walegspsessOutcome of Special Legislative Session

December 11, 2010





Latest revenue forecast:

-  drop $385 million from current 2009-11 biennium;

-  $809million next 2011-13 biennium.[i]

· Revenue forecasted for 2009-11 = $28.1 b.  Enacted budget 2009-11 = $30.5

· Available transfers equals about $1.4 b.

· Yields a $901 million deficit – however, caseload cost changes and need for leaving some balance yields a $1.2 billion deficit.

· Revenue forecasted for 2011-13 = $ 32.6 b.  OFM’s six-year outlook[1] projects statutorily required spending at $ 36.9 b.  (No transfers available due to above.)

· Yields a $4.3 billion deficit, assuming resolution of $901 m above.

· Total deficit faced = $ 5.2 billion (assuming they leave no ending fund balance in 2011-13 – which would be foolish considering the story above).

Budget Implications:

Current 2009-11 biennium (2010-11 school year):

· Special Session held on Saturday, December 11, 2010.

· There will be mid-year cuts this school year.

· Cuts not as drastic as was in the Governor’s original proposal.

· The adopted Special Session Supplemental budget includes:

o Repurposing for other uses the $ 208 million Educator Jobs funds.

o Elimination of the K-4 class size reduction funds ($39.4 million) effective Feb. 1, 2011.

o 6.3% reduction in broad array of OSPI & statewide programs ($3.7 million).

o Reduce selected Education Reform programs ($9.2 million).

o Reduce higher education funding across-the-board ($51.1 million total, $26.5 million in CCTC’s)

o No reduction to all day Kindergarten

o No reduction to Levy Equalization payments (LEA)

o No reduction for the NBCT bonus

o Still need to reduce another $400 million in regular session beginning January 10.

Next Biennium:

The projected $4.2 billion deficit contains significant amounts of new promised spending for K-12 that is readily suspended or eliminated as no program would actually be cut as a result.  Amongst these items are:


· The cost to restore I-728 per the statutory suspension would be $ 861 million.


· The currently projected amounts for the I-732 COLA for the next budget would be 0.4% for the 2011-12 school year and 1.8% for the 2012-13 sy.

· Under current law, for the 20011-13 biennium this would yield COLA payments of 1.6% and 3.0%.

· The projected cost for the statutorily required COLAs is $301 million.

K-4 Class Size:

· The newly adopted supplemental budget eliminates funding for K-4 class size reduction.

· If you’re calculating the future biennial cost as the program currently stands, it would be about $250 million.

· The number of CIS fte staff supported by the current funding level equals 1,435 fte.

Levy Equalization:

· The estimated biennial cost is approximately $ 650 million, however this amount could go down based on cuts elsewhere in the budget.

All-day K:

· Approximately $ 80 million per biennium at the current funding level.

HB 2776:

· HB 2776 was the bill passed to implement many of the promises contained in 2261.

· The fiscal note for HB 2776 suggested a $ 765 million cost for the 2011-13 biennium (however the OFM six year outlook only pegged the cost at $ 710 million).

· The three primary items funded by the bill were the phased implementation of K-3 class size reduction to a 17-1 student-teacher ratio, the new Transportation funding formula, and the new amounts for MSOC (Maintenance, Supplies, and Operating Costs – replaces NERC’s).


· The overall state cost increase for pension funding is $ 583 million.

· The K-12 cost of the total amount is $429 million.

Health Benefits:

· The current OFM estimate for health benefit inflation is 7.5% per capita, per year.

· Using those figures and old (so slightly inflated) staff numbers, I very roughly estimate the cost for that measure of increase in state funding for health benefits to be about $154 million. (The amount would grow to $281 million should parity with state employees be restored.)

[1] OFM is currently updating the Six-Year Outlook to reflect changes resulting from the November Caseload Forecast.

[i]Revenue Forecast Background:

· First forecast of expected 2009-11 revenue in Feb, 2008 @ $ 34.2 b.

· Forecast amount in Nov. 2008 when Gov proposed her original 2009-11 budget = $32.8 b

· Forecast amount in Mar. 2009 when leg adopted budget = $ 30.6 b.

· Forecast for 2011-13 has not been as volatile – Feb ’10 = $32.3/Current $ 32.6 b.

· Concerns over models – Marty Brown’s NO vote on adopting current

· Implications…. Potential budget stalling (March 17 next Revenue Forecast)