June 7, 2013

Dear Legislators: As we approach the end of the first special session of 2013, my concern for our students increases with each passing day. It is my understanding that if a budget does not pass by June 30th, my office will not have the appropriation authority to fulfill the payment obligations to school districts or even pay the staff needed to carry out this work. State funding makes up two-thirds of school districts general funds. Without state funding school districts will find it difficult to meet their financial obligations. The repercussions of not passing a budget will affect student learning for the upcoming year. School districts will not be able to provide professional development this summer for important state priorities such as the administration of the WaKIDS assessment for our state funded full-day Kindergarten students and teacher and principal training for the implementation of the Teacher and Principal Evaluation Project without state funding. OSPIs Teacher certification process will grind to a halt, impacting school districts ability to hire new staff in time for classes to begin on time in the fall. Some of the effects of missing the June 30th deadline can be mitigated if we act now. If a budget is not enacted by June 15th, I am requesting legislative action to allow school districts flexibility with the budgeting and employee notification deadlines set by statute. Specifically, school districts will need flexibility with the following deadlines: Notice of non-renewal of employee contracts and subsequent deadlines Notice of completion of school district budget Notice of meeting for adoption of school district budget Hearing and adoption of school district budgets and subsequent deadlines Budget review committee approval and subsequent deadlines Budget filing to OSPI

I am providing you with following specific examples of the impact to school districts if a budget agreement does not occur soon. Basic Education Payments to School Districts OSPI projects, based on the historical fund balance of school districts general funds, 115 districts will not be able to meet their financial obligations including

Legislators Page 2 June 7, 2013 meeting payroll and making utility payments if they do not receive their July apportionment payment from the state. OSPI makes payment to schools on or before the last business day of the month (RCW 28A.510.250). School districts receive ten percent of their annual apportionment payments in both July and August. The monthly apportionment payment to school districts is anticipated to be $517M. OSPI staff will need at least 10 days to prepare all the documentation to send out the payments. Without a clear date for state budget enactment, the length of disruption in cash flow for school districts is undefined. This uncertainty affects districts capacity to plan and adapt. School buildings may be shut down, since utility payments cannot be paid. Summer maintenance projects already contracted are at risk for nonpayment. Child Nutrition Funding The Child and Adult Care Food Program (CACFP) provides federal funds to 575 nonresidential child care providers to serve nutritious meals and snacks to lowincome children, but we cant disburse these funds without budgetary author ity. Without appropriation authority, OSPI will not be able to pass-through the July payments of $2.4M to child care providers and $1.4M to day care homes. These providers do not have the means to provide these meals without the states assistance. State Construction Funding for School District Facilities Thirty-six school districts receiving state construction funding could face a projected shortfall of $36M for construction projects already underway. School districts must exhaust their local share of the construction costs before state reimbursements begins. Without the state reimbursements, school districts will experience a financial hardship for contracts already executed. Additionally, OSPI will not grant school construction assistance commitments in July. Without this commitment, some school districts will not be able to send their projects out to bid causing delays with the potential of additional costs and missed opportunities in the summer construction window. Funds from the common school construction account pay the debt service for the school construction and skill center bonds. A transfer is expected on the first of July and August. Staff to make these transfers is needed to ensure the state does not default on these bonds. School District Budget Adoption & Employee Contracts Local school districts are required in statute (28A.505 RCW) to complete a budget by July 10th of each year. OSPI has the authority to extend this date, if the state has not approved an operating budget by June 1st. However, first-class school districts still must adopt a budget by August 31st, and second-class school districts must

Legislators Page 3 June 7, 2013 adopt a budget by August 1st. School districts must also notify employees of the annual renewal of their employment contracts by May 15th. If an operating budget is not passed by May 15th, school districts must make notification no later than June 15 th. OSPI requests amendments to RCWs 28A.405.210, 28A.405.220, 28A.405.230, 28A.405.245, and 28A.310.250 modifying the deadline for notices of nonrenewal of contracts for certificated school employees to allow school districts an additional day past the June 15th deadline for each day the legislature has not passed a budget past June 1st. This change will allow school districts a longer window for nonrenewal notices and the subsequent hearing dates. Additionally, OSPI requests amendments to school district budgeting statutes, RCWs 28A.505.040, 28A.505.050, 28A.505.060, 28A.505.070, and 28A.505.080, allowing school districts flexibility with statutory deadlines, if a budget is not enacted by June 1 st. OSPI requests an extension of the budget completion deadline. OSPI proposes to add one day extension for each day the legislature has not passed a budget after June 1th. Allowing this change will allow school districts more time to plan and react to any changes in state funding. The state constitution clearly states basic education is the paramount duty of our state. Shutting down schools and not fulfilling the states payment obligations, is certainly contrary to that duty. I urge you to move quickly enact a budget that meets your paramount duty to K12 education. Sincerely,

Randy I. Dorn State Superintendent of Public Instruction RD:ldn Attachments