Ospi K 12 Finance Outlook And 6 Key Recommendations Vancouver 10 23 08
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Transcript of Ospi K 12 Finance Outlook And 6 Key Recommendations Vancouver 10 23 08
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Office of Superintendent of Public Instruction
K-12 Finance: Depth, Breadth, and Causes of a Looming Finance Crisis
1. What is the Basic Education Finance Task Force?
2. What is the financial outlook for school districts?
3. What are the funding shortfalls?4. What solutions are proposed?5. What are some implications for school finance
re-design?
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Office of Superintendent of Public Instruction 2
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Office of Superintendent of Public Instruction
Basics of the Basic Education Finance Task Force
3
• SB 5627: This act is intended to make provisions for some significant steps towards a new basic education funding system by establishing a joint task force to address the details and next steps beyond the 2007-2009 biennium necessary to implement a new comprehensive K-12 finance formula or formulas. The formula(s) will provide Washington schools with stable and adequate funding as the expectations for the K-12 system continue to evolve.
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Office of Superintendent of Public Instruction
BEFTF Has Several Proposals to Sift Through for Final Recommendations
12/1/08
Proposals To Date Proposals Expected in November
• Superintendent of Public Instruction
• Full Funding Coalition (WASA, WSSDA, PSE, AWSP, WEA)
• League of Education Voters
• Task Force Legislators
• Task Force Chair
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Office of Superintendent of Public Instruction 5
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Office of Superintendent of Public Instruction
State, Local, and Federal Funds Total $9.3 Billion
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Office of Superintendent of Public Instruction
K-12 Financial Outlook
Why do school districts’ budget problems seem deeper and more widespread than in past
years?
1. What is at the core of the problem?2. In the recent past, how were districts balancing
budgets?3. What is the magnitude of the problem for 2008-
09 school year and beyond?
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Office of Superintendent of Public Instruction
• Local Funds are typically levy and local effort assistance (LEA) dollars▫ Includes Federal and I-728 funds in this analysis▫ Common elements: discretionary, not state basic
education, do not inflate with staffing-based costs• Local Funds are commonly thought to employ
“enhancement” staff and programs• In reality, Local Funds cover major state-funding
shortfalls• Local Funds increases barely cover compensation
increases for levy, federal, and I-728 employees• State and local funds increase too slowly to cover
compensation plus all of the other emergencies and pressures to improve student achievement
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State Underfunding Pushes Costs Onto Maxed-Out Local Funds
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Office of Superintendent of Public Instruction
Total Compensation Ranges Between 82% and 84% of Total Expenditures
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Office of Superintendent of Public Instruction
School Districts Spend $1 Billion on Health, Life and Disability Insurance
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Office of Superintendent of Public Instruction
HLD Expenditures per Student Have Increased Steadily Since 1999
HLD as % of per Student Expenditures
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Office of Superintendent of Public Instruction
School Districts Expend 8-9% More for HLD Benefits than the State Allocates per Teacher
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Office of Superintendent of Public Instruction
Mandatory Pension Contributions Increasing Rapidly
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Office of Superintendent of Public Instruction
Cost of Living Increases
•For every $100 million in state funds for COLA, districts expend $44 million in local funds to extend the COLA to all employees (caution, update required)
•Hold that thought
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Office of Superintendent of Public Instruction
Additional Salaries Increase 6%+ Annually
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Office of Superintendent of Public Instruction
How Do Supplemental Salaries Increase?6.3% increases driven by multiple factors:•State COLA applied to TRI schedule•Increase in extra duties (new curriculum
adoptions)•Higher or more frequent class size
overload pay•New incentives (seniority incentive)•COLA above state COLA•National Board Certification increasing
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Office of Superintendent of Public Instruction
At State Level, No Systematic Data on COLAs Included in Contracts
State A B C D E F G H I J K L
07-08 3.7 - 4.3 1.0 2.0 1.5 1.0 3.0 0.0 0.0 0.0 0.0 1.5 .5 2.5
08-09 4.4 - 5.1 .75 2.0 1.5 1.255.2 – 5.9
0.0 0.0 1.5 0.0 1.5 1.0 ---
09-10 5.0* ? 3.0 2.0 --- --- 0.0 0.0 1.0 ? --- 1.0 ---
10-11 3.1* ? --- --- --- --- 0.0 0.0 3.0 ? --- --- ---
• Example contracts of random large districts• Columns A-L represent percentage increase above state COLA applied to total
salary• In some cases, percentage is linked to extra time (district- and/or teacher-
directed)“?” Indicates COLA is dependent on negotiations for current contract; outcome
unknown--- Indicates that contract will be open for this year
*Projected I-732 COLA
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Office of Superintendent of Public Instruction
1% COLA Drives Significant Percentage Increase in TRI Schedule
Base Salary (projected 2007-
08 Avg)
Value of Supplemental
Salary Total SalaryValue of 1%
COLA
Increase in TRI Schedule of 1%
COLA
1% COLA Per Student Increase
$50,393 $1,000 $51,393 $514 51.4% $28$50,393 $2,000 $52,393 $524 26.2% $28$50,393 $3,000 $53,393 $534 17.8% $29$50,393 $4,000 $54,393 $544 13.6% $29$50,393 $5,000 $55,393 $554 11.1% $30$50,393 $6,000 $56,393 $564 9.4% $30$50,393 $7,000 $57,393 $574 8.2% $31$50,393 $8,000 $58,393 $584 7.3% $31$50,393 $9,000 $59,393 $594 6.6% $32$50,393 $10,000 $60,393 $604 6.0% $32$50,393 $11,000 $61,393 $614 5.6% $33$50,393 $12,000 $62,393 $624 5.2% $34$50,393 $13,000 $63,393 $634 4.9% $34$50,393 $14,000 $64,393 $644 4.6% $35
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Office of Superintendent of Public Instruction
Compensation Expenditures Grow Faster than Local, State and Federal Revenue
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% Increase in Local Revenue
% Increase in State Revenue
% Increase in Federal Revenue
1993-94 -7.1% 4.0% -2.4%1994-95 -0.7% 1.1% 0.1%1995-96 -1.7% 1.6% 4.1%1996-97 -2.9% 2.3% -2.0%1997-98 4.6% 2.5% -9.3%1998-99 0.0% 1.2% -5.1%1999-00 -4.7% 3.0% -12.2%2000-01 12.7% 14.1% 4.4%2001-02 0.4% 0.6% -9.6%2002-03 -2.1% 2.5% -7.3%2003-04 -2.8% 1.3% -3.3%2004-05 0.4% 1.8% -1.8%2005-06 0.4% -0.2% 4.4%2006-07 0.8% -0.8% 6.7%
2007-08* 2.2% 0.0% -3.8%
% Increase in Compensation Expenditures in Excess of:
*Budgeted
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Office of Superintendent of Public Instruction
Structural Disconnect Continues in 2009-10 School Year1% COLA above I-732 COLA for all Teachers in a District
$28 - $35 per student
Cost of 2009-10 I-732 COLA on Local Funds (COLA projected at 5%)
$99 per student
Typical Levy Growth (2007 to 2008) $60 - $100 per student
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Office of Superintendent of Public Instruction
How Have Districts Balanced Their Budgets in the Last Few Years?
2000-2008 2009 and Beyond
• Reduction in pension rates saved $364 million
• 2003-05 COLA suspension (3.1%) saved $187 million
• Increases in I-728 revenue and federal funding totaled $614 million
• Increase in levy authority to recognize I-732 suspension and I-728 delay
• Pension rates increase• I-728 and federal dollars
flatten • Local funds continue to
support COLAs• Other costs continue to
increase faster than inflation▫ Health benefits▫ Fuel
• Levy authority increases an average of 5%
• Levies approved to utilize 92% of authority
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Appendix slides quantify these statements.
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Office of Superintendent of Public Instruction
2000-2008: State Savings of $1.3 Billion in Employer
Pension Contributions; $364 Million for Local Funds
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Office of Superintendent of Public Instruction
Quantifying School District Outlooks for 2008-09 to 2010-
11• Revenue increases: I-728, federal, levy,
enhanced state funding• Cost increases: Salary, benefit, and
retirement increases not covered by state, and fuel increases
•In 2008-09, districts will have a remaining $38 million in new revenue to cover all remaining cost increases on a $2.8 billion base
•2009-10 and beyond -- same magnitude of problem 23
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Office of Superintendent of Public Instruction
With $38 Million Net Growth in Local Funds, Little Room Left for Other
Needs• Education programs to provide more
assistance and/or instructional expertise for students to meet achievement expectations or reduce drop-out rates
• Utilities, Insurance• Maintenance Emergencies• Curriculum Adoption• Increased Salaries Beyond Estimated COLA • Health Care Costs Above State Allocation Rate• New Mandates from State/Federal
Policymakers 24
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Office of Superintendent of Public Instruction
Spending Ending Fund Balance Only Delays Cuts; Many Districts Have Little Balance to
Spend
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Office of Superintendent of Public Instruction 26
Largest Change for Smallest School Districts
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Office of Superintendent of Public Instruction
Operating Fund Value of Districts with Less than 2% EFB Held Steady/Remains Large
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Office of Superintendent of Public Instruction
Summary for 2008-09 School Year
• Statewide average Ending Fund Balances held steady for 2008-09, but too many districts are on the financial edge
• Roughly 600 staff positions eliminated statewide (equivalent to 1 school district serving 4,000 students)
• 7 districts on Binding Conditions (BC) (1 may exit)
• At least 5 districts carefully watching for possible BC
• $2 Billion operating value for districts with 2% or less EFB
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Office of Superintendent of Public Instruction
Look Forward for 2009-10 SY• Little cushion for 2009-10; without new state
resources schools face deep and devastating budget reductions
• State COLA is projected at 5%; pension rates increase; health benefits inflation consistent trend up
• Fuel stabilized but high and subject to spikes• Utilities consistent trend up• More students in public schools• More needy students• $3.2 Billion projected state deficit for 2009-
11 Biennium29
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Office of Superintendent of Public Instruction 30
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Office of Superintendent of Public Instruction
State Underfunding is Not Disputed
•Questions to answer: ▫What is the appropriate definition of basic
education?▫Will that definition fix the shortfalls
between district reality and state funding?
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Office of Superintendent of Public Instruction
6 Key Funding Shortfalls Must be Addressed
Learning Assistance
(4) B. Staff Ratios (1)(Certificated Instructional, Administrative & Classified)
C. Salaries (2) & Benefits
D. Operating Costs (NERC) (3)
=
State GeneralApportionment
Busing (6)
SpecialEducationBilingual
(5)
A. District Enrollment
32
I-728
Gifted
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Office of Superintendent of Public Instruction
Resource Level vs. Funding Formula
• Formula(s) must:▫Drive the right resource▫Account for district differences▫Provide stable and ample funding for decades
• More critical that BEFTF recommendations specifically identify the resource that must be driven by a formula▫Re-defining the basic education resource that
represents ample funding of a stable, general and uniform public school system is the fundamental change required
▫Without a specific set of resource recommendations, future Legislatures can implement the TF formula design but at an inadequate funding level
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Office of Superintendent of Public Instruction
A. Certificated Instructional StaffB. Classified Staff
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Office of Superintendent of Public Instruction
Certificated Instructional Staff Ratios (1A)
The ratios do not represent true class sizes.
Class sizes increase when planning periods, specialist teachers, librarians, counselors, etc., are purchased from the ratio above.
Certificated Instructional Staff
K-4: 1:18.85-12: 1:21.7
IncludesAll Teachers,Instructional
Coaches, Nurses, Counselors, Librarians,
and all other Pupil Support
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Office of Superintendent of Public Instruction
Districts Choose Between Lower Class Sizes, More Hours per Day, and Student Support
CertificatedInstruction Staff
K-4: 1:18.85-12: 1:21.7
Students per 1 FTE Staff 6 periods + 1 hr planning
TeachersGrades K-5
Grades 6-8Grades 9-12
Instructional Coaches
Librarians=
1:24.71:29.01:29.0
1:1,250
1:2,659
1:786
1:462
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CertificatedInstruction Staff
K-5: 15.896-12: 18.43
=
Nurses
1:21.21:25.5
1:25.5
1:1,000
1:500
1:750
1:403
Students per 1 FTE Staff 6 periods + 1 hr planning
Current Proposed
Guidance Counselors & Pupil Support
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Office of Superintendent of Public Instruction
Districts Hire Many More Classified Staff Than Are Funded by the State
(1B)
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Office of Superintendent of Public Instruction
SPI Recommendations to BEFTF: Define Basic Education at 25.1 Staff per 1,000
38
Current ratio: 17 per 1,000 students
Proposed: 25 per 1,000 students
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Office of Superintendent of Public Instruction
A. Certificated Instructional (Primarily Teachers)B. Classified (Non-Certificated) and Administrative
(Certificated but Supervise)
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Office of Superintendent of Public Instruction
Districts Subsidize State Salaries, Issues Differ by Group
Teachers and Other Certificated Classified and Administrative
1. State sets salaries based on a salary schedule and pays some teachers on a greater schedule than others
2. State has not evaluated salary levels or purposes for decades; districts pay for some supplemental salaries that are likely a basic education responsibility
3. State salary schedule has not been updated to reflect research on compensation incentives or latest research on appropriate base compensation
(State does not set salaries for classified and administrators; instead the state allocates a salary average for each group)
4. State allocates different salary averages among districts based on 30-year-old snapshot
5. State has no method to allocate staff salaries to reasonable cost of attracting and retaining
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Office of Superintendent of Public Instruction
55,322
12,878**
Differences in Teacher Salary Impacts Morale and Retention
1. Base salary most districts
2. Base salary of Everett
Equalizing will cost $167 million and raise most teacher salaries by 5%
3. Additional (supplemental) salaries on average nearly $8,500 per teacher statewide
$61,154
2008-09 Teacher Salaries (average experience and education)
$100,000
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
Base Salary
Additional Salaries
Typical Everett
52,706
41
8,448*
$68,200
* Projected from 2006-07** 2006-07; full-time staff only
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Office of Superintendent of Public Instruction
Districts Must Subsidize Classified/Admin Salaries by $366 Million
1. Average total salary
2. State average allocation
3. District allocations vary, first step is to equalize salary allocations ($226 million state cost to equalize)
4. After equalization, the state still must identify an appropriate method to address true costs districts experience ($140 million difference between equalized allocations and district costs)
Districts also pay difference in salary and COLA/benefits
$36,593
$96,445$100,000
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
State Avg. Allocation
Addt’l $ Above Max Rate
State Allocation at Max Rate
Classified Administrative
30,688
4,5391,316
57,065
23,742
15,638
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Office of Superintendent of Public Instruction
Local Funds Pay COLA on 4 Levels
1. COLA on average salary paid for “local staff units” ($54 million)
2. COLA on all supplemental salaries, all staff ($24 million)
3. COLA on unequalized portion of Classified and Administrative salaries, all staff ($12 million)
4. COLA on difference between the state maximum allocation and the salary districts actually pay, all staff ($6 million)
$58,340
$36,593
Local Funds COLA Effect (5% in 2009-10)
$96 million total
$96,445
2007-08 Building Blocks ofK-12 Staff Average Salaries
$100,000
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
State Avg. Allocation
Supplemental Salaries
Actual Avg. Paid
State Allocation at Max Rate
Instructional
Classified Administrative
50,393
7,947
30,688
4,5391,316
57,065
23,742
15,638
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Office of Superintendent of Public Instruction
SPI Salary Recommendations to BEFTF
Teachers and Other Certificated Classified and Administrative
1. Equalize base salaries to Everett level
2. Complete BEFTF research on supplemental salaries and comparisons of teacher salaries to other occupations /states; identify appropriate salary and appropriate state contribution
3. Adopt a new salary schedule with higher lifetime earnings and increases for certification-based demonstrations of excellence
4. Equalize salary allocations across districts
5. Identify an appropriate method to allocate salaries at a level consistent with what districts must pay
▫ Classified salaries based on state salary schedules
▫ Administrative salaries—TBD but must reflect near current actual salaries
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Office of Superintendent of Public Instruction 45
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$9,476per CIS
(2006-07 SY)
$468per student
=
State NERC Funding Intended to Cover All Non-Employee Costs Related to Basic Education
=
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Office of Superintendent of Public Instruction
Districts Spend Over $500 Million More on NERC Than the State Funds (3)
18-yr Cycle
8-yr Cycle
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Office of Superintendent of Public Instruction
An Increasing Number of Districts Spend Over 80% of Their NERC Allocation on Utilities and
Insurance
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Office of Superintendent of Public Instruction
SPI Recommendation to BEFTF: NERC
•Define basic education at $1,101 per student instead of $468 (2006-07 dollars)• Fully funds operating costs that relate to basic
education • Includes $126 per student for curriculum, a 6-
year adoption cycle• Inflate with measures specific to cost
•Add $282 per student for instructional technology• Phase-in over 7 years
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Office of Superintendent of Public Instruction 50
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Office of Superintendent of Public Instruction 51
Poverty is Now the Funding Driver; Lap Funds, in Total, LAP Funds Have Increased Substantially.
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Office of Superintendent of Public Instruction 52
Despite Large Increases in Funding, Buying Power Remains Constant
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Office of Superintendent of Public Instruction
Current LAP Funding Must be Redefined
•LAP/Title 1/I-728/PAS buying-power (teacher hours) is roughly the same as in 1992-93
•Learning Assistance Program (LAP) allocates 3.46 staff units per 1,000 poverty students (1 staff per 289 poverty students)
•This equates to a teacher spending 30 minutes per day with groups of 28 struggling students▫No resource for materials, program support
or professional development53
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Office of Superintendent of Public Instruction
SPI Recommendation to BEFTF: LAP
Redefine the LAP formula with 6 formula components based on successful programs:1. Reduce class sizes for severe poverty districts
Immediate class size reduction for poorest students; general staffing ratios may be implemented slowly
2. Hire teachers for small group tutoring (10% of students + more as poverty increases) Groups of 15 students for 1 teacher, 30 to 50 minutes per
day
3. Hire teachers for intensive tutoring (1% of students + poverty) Groups of 3 students for 1 teacher, 30 to 50 minutes per day
4. Add program administrative support5. Provide professional development for the teacher
staffing units driven by parts 1, 2, 3, and 46. Buy instructional materials
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Office of Superintendent of Public Instruction
LAP Recommendations Continued• LAP must remain a “basic education” program• Must be a staffing model or risk losing teacher
buying power• Must be based on a model of service proven
successful• Categorical allocation from state to school district
▫ Districts can implement a different model, hire different mix of staff
▫ Districts decide how to allocate among schools▫ Must serve struggling students
• $325 M increase over current funding ▫ I-728 currently pays for a portion of this now
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Office of Superintendent of Public Instruction 56
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Office of Superintendent of Public Instruction
Buying Power of State Transitional Bilingual Program is Constant
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Office of Superintendent of Public Instruction
Funding for English Language Learners (5)
•Current allocation is $904 per student▫Funding generates 1 teacher per 75
ELL students▫At this staffing ratio, no resources are
available for interpreters, program administration, professional development, instructional materials, translations, family outreach
•Some districts significantly subsidize the ELL program and positively impact student learning
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Office of Superintendent of Public Instruction
• Redefine the ELL formula with 6 formula components based on successful programs:1. Reduce class sizes for ELL2. Provide “floor” funding for districts with few
ELL3. Enhance funding for high ELL/multiple
language districts4. Middle/High school enhancement5. Provide professional development6. Buy instructional materials and assessments
•$96 M increase over current funding•Categorical allocation from state to districts
0
SPI Recommendation to BEFTF: ELL
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Office of Superintendent of Public Instruction 60
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Office of Superintendent of Public Instruction
Transportation Funding Gap is Widening
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JLARC est. for basic education responsibilities underfunding in 2004-05: $92.6 - $114 Million
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Office of Superintendent of Public Instruction
Diesel $ per Gallon up 48% Over Sept 2007 Price
West Coast Monthly Average Retail Price per Gallon of Diesel
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Office of Superintendent of Public Instruction
Districts Budgeted 28% More for Fuel in 2008-09
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Office of Superintendent of Public Instruction
Proposed Transportation Solutions and Timeline
•Oct 1: 2-3 formula options fully developed and presented to Advisory Committee
•Nov 15: Final report to OFM/Legislature•Early December: Actual funding gap is
known for basic education (to/from) transportation, 2007-08 school year
•Jan 15: OSPI completes modeling of district-by-district impact of 2-3 formula options
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Office of Superintendent of Public Instruction 65
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Office of Superintendent of Public Instruction
Last Thoughts• Very few opportunities to redefine Basic Education• Basic Education shortfalls are so large, fixes will
take many years▫ Requires prioritization▫ Much of the early investments do not buy new
programs• Recommendations must address the resource level
needed, but formula structure will drive district practice for decades▫ General apportionment allocation vs. Categorical allocation
• BEFTF needs specific recommendations▫ What needs to be purchased and why?▫ What is the formula that would drive this resource or where
does it fit into a formula?▫ What is the phase-in priority? 66
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Office of Superintendent of Public Instruction
Minimum Outcomes Needed from the BEFTF
1. Improve funding ratios for Certificated Instructional and Classified Staff
2. Salary Policy and Fundinga) First, equalize classified and administrator
allocationsb) Then, allocate classified/administrator
based on common-sense methods that cover actual costs
c) Address state underfunding of teacher compensation
d) Compensate teachers for excellence
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Office of Superintendent of Public Instruction
Minimum Outcomes Needed from the BEFTF
3. Improve funding level for NERC, inflate with common sense measures
4. Improve funding for LAP Staffing formula driven by instructional
programming reality and informed by research
5. Improve funding for ELL Staffing formula driven by instructional reality and
diverse community needs and informed by research
6. Implement a new formula with adequate funding for pupil transportation
7. Special Education New $ driven via components 1-3
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Office of Superintendent of Public Instruction
Budget Context• $3.2 Billion projected
deficit for biennium▫ K-12 “share” ~$1.34
B• COLA is 5% in 2009-
10; 3.1% in 2010-11▫ $590 M cost included
in deficit projection▫ Drives an additional
$257 M in local funds needed
• State cannot cut “basic education”
• Non-basic items include (biennial savings):▫ K-4 enhancement ($388
M)▫ 2 LID ($75 M)▫ Levy equalization ($456
M)▫ I-728 ($908 M)▫ Gifted education ($20 M)▫ Health Benefits inflation
($96 M if 7% inflation)69
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Office of Superintendent of Public Instruction
What Should K-12 Do? Start Now
•Communicate that all districts are facing deficits•Project 2-year deficits now, after Governor’s
budget released (mid-December), after each chamber (March)
•Publically recognize the difficult job that policymakers face
• Identify I-728-supported programs•Publically identify reduction options and impacts•Speak with one-voice on way-forward
▫ “Must-do” list from Task Force recommendations▫ Communicate re: need for foundational resources to afford
compensation increases
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Office of Superintendent of Public Instruction
For More Information
•Jennifer Priddy: (360) 725-6292, or by email, [email protected]
•Superintendent Bergeson's BEFTF Proposal: http://www.k12.wa.us/Communications/BasicEdFundingTaskForce.aspx
•Basic Education Finance Task Force: http://www.leg.wa.gov/Joint/Committees/BEF/
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Office of Superintendent of Public Instruction 72
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Office of Superintendent of Public Instruction
2003-05 and Beyond, Impact to Local FundsWas Minimized by Suspension of I-732 COLA
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Instructional Classified Administrative1999-00 6.4%* 3.0% 3.0%2000-01 3.0% 3.0% 3.0%2001-02 3.7% 3.7% 3.7%2002-03 3.6% 3.6% 3.6%2003-04 0.4%** 0.0% 0.0%2004-05 0.4%** 1.0% 0.0%2005-06 1.2% 1.2% 1.2%2006-07 4.5% 4.5% 4.5%2007-08 3.7 + .6% 3.7% 3.7%2008-09 3.9 + .7 + .5% 3.9 + .5% 3.9 + .5%
2009-10 (p) 5.0% 5.0% 5.0%2010-11 (p) 3.1% 3.1% 3.1%2011-12 (p) 2.4% 2.4% 2.4%
*Increases between 4.7% and 12%; 3 LID added**Increases between 3% and .05% for staff in 1st 7 years only
(p), projected I-732 COLA
Annual Average Compensation Increases, COLA and Other
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Office of Superintendent of Public Instruction
2000-2008: Local Funds Avoided $551 Million in Compensation Costs
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Office of Superintendent of Public Instruction
From 1999-2008, I-728 and Federal Funds Increased by $614 Million; Beginning 2008-09 Only Small Increases
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Office of Superintendent of Public Instruction
Districts are Already Maximizing Levy Authority
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