With some schools in western Washington looking at consolidation plans to make up for budget shortfalls, many are asking where state funding is going and how they can make sure their kids are getting the best education possible.
On the Gee & Ursula Show, hosts Gee Scott and Ursula Reutin sat down with Washington state Superintendant Chris Reykdal to talk about the education system, and how recent changes to the capital gains tax is affecting school funding despite drops in enrollment, struggles filling educator positions, and school consolidation.
Ursula: The Senate has a proposal of $3 billion in additional school spending, will that be enough to keep schools from closing?
Reykdal: Not entirely. Our local school boards have to make these decisions, and they work so hard. I have nothing but respect for our local board. Each situation is so unique. So when the Legislature says they’re spending $3 billion, and they are, that’s on a base of about $20 billion, so everyone can do the math there. Most of that is inflation. They are paying for the inflation of goods and services or the inflation of the cost of living adjustments for the staff or health care benefits.
So there’s not a lot of additional programming coming, but they’re at least going to cover inflation for the stuff they buy. What the Legislature doesn’t do is cover the inflation for locally funded positions or federally funded positions.
And those two combined are about 25% of the school budget. So that’s why you hear districts say it will help if the Legislature will invest in inflation to support students with disabilities more. It will all help, but in some places, because of a loss of enrollment, they will have to make these cuts.
They will have to merge schools, they’re going to make tough choices, and we’ll support them because it is their local decision to figure that out.
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The impact of the capital gains tax
Ursula: You tweeted out right after the decision, and you said it’s a start. So why don’t you get into your reaction and your thoughts about this ruling? And what it’s going to mean for schools in our state?
The State Supreme Court has upheld Washington’s excise tax on capital gains. It’s a start! Our tax code remains regressive and inadequate. Wa.State’s education investments continue to be BELOW the national average as a share of our economy. #paramountdutyhttps://t.co/n7yTqkMbFx
— Chris Reykdal (@chrisreykdal) March 24, 2023
Reykdal: I guess I’d take it on two fronts. There’s this tax equity question, and then there’s the ‘what’s the money for’, and in both cases, I say, ‘it’s a start.’ So we are a state that continues to be number one in the country in regressivity. And that’s a big, fancy word, and all it means is our lower income, and our middle-income families pay a much higher tax rate and state taxes that are [for the] very wealthiest families and businesses.
So this was a small effort to make it more equal. It’s an excise tax, according to the court, which means you’re only paying on a transaction above a quarter-million dollars. And so it does tend to create a little more fairness because it’s taxing folks who have lots of disposable income by the sale of securities. And there’s all kinds of exemptions, your personal property, your retirement, there are all kinds of stuff that were exempted. So it doesn’t harm any of that.
Good start on equity, but there’s a long way to go to make our tax code fair. And then on adequacy, like what we spend it on, it’s all dedicated to early learning. Anything collected each year over $500 million spills into a school construction account. I don’t anticipate that for a little while. But it’s a great thing that the Legislature will dedicate this to early learning, we need lots of three- and four-year-olds getting more formal learning.
Is the education funding model broken?
Gee: The Wahkiakum School District is suing the state, and they’re arguing that the state’s education funding model is broken, leaving low-income districts on their own to fund construction projects. Your thoughts?
Reykdal: Well, I hope the court rules in favor of Wahkiakum because I do believe that is a tremendous inequity. Our Legislature has made some progress in trying to make more equal our operating budgets.
The capital budget, though, there’s just no path for small rural districts, property-poor communities, and those who can’t get over a 60% bond vote. Even when they do, I always want to say that even when a community can get to the 60% threshold — if they need a new school — they do not generate the kind of money necessary to replace that school.
So it’s a bad situation out there. Our rural schools are in terrible states of decay in many places. So this would be great. I think it’s one of the places the Legislature could really step up and invest capital dollars in schools.
I’ve said it before, we’re now [at] less than half of the operating budget again — we were over half. But we’re less than 25% of the capital budget. And K-12 is the paramount duty, so they need to get after it.
How long have regressive taxes been an issue in Washington?
Gee: How long has the state of Washington been this way? I feel like just here recently, it is being known that Washington state is No. 1 in the country when it comes to regressive taxes. How long has that been an issue for the state of Washington?
Reykdal: You know, structurally, it’s been there from the beginning. When you rely on sales tax and B&O taxes, you’re basically taxing transactions. And so it’s been there from the beginning.
What has made it worse, though, is your sales tax tends to fall on goods — so when we buy things, when we touch stuff. As the economy has shifted to more services, more experiences, and fewer goods buying as a share, it’s even worse because then you’re generating less revenue from all of our activity.
If you go buy a car, you pay sales tax, but if you go lease a service, or you have somebody do some service work for you, it’s still an important activity to you, but you don’t pay any sales tax on that.
So it’s been there from the beginning, and it’s getting worse in terms of the regressivity for low and middle-income families. And the overall share that this state collects and revenue as a share of our economy just keeps shrinking and shrinking and shrinking as more purchasing [for] services goes online and goes out of state.
Ursula: We get a lot of people who say this kind of general sentiment, which is, we’re already spending more than many other states in the country when it comes to what we spend per pupil. And there is a report that says in 2020, we spent $16,216, which is $770 more than the national average, why aren’t we doing enough with the money that we already have without having to add additional taxes?
Reykdal: Yeah, I think it’s a really good question. I think people should keep asking those hard questions. There are two points to this that are most important.
A) We are a pretty high-performing state. So we do a great job with the dollars we have, we move more kids who are not kindergarten ready to fourth-grade and eighth-grade assessment scores and graduation and post-secondary than just about any other state. So I think we do a good job with the resources.
B) No one can just look at the raw amount of money per kid. It is so expensive to live in New York, Boston, or Connecticut. So their spending per child is very, very high. Mississippi, Alabama, and South Carolina all have very low costs of living. So their spending per child is lower. So you can’t just look at the dollar amount. You have to adjust for the regional cost of living.
So we’re doing okay in the state. A measure I like to look at as well — what percentage of your economy are you putting back into your school system, both K-12 and higher ed, because your labor market is the biggest determining factor on the success of your economy.
We are a state that still spends less than the national average as a share of our economy. We put less money back into our schools as a share of our overall economic activity than the average state.
And it’s half a percent, it doesn’t seem like that much. But that half percent is $2 billion a year or $4 billion per education budget cycle.
So there’s more we can do without harming the economy. And it would make a really good long-term investment. But we got to make that choice.
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Where does the state stand on free lunch for students?
Ursula: One of the last times you spoke with us, you announced that you were pushing for free lunch for all students. And as you know, that didn’t get anywhere in the Legislature this year. What is your reaction to that?
Reykdal: Well, the Senate, I don’t think, is going to include it, and they didn’t in their first draft. I think we’ll see something in the House budget today that gets released whether they’re going to take the next step.
Maybe pick up the next 80,000-90,000 kids who would be eligible as you kind of march up that income scale. So we’ve got 70-80% of our kids already qualifying, or they’re in districts that provide free meals.
The House looks like they’re going to try to give us a boost to the next 80 or 90,000 kids. We hope the Senate agrees with them.
I said all along, I’d like this now, people need this now, families need this now, middle-income families need it. If you’re trying to feed two kids and pay for lunch every day, it’s over $3,000 out of pocket. So everyone should get this benefit.
If they want to take it over a couple of years and phase it in, we continue to support that, and it looks like the House is interested in that.
Addressing rhetoric around teachers
Gee: I don’t know what happened over the last couple of years, maybe two to three years. But for some reason, teachers across the country, not just here, but across the country, have just been demonized, right? Like a lot of rhetoric, hateful rhetoric towards teachers and everything. Do you think some of that has been prevented?
Reykdal: No question about it. We all want to do something with purpose, right? It doesn’t matter what you do. We need to sell real estate, we need to sell goods and services, we need to make pizzas, we need to teach, we need to be radio anchors, we’ve got to do things where we add purpose and value and a sense of contribution. And, of course, we want to be compensated well.
So anytime you have a profession where there’s a national political strategy to vilify and demonize them, you will have a psychological impact on folks. They will not want to be a part of something where even if the pay is decent, they don’t have a sense of self-worth or a belief that others believe in what they’re doing.
It’s intentional. It’s been here for so many decades, this is just the latest phase of this thing. And it’s on that continuum of how do you vilify the public schools in order to turn it into a private sector system, where wealthy families and the privileged can take their share of tax money and go back to their private institution to get it subsidized.
Again, we’ve talked about this. There are reasons people support that I think it’s a terrible idea for our democracy. And I think it’s going to do what it has always done, which is re-segregate schools and cause more discrimination based on race, based on gender, based on income.
So we fight it every day. And all we can do is try to get young people to see the power of this profession and the importance of it. Obviously, compensate them well.
But there’s a national strategy to vilify coming from the hard right. And I would argue in the last couple of years, they’ve had success. They’re doing exactly what they want. They sell a fear narrative. We try to sell hope and an opportunity narrative, and those are rarely on par with each other because human psychology is attracted to fear more than hope.
Listen to Gee Scott and Ursula Reutin weekday mornings from 9 a.m. – 12 p.m. on KIRO Newsradio, 97.3 FM. Subscribe to the podcast here.