Hits safety net in Year 1 instead of split between 2 years • (All of allocation must be obligated by 9/30/11, regardless of split of grant between years)

29. How to gain flexibility if one of 173? Preliminary OSPI Analysis of Conference Budgets OSPI considering allocating full grant in 2009-10, not split between two years Working on other options to provide flexibility if one of 173 Additional information will be forthcoming

30. Fiscal-Related Legislation Preliminary OSPI Analysis of Conference Budgets

31. ESHB 2261 – State Education System Preliminary OSPI Analysis of Conference Budgets • Elements of an expanded “Program of Basic Education” and the funding to support it are phased-in and intended to be fully implemented by 2018.  • This expanded program does the following: • Increases Instructional Hours • Enhances the High School Diploma • Authorizes a New Transportation Funding Formula • All-Day Kindergarten part of BEA • Adds the Highly Capable Program to BEA & creates a safety net similar to that of special education • Adds Early Learning

32. ESHB 2261 – State Education System Preliminary OSPI Analysis of Conference Budgets • Other items included in the bill: • Funding allocations and reporting on expenditures will use a prototypical school model • System Capacity will be reviewed on an annual basis by OSPI • The Quality Education Council will be formed • Four Working Groups will be created to develop details of the funding formulas, early learning employee compensation, and levies and levy equalization • A “K-12 Data Governance Group” will be established • The State Board of Education will continue to refine an accountability framework • The Professional Educator standards Board (PESB) must adopt performance standards for effective teaching and modifications for educator certification • By January 1, 2010 PESB shall adopt a definition of master teacher

33. No Immediate Impact Legislation with Immediate Fiscal Impact; Legislation with Delayed Impact Immediate Impact HB 1244 Sec. 222: Dept. of Health prohibited from implementing new school health safety rules HB 1852: Fees for background checks increase to $60.25 SB 5676: Provides funding for approved middle school CTE using current allocation model HB 1292: Allows SBE to allow 180 Day School Waiver • SB 5487: delay the deadline for Reduction In Force notices • HB 2363: Value of suspended COLA from 2010 and 2011 school years must be made up in 2012-15 school years • SHB 2343 – The 2010 & 2011 school years suspension of inflationary increase for  National Board Bonus must be made up in 2012-15 school years. 33 Preliminary OSPI Analysis of Conference Budgets

34. Grants and Misc. Programs Preliminary OSPI Analysis of Conference Budgets

35. Eliminated Programs Preliminary OSPI Analysis of Conference Budgets

36. Eliminated Programs Preliminary OSPI Analysis of Conference Budgets

37. Partially Reduced Programs Preliminary OSPI Analysis of Conference Budgets

38. New Programs Preliminary OSPI Analysis of Conference Budgets

39. Available District Grants Preliminary OSPI Analysis of Conference Budgets

40. Current Events Preliminary OSPI Analysis of Conference Budgets

41. Swine Influenza: A Situation Update Currently 6 suspected cases in Washington. Very high likelihood these cases will test positive for H1N1 swine virus. Expect a least a few additional suspected cases to be announced each day. One school closure—Madrona Elementary in Seattle. Additional school closures probable, under authority of local health officer.

42. Swine Influenza: A Situation Update • Review continuity of operations plans • Establish and maintain communication with local health officer • Communicate with students, parents and staff • Current district status • Wash your hands/cover cough/stay home if sick • Notification procedures if closure necessary

43. School Closure Preliminary OSPI Analysis of Conference Budgets • SPI may excuse 3 school days for school closure • School is closed when district is open • Up to 2 days per incident, no more than 3 • WAC 392-129-150 • Districts that are closed must make-up 3 days before any make-up can be waived by SPI • District must also extend school beyond June 14th • No district can drop below a district-wide average of 1,000 instructional hours • WAC 392-129-105 • If the Governor declares an emergency, make-up days can be waived; 1,000 instructional hour requirement is not waived

44. Enrollment Reporting Preliminary OSPI Analysis of Conference Budgets • If a school is closed on a reporting day, the district should include the school enrollment as an estimate • When the school re-opens, revise to actual enrollment • Students must be absent from school for 20 school days (e.g., not closure days) before dropped from enrollment • If a district is closed on a reporting day, the reporting day becomes the first day of the month that the district re-opens

45. Loose Ends Preliminary OSPI Analysis of Conference Budgets

46. Apportionment/Financial Services Preliminary OSPI Analysis of Conference Budgets Updates…

47. District-by-District Analyses Preliminary OSPI Analysis of Conference Budgets District-by-district analyses necessary b/c when cutting as deeply as this biennium, fairness comparisons became critical Any district-by-district analysis is wrong; it is an estimate, and designed to show relative impact Pivot tables---they are a best-guess, but 1,000’s of variables will change outcome

48. Preparing Your Budgets Preliminary OSPI Analysis of Conference Budgets • Budget Preparation Site: http://www.k12.wa.us/SAFS/09budprp.asp Following items are available on site. • Operating Budget • John Jenft Rate Sheet • F203/203X • Pivot tables