Purpose of Presentation

To submit that equal education and economic opportunity in America cannot be ensured unless we address three underlying issues: 1) school funding, 2) tax policy, and 3) economic development.

To provide you knowledge and data that can be useful in the work you do, especially lobbying and organizing.

How far have Washington’s schools fallen behind?

• 46th in class size out of 50 states and Washington, D.C.

• 42nd in education spending per student, adjusted for regional cost differences.

• $2 billion less for schools due to spending not keeping pace. Twenty-five years ago, Washington spent 50.4% of the state Operating Budget. Now we spend just 42.1%.

• $548 less per student compared to 1992. Inflation has risen and demands have increased. Yet, today’s schools are asked to do more with less.

• Dead last in compensation among the five West Coast states.

-- Overview of State Funding --What Is the State’s Responsibility?

Washington State ConstitutionArticle IX

Section 1. “It is the paramount duty of the state to make ample provision for the education of all children residing within its borders, without distinction or preference on account of race, color, caste, or sex.”

Section 2. “The legislature shall provide a general and uniform system of public schools . . . and such . . . normal and technical schools as may hereafter be established.”

Enrollment

Formula Staff Ratios(Teachers, Administrators & Aides)

Salaries & Benefits

Nonemployee Related Costs (NERC)

=State General Apportionment Allocation

Basic Funding Concepts#1

#2

#3, 4, 5

#6

What has been the effect of state funding?

Expenditures per student as a percent of the national average have declined since the state took over “full” funding of basic education.

Figure 5Washington Current Expenditures Per Pupil In Average Daily Attendance

As A Percent of National Average (1959-2000)

90%

100%

110%

120%

First year of full state funding of basic education

Start of HB 1209 Ed Reform

Source: US Dept. of Education, Digest of Education Statistics, Table 168, 2002.

112%113%

100%

94%

National Average operating dollars per pupil from all sources.

47.6%47.0%

46.1%

44.9%43.8% 43.3%

42.1%

30.0%

32.0%

34.0%

36.0%

38.0%

40.0%

42.0%

44.0%

46.0%

48.0%

50.0%

1993-95 1995-97 1997-99 1999-01 2001-03 2003-05 2005-07

Percent of the State General Fund Spent on K-12 Public Schools

2004-05 SY Revenues

Dollars in Millions

State $5,365

Local Taxes 1,258

Federal 783

Other 319

Total $7,724

School districts receive about 70 percent of their general fund revenues from the state.

State70%

Local16%

Federal 10%

Other 4%

Where does our money Where does our money come from???come from???

Not

trees…

But TAXES……

The state collects several types of taxes…• Sales taxes• Business and occupation taxes• Property taxes

Who pays?

• Lower and moderate income folks pay a higher % of their income in taxes than high-income folks do…

• Washington places greater tax responsibility on its low and middle income families…

Who Pays State and Local Taxes?

(Adjusted to Scale)

Problem: Revenue in WashingtonRelies Heavily on Retail Sales Taxes

Retail Sales52%

B & O19%

Property11%

Real Estate Excise5%

Public Utility2%

Other7%

Use4%

Note: These figures are for state taxes for the 2005-07 biennium.

What about the lottery????

True, the lottery generates income,but not as much as you would think….

only the equivalent of 2% of K-12 education spending.

1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001100

300

500

700

900

1100

1300

Percent of 1971 value

Excluding tax base and rate changes, over the past 30 years General Fund revenue has grown

more slowly than the economy.

Revenues(excluding tax base and rate

changes)

The Economy (Personal Income)

Based on growth in major General Fund tax sources.

Based on constant rate, constant base assumptions, excluding legislative changes.

1971 = 100

100

300

500

700

900

1100

1300

1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001

Percent of 1971 value

Meanwhile, operating expenses grew at about the

same pace as the economy. Expenditures from all operating funds

Expenditures grew at 8.9 percent

Personal Income grew at 8.8 percent.

1971 = 100

Operating Expenses

Personal Income

…and the base of traditional sales taxes is declining

Durable and Non-durable Goods, Less Food for Home Consumption, As a Share of Personal Consumption Expenditures

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1929

1931

1933

1935

1937

1939

1941

1943

1945

1947

1949

1951

1953

1955

1957

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

46%

33%

Trends such as the continual shift toward consumer services and internet purchases are likely to cause

this trend to continue

Ratio of Low 20-Top 1 Tax Burdens, 2000

Ratio of Burdens, 2000>300%: 8 states

200-300%: 3 states100-200%: 37 states

<1: 3 states

—

100%

200%

300%

400%

500%

600%

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Is Washington’s tax regressivity that much different than other states?

Yes

–Why Invest in Public Education?

We live in a new economic age. New evidence suggests that, dollar for dollar, investing in

K–12 public education will create more jobs and income than would

an equal amount spent in any other sector.

Direct Labor 48.0%

State Corporate

Income Taxes 0.27%

0%

10%

20%

30%

40%

50%

60%

Shares of Total Business Costs

“There is no greater return to an economy or to a society than an educational system second to none.”

John F. Kennedy