wa-law.org > bill > 2025-26 > HB 2049 > Substitute Bill
The legislature further finds that school funding obligations require an adjustment to levy equalization methods to ensure equitable funding for our state's public schools. Increasing local flexibility requires the state to ensure equitable funding for historically underinvested areas of our state, including rural school districts, mitigating widening funding gaps between schools.
Therefore, it is the legislature's intent to increase the levy authority for state and local property tax limits from one percent to three percent to ensure investments in public K-12 schools and public safety improving community resiliency. The legislature further intends to adjust the school funding formula to ensure appropriate funding for schools so that all Washington children receive the quality education afforded to them under our Constitution.
Beginning with taxes levied for collection in 2020, the maximum dollar amount which may be levied by or for any school district for enrichment levies under RCW 84.52.053 is equal to the lesser of $2.50 per $1,000 of the assessed value of property in the school district or the maximum per-pupil limit. This maximum dollar amount shall be reduced accordingly as provided under RCW 43.09.2856(2).
The definitions in this subsection apply to this section unless the context clearly requires otherwise.
"Inflation" means the percentage change in the seasonally adjusted consumer price index for all urban consumers, Seattle area, for the most recent 12-month period as of September 25th of the year before the taxes are payable, using the official current base compiled by the United States bureau of labor statistics.
"Inflation enhancement" means:
$500 in the 2026 calendar year; and
3.33 percentage points added to inflation each year from the 2027 to 2030 calendar years.
"Maximum per-pupil limit" means:
(A) $2,500, as increased by inflation, plus inflation enhancements defined in (b) of this subsection, beginning with property taxes levied for collection in 2020, multiplied by the number of average annual full-time equivalent students enrolled in the school district in the prior school year, for school districts with fewer than 40,000 annual full-time equivalent students enrolled in the school district in the prior school year; or
(B) $3,000, as increased by inflation plus the inflation enhancement defined in (b)(i) of this subsection, beginning with property taxes levied for collection in 2020, multiplied by the number of average annual full-time equivalent students enrolled in the school district in the prior school year, for school districts with 40,000 or more annual full-time equivalent students enrolled in the school district in the prior school year.
ii. Beginning with the 2031 calendar year, $5,035, as increased by inflation beginning with property taxes levied for collection in 2032, multiplied by the number of average annual full-time equivalent students enrolled in the school district in the prior school year.
d. "Prior school year" means the most recent school year completed prior to the year in which the levies are to be collected
.
For districts in a high/nonhigh relationship, the enrollments of the nonhigh students attending the high school shall only be counted by the nonhigh school districts for purposes of funding under this section.
For school districts participating in an innovation academy cooperative established under RCW 28A.340.080, enrollments of students attending the academy shall be adjusted so that each participant district receives its proportional share of student enrollments for purposes of funding under this section.
Beginning with propositions for enrichment levies for collection in calendar year 2020 and thereafter, a district must receive approval of an enrichment levy expenditure plan under RCW 28A.505.240 before submission of the proposition to the voters.
The superintendent of public instruction shall develop rules and regulations and inform school districts of the pertinent data necessary to carry out the provisions of this section.
Beginning with taxes levied for collection in 2018, enrichment levy revenues must be deposited in a separate subfund of the school district's general fund pursuant to RCW 28A.320.330, and for the 2018-19 school year are subject to the restrictions of RCW 28A.150.276 and the audit requirements of RCW 43.09.2856.
Funds collected from levies for transportation vehicles, construction, modernization, or remodeling of school facilities as established in RCW 84.52.053 are not subject to the levy limitations in subsections (1) through (5) of this section.
Beginning in calendar year 2020 and each calendar year thereafter, the state must provide state local effort assistance funding to supplement school district enrichment levies as provided in this section.
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For an eligible school district with an actual enrichment levy rate that is less than $1.50 per $1,000 of assessed value in the school district, the annual local effort assistance funding is equal to the school district's maximum local effort assistance multiplied by a fraction equal to the school district's actual enrichment levy rate divided by $1.50 per $1,000 of assessed value in the school district.
For an eligible school district with an actual enrichment levy rate that is equal to or greater than $1.50 per $1,000 of assessed value in the school district, the annual local effort assistance funding is equal to the school district's maximum local effort assistance.
Beginning in calendar year 2022, for state-tribal education compact schools established under chapter 28A.715 RCW, the annual local effort assistance funding is equal to the actual enrichment levy per student as calculated by the superintendent of public instruction for the previous year for the school district in which the state-tribal education compact school is located, up to a maximum per-student amount of $1,550 as increased by inflation, plus inflation enhancements, from the 2019 calendar year, multiplied by the student enrollment of the state-tribal education compact school in the prior school year.
The state local effort assistance funding provided under this section is not part of the state's program of basic education deemed by the legislature to comply with the requirements of Article IX, section 1 of the state Constitution.
The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
"Eligible school district" means a school district where the amount generated by a levy of $1.50 per $1,000 of assessed value in the school district, divided by the school district's total student enrollment in the prior school year, is less than the state local effort assistance threshold.
"Inflation" means, for any school year, the rate of the yearly increase of the previous calendar year's annual average consumer price index for all urban consumers, Seattle area, using the official current base compiled by the bureau of labor statistics, United States department of labor.
"Inflation enhancement" means:
$150 in the 2026 calendar year;
$250 in the 2027 calendar year; and
$200 in the 2030 and 2031 calendar years.
"Maximum local effort assistance" means the difference between the following:
The school district's actual prior school year enrollment multiplied by the state local effort assistance threshold; and
The amount generated by a levy of $1.50 per $1,000 of assessed value in the school district.
"Prior school year" means the most recent school year completed prior to the year in which the state local effort assistance funding is to be distributed
.
f. "State local effort assistance threshold" means $1,550 per student, increased for inflation, plus inflation enhancements, beginning in calendar year 2020.
g. "Student enrollment" means the average annual full-time equivalent student enrollment.
For districts in a high/nonhigh relationship, the enrollments of the nonhigh students attending the high school shall only be counted by the nonhigh school districts for purposes of funding under this section.
For school districts participating in an innovation academy cooperative established under RCW 28A.340.080, enrollments of students attending the academy shall be adjusted so that each participant district receives its proportional share of student enrollments for purposes of funding under this section.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
"Inflation" means the annual percentage change in the consumer price index for all urban consumers in the western region for all items as provided in the most recent 12-month period by the bureau of labor statistics of the United States department of labor by July 25th of the year before the taxes are payable.
"Limit factor" means
101 percent plus population change and inflation, not to exceed 103 percent.
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"Population change" means the annual percent increase in the population of a taxing district between the two most recent years as provided in the official population estimates published by the office of financial management for April 1st of the year before taxes are payable. If the office of financial management estimates a net decrease in a taxing district's population, for the purposes of this section, the population change is zero. For a county, the "population of a taxing district" means the population within the county's incorporated and unincorporated areas, unless the county taxing district boundaries are limited to the unincorporated county areas, except for a county road fund levy, in which case the "population of a taxing district" means the population of the unincorporated county areas only. Except for the state, for taxing districts that are not coterminous with one or more cities, towns, counties, or unincorporated county areas, or any combination thereof, as provided in the official population estimates published by the office of financial management in April of the year before the taxes are payable, "population change" means:
The population change for the city or town within which the taxing district is wholly located;
The population change for the county in which the taxing district is wholly located, when the taxing district is not wholly located within a city or town; or
For taxing districts located in more than one county, the county population change for the county in which the greatest total taxable assessed value of the taxing district for the prior assessment year is located.
For the purposes of this subsection (3), the annual percent increase in population is calculated to the nearest 0.1 percent, rounding up to the next 0.1 percent if the second decimal place of the annual percent increase is five or greater.
"Regular property taxes" has the meaning given it in RCW 84.04.140.
The property tax limitation contained in this chapter shall be determined by the county assessors of the respective counties in accordance with the provisions of this chapter: PROVIDED, That the limitation for any state levy shall be determined by the department of revenue and the limitation for any intercounty rural library district shall be determined by the library district in consultation with the respective county assessors.
By September 1, 2025, and by September 1st every year thereafter, the department of revenue must provide county assessors the limit factors necessary for the county assessor to comply with subsections (1) and (3) of this section.
By October 1, 2025, and by October 1st every year thereafter, the county assessor must determine the limit factor applicable to each taxing district in their county and notify each taxing district of the determination. However, for a taxing district located in more than one county, the assessor of the county with the most assessed value of the taxing district is subject to the requirements of this subsection (3).
Sections 4 through 6 of this act apply to taxes levied for collection in 2026 and thereafter.
The superintendent of public instruction shall convene a K-12 funding equity work group to analyze K-12 funding formulas and explore options for revisions to the funding formula that are responsive to student needs, including economic, demographic, and geographic differences in student and community populations. The office of the superintendent of public instruction may contract with institutions of higher education and public, nonpartisan research entities to support the work group's analysis.
At a minimum, the work group's analysis must include:
Impacts of changes to per-pupil funding formulas and local revenue;
Compensation factors described in RCW 28A.150.412;
Funding distribution trends resulting from the prototypical school funding formula; and
Current formulas that benefit specific populations of students including, but not limited to, the learning assistance program, local effort assistance, and small school funding.
The superintendent of public instruction must use the work group's analysis conducted under subsection (1) of this section to consider options for revising state and local school funding formulas. By November 1, 2025, and annually thereafter through 2027, the superintendent of public instruction shall report the work group's progress and any proposed options to the education and fiscal committees of the legislature. The reports must include, but are not limited to, the following topics:
Options for revisions to the funding formula that address system and resource inequities;
Options that address state, local, and regional needs;
The potential adoption of student weights to direct additional funding to students most in need; and
Metrics for monitoring and accountability related to equitable access to resources.
The superintendent of public instruction may determine the size, membership, and meeting frequency of the work group. The work group must include representation from education and community partners that are demographically and geographically diverse including, but not limited to, groups representing educators, school and district administrators, labor unions, families, students, community partners who support groups disproportionately impacted by inequities, and legislators.
The estimated cost of an option or group of options proposed by the superintendent of public instruction under subsection (2) of this section must not exceed the estimated additional state revenue provided under section 4, chapter . . ., Laws of 2025 when combined with the estimated additional state funding allocated in this act. The department of revenue shall make available relevant data and analyses to the superintendent of public instruction to support the calculations under this subsection (4).
This section expires December 1, 2027.