TABLE OF CONTENTS

• I. Executive Summary
• II. Introduction
• III. Description of Initiative 884
• IV. Funding of Initiative 884
• V. K-12 Public Education in Washington
• VI. Higher Education in Washington
• VII. Early Education in Washington
• VIII. Increases in Education Spending over Time
• IX. Conclusion
• Appendix A

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Citizen’s Guide to the $1 Billion Education Initiative
An Analysis of Initiative 884 and public education funding in Washington

by Melissa Lambert Milewski
Policy Analyst
July 2004

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I. Executive Summary

In November, Washington voters will likely see on the ballot a proposed one billion dollar initiative for education that would increase the state sales tax by 15%, raising the tax rate from 6.5% to 7.5%.   Initiative 884 would create a trust fund for education, annually raising about $1 billion for preschool education, kindergarten through 12th grade and higher education.  Of the $1 billion that the sales tax increase is projected to raise annually, $500 million would go to K-12 education, $400 million would go to higher education and $100 million to preschool education.

If Washington’s state sales tax increases to 7.5%, it would become the highest in the nation and would total almost 10% in many cities when combined with local sales taxes.  Working with the Beacon Hill Institute at Suffolk University, Washington Policy Center has developed an economic model which shows that under Initiative 884, there would be approximately 10,000 fewer jobs in the economy, with the retail sector showing the largest decline.  In addition, the sales tax increase would have a larger impact on Washington residents with the lowest incomes.  The state’s poorest citizens would pay an additional 0.8% of their income a year in taxes, while citizens in the highest income level would pay an extra 0.3% of their incomes.

In October 2003, there were just over a million (1,021,926) K-12 public school students in Washington.  K-12 education is the largest single expenditure in the state budget, totaling slightly over $9 billion ($9,195,419,356) in the 2002-03 school year.  In 2002-03, the average cost per student for a public education in Washington was $9,454.

In fall 2002, there were 102,868 students enrolled in public four-year colleges and universities and 260,488 students enrolled in community and technical colleges in Washington. The operating expenditures of public four-year colleges were $2.75 billion and the expenditures of public community and technical colleges were $939.7 million in the 2003 fiscal year. 

Spending on K-12 and higher education in Washington almost doubled in real terms between 1980 and 2000.  State and local spending on K-12 education increased by 94% in inflation-adjusted dollars, from $3.96 billion in 1980, $5.37 billion in 1990, and $7.67 billion in 2000.  Yet while spending almost doubled during this time, the number of public education students only increased by 32%.  Spending on higher education increased by 98% in real terms from $1.68 billion in 1980 to $2.14 billion in 1990, to $3.33 billion in 2000.  During this time, the number of higher education students increased by only 2.6%.

The information in this report will help voters decide whether Initiative 884 is good public policy that will improve the quality of public education and is worth the economic impacts that the higher sales tax will bring. 

II. Introduction

On the November ballot, Washington voters will likely see a proposed one billion dollar initiative for education that would increase the state sales tax by 15%, raising the tax rate from 6.5% to 7.5%.   Initiative 884 would create a trust fund for education, annually setting aside approximately $1 billion from the tax increase for preschool education, kindergarten through 12th grade education, and higher education.  At the same time, the state sales tax in Washington would become the highest in the nation, and would total almost 10% in many cities when combined with local sales taxes.[1] 

Voters will be deciding between voting for a steeper sales tax or turning down additional money for the state education system.  Before making a decision, it is useful to know the facts.

What will the change be in the current sales tax and how will this affect the economy?

How much more money will residents of different income levels and in different areas pay in sales tax each year? 

What would the additional education money be used for? 

What is currently being spent on education in Washington?

How does the money currently spent on education in Washington compare with other states and with private schools? 

How has education spending changed in the past decades? 

Is more money needed?

This study seeks to answer these questions, giving the facts necessary for voters to make an informed decision about Initiative 884 on election day and to better understand education spending in Washington. 

III. Description of Initiative 884

Initiative 884 is sponsored by the League of Education Voters and supported by Governor Gary Locke.  The League of Education Voters, an education advocacy organization based in Seattle, successfully promoted two initiatives in 2000, I-728 and I-732.  Unlike these earlier initiatives, however, Initiative 884 includes its own funding source, a sales tax increase.  Of the approximately $1 billion that the sales tax increase is projected to raise annually, $500 million would go to kindergarten through 12th grade education, $400 million would go to higher education and $100 million to preschool education.  All areas of Initiative 884 spending would gradually increase in future years as sales tax revenues rise with the expanding economy. 

The money for education raised by Initiative 884 would be used for very specific purposes.  In K-12 education, the money would primarily be used to reduce class sizes, fund cost-of-living raises for school employees, give bonuses to teachers who receive additional certifications and fund expanded and extended education for students.  In higher education, the money would be used to create 25,000 new student enrollment spots, fund cost-of-living raises for community and technical college employees, increase scholarships and financial aid, and fund new research.  In early education, the money would mainly be used to give more low-income children access to preschool education.

1. K-12 Education

The $500 million for K-12 education would be used for many of the areas currently funded by an earlier education initiative, Initiative 728.  Initiative 728, which was approved by voters in November 2000, is funded by a portion of the state property tax and state lottery revenues.  The Initiative’s funding per student was scheduled to double in 2004, but the 2003 Legislature revised Initiative 728’s funding to increase at a more gradual rate.[2] 

Like Initiative 728, Initiative 884 reduces class sizes, provides before and after school programs and summer school and gives additional paid time to teachers for curriculum and lesson redesign.  Initiative 884 also revises the areas that Initiative 728 currently funds and adds new areas, many concerning higher teacher salaries and increased professional development.[3]  The new and revised areas that Initiative 884 would fund are:

Expanded learning opportunities.  These include optional all-day kindergarten (priority would be given to low-income students), Advanced Placement classes and dual high school and college credit programs.

Teacher training and expenses.  The Initiative would pay for fees, expenses and support related to professional certifications for educators.  It would also fund training for staff with instructional responsibilities for special education students or students whose first language is not English and reimburse teachers for out-of-pocket costs relating to classroom supplies.

Additional student academic counseling and strategies to increase parental involvement.

Up to $93 million each year to fully fund Initiative 732, which mandated cost-of-living salary increases for school employees based on the Puget Sound area consumer price index.[4] 

$5,000 and $15,000 annual bonuses to teachers with national board certification.  A $5,000 annual bonus would be given to teachers who attain master teacher certification from the national board for professional teaching standards and a $15,000 bonus would be given to teachers who attain national board certification and who teach in a high need school (“high need” schools can include up to 25% of total schools).  Currently there are 436 teachers in Washington who are national board certified.[5]  However, national board certification is not the only route for master teacher certification.  The American Board for Certification of Teacher Excellence (ABCTE) is a new certification program that plans to use student achievement as a criterion in certifying master teachers.  Under I-884, teachers who earn ABCTE certificates would not receive a bonus.

Up to $10 million per year in scholarships for teacher education.  Scholarships would be given to students completing a teacher certification program in a high need area or to teachers seeking an additional endorsement in a high need area.

2. Higher Education

Initiative 884 would put about $400 million dollars annually into a higher education trust fund.  The money would be allocated in the following manner:[6]

$230.4 million annually to increase enrollments in the 2006 and 2007 fiscal years. Beginning in the 2008 fiscal year, the percentage of funds for increasing enrollments would increase to approximately $255.4 million a year.  According to the Initiative, these funds must produce a minimum of 25,000 additional state-supported higher education full-time student slots.  At least $75 million of the funds to increase enrollment must be used to fund high demand enrollments such as nursing and engineering.[7] 

Up to $19.6 million each year to provide cost-of-living salary increases for community and technical college employees. This amount would be used to increase the rate of pay for community and technical college employees to the level they would have received if the legislature had not suspended Initiative 732 during the 2003-05 biennium.

$50 million for scholarships and financial aid.[8]  The Initiative increases the number of students qualifying for financial aid by expanding eligibility requirements for the state need grant program and Washington Promise Scholarship.  State need grants, the state’s largest financial aid program, pay a portion of the college costs for Washington’s lower-income undergraduates.  Currently, applicants’ family incomes cannot be more than 55% of the state median family income of about $36,500 for a family of four.  The Initiative allows students with a family income of up to 65% of the median family income to qualify for the grants.[9]  The Initiative also lowers the standards for who can qualify for the Washington Promise Scholarship program, mandating that students in the top 30% of their class can qualify, instead of the top 15% as under current law.[10]

$100 million for research and obtaining outside grants in fiscal years 2006 and 2007.  These funds would be used to “enhance the capacity to obtain other research funding and to conduct high priority research.”  Beginning in fiscal year 2008, approximately $75 million each year will be allotted for these purposes. [11]  Eighty percent of the research funds would be allotted to specific universities for research and 20% would go into a pool that universities could apply to for competitive grants.  Of the noncompetitive research money, the University of Washington would receive 60% of the funds, Washington State University would receive 30% and 10% will be distributed among the comprehensive universities and The Evergreen State College.

3. Early Education

Initiative 884 directs that approximately $100 million a year from the tax increase be placed in an early education account.  The additional funds for early education could be used in paying all or part of the fees of low-income children in early education programs in schools, head start programs, early childhood education and assistance programs (ECEAP), and licensed child care facilities.[12]  The League of Education Voters says that these funds would allow the enrollment of 10,000 more low-income eligible children per year in high-quality preschools.  The Initiative itself, however, does not provide an exact number of additional students who would be enrolled. 

In addition, the Initiative creates an Early Education Board to establish state early education goals and benchmarks and determine eligibility and funding formulas for different localities.   The Early Education Board would also oversee the expansion of one of the existing early education programs, the Early Childhood Education and Assistance Program (ECEAP). 

4. Oversight of Trust Fund

The Initiative establishes an oversight board for the education trust fund, composed of 11 voting members and one non-voting member.  The board must have eight citizen members appointed by the governor for four-year terms and three expert members (the Superintendent of Public Instruction or designee, a member of the Early Education Board and a representative of higher education appointed by the governor).  According to Initiative 884, the board must ensure trust fund money is spent as outlined by the Initiative, establish performance benchmarks for students, and adopt rules and procedures for implementing education trust funding.[13]

IV. Funding of Initiative 884

The Initiative’s funding would come from an increase in the state sales tax rate from 6.5% to 7.5%, beginning on April 1, 2005.  This is a 15% increase in the Washington state sales tax.  Since lodging taxes include the sales tax, the cap on the total tax on lodging would increase from 12% to 13%.  In Seattle, the limit on the tax on sales of lodging would increase from 15.2% to 16.2%.[14]

The money from the sales tax increase would be deposited in an education trust fund to be used for the purposes outlined above.[15]  According to Initiative 884, the state must appropriate general funds for education before education trust funds are appropriated.  The Initiative states that existing state funding cannot be “reduced, supplanted, or otherwise adversely impacted by distributions from the Washington education trust fund.”  In addition, before Initiative money is given, the state must maintain or increase education staffing ratios and maintain or increase state funding for early education and higher education.[16]

1. Sales Tax

According to the Initiative sponsors, “The sales tax is simple, familiar, and citizens believe it’s fair.  Everyone pays and everyone benefits from public education.”[17]  In contrast, a group opposing the Initiative, Citizens for a Sound Economy, says that raising the sales tax “will drive people to purchase goods in sales tax-free Oregon and over the internet.”[18]  Others argue that since the sales tax is a regressive tax, citizens with lower incomes must pay a higher percentage of their income for the tax than those at a higher income level.

The sales tax is the largest single revenue source for the state.  Sales tax revenue is forecasted to account for 53.2% of revenues from state sources in the state general fund in the 2003-05 biennium ($11.9 billion of the state’s total general fund of $22.45 billion).[19] 

Washington’s current sales tax rate of 6.5% is higher than that of 44 other states.  It is exceeded only by the 7.0% rate levied by Mississippi, Rhode Island and Tennessee.  Two other states, Minnesota and Nevada, share Washington’s 6.5% state sales tax rate.  If Washington’s state sales tax rate is increased to 7.5%, it would become the highest in the nation.[20]  Local sales tax (up to 2.4% in Washington) is added to the state sales tax to get the total combined sales tax that a customer is charged.  Under Initiative 884, the maximum combined sales tax rate would be 9.9%, giving Washington the 6th highest combined sales tax in the nation.[21] 

2. Effect on Different Cities

Residents of cities in the Central Puget Sound Regional Transportation Authority (RTA) district in Snohomish, King and Pierce counties would have the highest sales tax rates, in part because of the special transportation tax they pay.  In a number of cities in Snohomish County, including Bothell, Edmonds, and Lynnwood, the combined state and local sales tax is currently 8.9%.  Under Initiative 884, the rate would rise to 9.9%.  In many cities of King County, including Seattle, Bellevue, Federal Way and Mercer Island, the combined sales tax is currently 8.8% and would rise to 9.8%.  In Pierce County, a number of cities have an 8.8% sales tax, including Lakewood, Puyallup and Tacoma.  Under Initiative 884, these cities would have a combined sales tax of 9.8%. 

In addition, many cities in Benton, Clallam, Franklin, Grays Harbor, Island, Kitsap, Mason, Thurston and Walla Walla Counties would have combined sales taxes of 9.3% or more under the Initiative.  A listing of the counties and cities that would have a sales tax rate of 9.3% or higher under Initiative 884 is in the appendix.

3. Effect on the Economy

One method to analyze changes in the tax system is a Computable General Equilibrium (CGE) model.  The Beacon Hill Institute at Suffolk University has developed a CGE computing model called the State Tax Analysis Modeling Program, or STAMP. Washington Policy Center used the Washington state STAMP model to simulate an increase in the state sales tax from 6.5% to 7.5% and trace its effects on Washington’s economy.

According to STAMP analysis, if Initiative 884 passes and the sales tax is increased, there would be approximately 10,000 fewer jobs in the economy, with the retail sector showing the largest decline.  The increase in the sales tax would also decrease disposable income in Washington by $931 million statewide.  In addition, each person’s disposable income would be decreased by an average of $115, as residents would be paying more for each purchase.  While revenue from the state sales tax would increase, revenue from other taxes including the business and occupation tax, property tax and cigarette tax would decrease as personal disposable income was reduced.[22]

4. Effect on Different Income Levels

The sales tax increase proposed by Initiative 884 would have a strongly disproportionate impact on Washington residents with the lowest incomes.  Citizens in the lowest income bracket (under $20,000 a year) would pay an additional 0.8% of their income a year in taxes if the Initiative passes, while citizens in the highest income level would pay an extra 0.3% of their incomes in taxes.  As shown in the table below, households making between zero and $20,000 a year would pay an average of $93 more in taxes each year as a result of the sales tax increase.  Middle-income households making between $40,000 and $50,000 a year would pay $195 more each year in taxes, 0.4% of their total income.  Households with the highest incomes (over $130,000 a year) would pay the lowest percentage of their total income towards the new tax increase, paying about $547 more a year in taxes, or 0.3% of their total income.[23]

Under Initiative 884, the total amount of major state and local taxes Washington residents pay would rise to $1,930 for households making between zero and $20,000 a year, $3,895 for households making between $40,000 and $50,000 a year and $9,745 for households making over $130,000 a year.  Figure 2 lists the major state and local taxes that would be paid by Washington residents if Initiative 884 passes, including the total amount of sales tax for different income levels under the Initiative.

5. Forecast of Revenue

While estimated to collect about a billion dollars annually, the additional sales tax revenue deposited in the education trust fund is forecasted to increase each year due to economic growth and inflation.  In 2006, the first full fiscal year the new tax would be in effect, the state is forecasted to collect an additional $982.7 million.  In fiscal year 2007 the new tax would raise an additional $1.04 billion and by fiscal year 2009, an additional $1.15 billion.[26]  The forecasted yearly revenue from the proposed sales tax increase is shown in Figures 3 and 4.

V. K-12 Public Education in Washington

In order to judge whether additional money is necessary in public education, it is important to know how much the people of Washington are currently spending on public education.  Because the highest proportion of the proposed $1 billion increase would go to K-12 education, assessing funding in this area is especially important. 

1. K-12 Education Enrollment

In October 2003, there were just over a million (1,021,926) K-12 public school students in Washington.[29]  Public school enrollment has been increasing slightly since 1984, following a long decline in enrollment from 1970 through 1984.  The gains in the number of public school students since 1984 are due to more families moving into Washington state than moving out, more juniors and seniors remaining in school and a slight increase in the birth rate beginning in 1995.[30]     

The state’s total population, however, has grown at a much faster pace than the number of students enrolled in K-12 and higher education public schools, creating a larger tax base to pay for educating a proportionately smaller number of students.  Between 1971 and 2001, the state population increased by about 2.5 million people (74%),[31] while K-12 public school enrollment increased by approximately 201,277 students (25%) and higher education enrollment increased by approximately 101,383 students (57%).[32]  See Figure 5.  

2. K-12 Education Revenue

In the 2002-03 school year, about $5.1 billion of the K-12 general fund dollars came from state revenue (state tax dollars), about $1.5 billion from local revenue (primarily property taxes), and about $691 million came from federal grants. Thus, approximately 70.2% of the K-12 general fund money was from the state, 20.3% from local government, and 9.5% from the federal government.  Other K-12 public education costs not paid for from the general fund, such as building or improving school buildings and buying new school buses, are funded from separate state, local and federal revenue.[34]

3. K-12 Education Spending

K-12 education is the largest single expenditure in the state budget, with the total amount spent by school districts in Washington totaling about $9.2 billion ($9,195,419,356) in the 2002-03 school year.  In the 2002-03 school year, the average cost per public school student was $9,454.[36] 

In 2002-03, $7.2 billion was spent in Washington from the general fund on operating schools.  Of the money for operating schools, $3.9 billion, or 42.5% of the total $9.2 billion spent on education, went towards basic instruction (teaching).  The other $3.3 billion from the general fund for operating schools was spent on special education, transportation, food services, interest on debts, and compensatory education. 

Several other funds beside the general fund help pay for the total cost of schools in Washington.  In 2002-03, the purchase, construction and remodeling of school sites totaled $1.1 billion.  In addition, $708 million was spent to repay the principal and interest from districts’ bond debt, $34 million was spent to purchase school buses and $117 million was spent for student body activities.[37]

4. Assessing K-12 Education Funding

It is difficult to say exactly what the level of funding should be for public education at any given time.  There are many different opinions on this issue, which will probably never be completely resolved.  Proponents of Initiative 884 seem to have chosen two different benchmarks to measure the adequacy of public education funding: private school spending and comparisons with public education in other states.  Both measures have advantages and disadvantages. 

On one hand, using the costs of private education in Washington to measure the state’s public school funding neutralizes some of the differences across states.  However, there are problems with using private school costs to measure public schools.  Many private schools are concentrated in large cities, where the cost of living is higher and there are vast differences in the administration and operations of public and private schools.  There are also wide differences in the costs of private schools themselves. 

The advantage of comparing Washington public school spending with public school funding across the nation is that the administration and operation of each state’s public schools is much the same throughout the United States.  Yet, unlike the comparison with private schools, regional differences are not necessarily accounted for in such a comparison. 

As the advantages and disadvantages of these two measures complement each other, it is useful to compare how Washington public schools rank in both measures to determine the adequacy of Washington public education spending.

5. Comparing Private and Public School Spending

The 76,432 K-12 private school students in Washington made up seven percent of the total K-12 students in Washington in October 2003.[40]  The majority of these private school students were in elementary school.[41]  The percentage of private school students is significantly higher in urban areas, particularly in the Seattle school district, where the proportion of K-12 private school students is 24% (15,190 private school students out of 63,043 students in district).[42] 

Catholic schools’ costs are on the lower end of the private school costs spectrum.  About 36% of private school students in Washington attend Catholic schools (approximately 29,000 Catholic school students in 2002-03).  The average actual cost for educating a child at a Catholic elementary or high school in Western Washington is $7,696, about $2,000 less than the $9,454 spent per K-12 public school student.  The average actual cost for educating a child at a Catholic school in Eastern Washington is $4,128 and in Central Washington it is $4,170, both about $5,000 less than what is spent for public school students.[43]

A number of the higher end private schools in Washington belong to the Pacific Northwest Association of Independent Schools (PNAIS). Washington schools belonging to the Association charge an average tuition of $11,478 for full-day kindergarten, $14,499 for 6th grade and $17,392 for 9th grade.[44] According to PNAIS executive director Meade Thayer, these tuition costs are generally “less than the actual cost of educating a child because schools depend on other sources of funding such as fundraisers and endowments.”[45]

A broad, representative spectrum of private and religious schools belong to the Washington Federation of Independent Schools (WFIS), including both the less expensive Catholic schools, schools with costs in the middle range, and the more costly PNAIS schools.  A survey by the Federation of 122 private and religious schools in Washington found that during the 2003-04 school year, the average private school tuition in Washington for grades 1-4 was $5,095, the average tuition for grades 5-8 was $6,109 and the average tuition for high school was $8,249.  The survey also asked whether the tuition covered the school’s actual costs per student.  Twenty-six percent of schools reported that their actual cost was at or below their tuition, 53% reported that their actual cost was between $1 and $1,500 more than their tuition, and 21% reported that their actual cost was more than $1,500 higher than their tuition.[46]

The average tuition rates and range of actual costs reported in the WFIS survey are probably one of the best measurements of what the actual cost of private school education is in Washington today.  Even when between $1 and $1,500 is added to the tuition rates to generate the actual cost per student, the costs of private schools in Washington remain very similar – and in the lower grades significantly lower – than the costs of public education in Washington.  See Figure 9.

6. Education Spending Compared with Other States

There are many different ways to measure and compare a state’s education spending to other states in the nation.  One measure is the amount of money spent per student.  According to the National Education Association, in 2002-03 Washington ranked 34th in the nation in per student funding.[48]  Initiative 884 states that the sales tax hike is needed because “the state has fallen behind the nation” in this measure, funding per student.[49]  However, in another measure of education spending, state and local K-12 education spending per capita, Washington ranked 15th out of the 50 states.  Education spending can also be measured by dividing overall state and local K-12 spending by each $1,000 of personal income earned in the state.  By this standard, Washington ranked 36th.[50]  Measuring spending based on income, however, may be less reliable because it is affected by the unusually high incomes of certain residents of the state. 

Capital spending on new schools, buying land and improving existing land and buildings can also be compared with other states.  In 1999-2000, Washington ranked 4th in per capita state and local capital spending for public K-12 schools.[51]

A long-term view of how Washington education spending compares to other states can also be useful. Washington state and local K-12 expenditures per capita have been above the 50-state average every year between 1980 and 2000 (the last year for which the comparison is available).  While the figure has gone up and down over the years, education spending per capita in Washington has not dropped below the national average for two decades.[52]  See Figure 10.

7. Teacher Salaries and Class Sizes

Initiative 884 would devote a significant amount of money to decreasing class sizes in Washington, thus requiring the hiring of new teachers.  The Initiative would also increase the pay of school employees to the levels mandated by Initiative 732.  Before deciding how to vote on the Initiative, it is important to examine the current salaries and proportion of teachers in Washington and how our state ranks in comparison with the rest of the nation.

In 2003-04, there were approximately 58,123 public elementary and secondary teachers in Washington, about 38.5% of the 150,815 total school district personnel.  The average salary of full-time public K-12 teachers in Washington was $45,429 in 2003-04.  In addition, the average 2003-04 salary of public school central administrators in Washington was $89,027 and the salary of local school administrators was $80,826.[53] 

When compared to other states, Washington has one of the highest ratios of students enrolled per teacher in public K-12 schools.  In fall 2002, Washington ranked fifth highest, having an average of 19.1 students per teacher.  The national average in fall 2002 was 15.7 students per teacher.[54]  Yet classroom sizes have declined slightly in Washington over the past decade.  In 1992-03, Washington had the third highest teacher-student ratio in the nation, with a ratio of 20.3 students per teacher.[55] 

At the same time, Washington ranked 18th in the country for the salaries of K-12 public school teachers in the 2002-03 school year.  At that time, Washington paid teachers an average of $44,958, while the highest average salary in the country was $56,283 (California) and the lowest average salary was $32,416 (South Dakota).[56]

There is a debate in the education community over whether it is more beneficial to the student to have a smaller class size or a more qualified, higher paid teacher.  In this regard, Washington currently seems to be coming down on the side of paying teachers more and keeping class sizes relatively large.  

This current approach in Washington is supported by economist Eric Hanushek of Stanford University’s Hoover Institution, who gives three reasons why he found class size reduction generally does not improve student learning:

Class size reductions are usually not targeted to the specific situations where they would be effective.

Class size reductions require hiring more teachers and the new teachers hired are often less experienced than current teachers.  Because teacher quality is much more important than class size for student achievement, students may be worse off in a smaller class if they have a less experienced teacher.

Class size reduction is very expensive and often “little or no consideration is given to alternative and more productive uses of those resources.”[57]   

8.  Student Achievement

Education quality is often measured by student test scores and performance.  National tests show that Washington students often do better than the national average.  The average score of Washington high school graduates who took the Scholastic Assessment Test (SAT) in 2002-03 was 1062 (out of 1600), 36 points higher than the national average of 1020.  In addition, the average score of Washington high school graduates who took the American College Testing (ACT) was 22.5 (out of 36), 1.7 points higher than the national average.[58]  The scores of 4th and 8th grade students in Washington on the reading and math national assessment tests were also above the national average in 2003.[59]  In addition, the number of high school graduates in Washington between 1992-93 and 2002-03 increased by 29.2%, the 10th highest increase in the nation.[60]

While Washington may compare favorably in certain national measures, the 2002-03 Washington Assessment for Student Learning (WASL) results show that there is significant room for improvement in student performance.  In fourth grade, only 67% of Washington students met the WASL reading standard and 55% met the math standard.  In seventh grade, 48% met the WASL reading standard and 37% met the math standard.  Finally, in tenth grade, 60% of students met the reading standard and 39% met the math standard.[61]      

The nation’s achievement on an international level seems to show that educational achievement is not necessarily related to spending.  While the United States ranks among the highest in the world for education spending, America lags behind many other developed countries in student achievement. An international comparison by the Organisation for Economic Co-operation and Development (OECD) ranked U.S. schools “third highest among 22 countries in per-student expenditures on primary schools.”  At the time, the U.S. spent 75% more per student on primary education than the $3,033 international average.[62]

Despite the United States’ high level of spending, the longer American students remain in school, the poorer they perform academically compared to students in other countries.  The International Math and Science Study (TIMSS), which assessed the performance of students from up to 41 countries, found that American students ranked 12th out of 26 countries for Math in 4th grade and 3rd out of 26 countries for Science in 4th grade.  By 12th grade, however, the rankings of American students had dropped to last and next to last – 15th out of 16 countries for Math and 16th out of 16 countries for Science.[63]

9. Proportion of State and Local Funding

Initiative 884 would increase the proportion of total education revenue from state funds while decreasing the proportion from local and federal funds.  Therefore, it is useful to examine what proportion of education revenue currently comes from the state, local, and federal governments.  Washington currently has one of the highest proportions of funding from the state, ranking 9th in the nation in the percentage of revenue for public K-12 schools from state governments.  Washington also has one of the lowest proportions of local revenue, ranking 43rd in the nation in the percentage of revenue from local governments.[64] 

In the 2002-03 school year, about $5.1 billion of K-12 general fund revenue came from the state (state tax dollars), about $1.5 billion came from local sources (primarily property taxes), and about $691 million came from federal grants. Thus, approximately 70.2% of the K-12 general fund was from the state, 20.3% from local government, and 9.5% from the federal government.[65] 

Until 1977, local governments funded a much higher proportion of education in Washington (up to 30%), with much of the money coming from levies.  In 1977, the failure of the Seattle School District’s 1976 levy led to a landmark court decision which required the Legislature to fully fund a basic education program for all public school students “through a regular and dependable tax source instead of a heavy reliance upon annual local special tax levies.”  In response to this court ruling, Washington increased state support for education and limited local property tax support for schools.  This court case and subsequent rulings have led to the high proportion of state support of K-12 education in Washington.[66]

VI. Higher Education in Washington

A significant amount - $400 million – of Initiative 884’s dollars would go to higher education in Washington and would be used to create 25,000 new student enrollment spots, fund cost-of-living raises for community and technical college employees, increase scholarships and financial aid, and fund more research.  This section will examine the total spending on higher education in Washington as well as spending in these specific areas. 

The public higher education system in Washington currently consists of 34 community and technical colleges, six four-year universities and colleges, and five branch campuses.  In fall 2002, there were 102,868 students enrolled in public four-year colleges and universities and 260,488 students enrolled in community and technical colleges in Washington.[67]

1. Higher Education Spending

Public higher education is primarily funded from the state’s general fund and student tuition, but also receives revenue from higher education grants and contracts, dedicated local revenues and the University of Washington Hospital.[68]  In fiscal 2003-04, public higher education institutions will receive about $514 million from tuition and about $1.165 billion from the state general fund (tax dollars).[69]  The total operating expenditures of public four-year colleges were $2.75 billion and the operating expenditures of public community and technical colleges were $939.7 million in the 2003 fiscal year.[70] 

Instruction and research are the two largest expenses for both two and four-year higher education.  For public four-year colleges and universities, research was the highest cost in fiscal 2003 ($996 million) and instruction was the second highest cost ($724 million).  In contrast, for public community and technical colleges, instruction was the highest cost ($399 million) and research was the next highest cost ($151 million) in fiscal 2003.  A breakdown of spending for four-year and community and technical colleges and universities is shown in Figure 12.

Figure 12
Operating Expenditures for Public Higher Education
in Washington in Fiscal 2003 [71]

2. Tuition Costs

In the 2003-04 academic year, resident tuition paid for approximately 51% of the cost of instruction at research universities, 39% of the cost at comprehensive institutions and 36% of the cost at community colleges.  The remaining portion of instruction costs is primarily paid for from the state general fund (state taxes).  Tuition for nonresident undergraduate students is higher and covers the entire cost of instruction.[72]

Tuition rates for Washington higher education remain below average when compared to similar public schools in other states.  The average tuition at comparable public schools is $1,027 more than the tuition at the University of Washington, $562 more than the tuition at Washington State University, and $469 more than tuition at the comprehensive institutions.  The average tuition at comparable community and technical colleges in the U.S. is $13 more than the tuition at community and technical colleges in Washington.[73]

Although tuition rates remain below average, during the past decade, the percentage of instruction costs paid for by tuition has risen in Washington.  While today tuition pays for 51% of instruction costs at research universities and 36% of instruction costs at community colleges, between 1981-82 and 1992-93, tuition at research universities paid for 33.3% of instruction costs and tuition at community colleges paid for 23% of instruction costs.[74] 

Undergraduate tuition and fees have increased 89% in non-inflation adjusted dollars during the past decade at the state’s public research universities, increasing from about $2,532 in 1993-94 to about $4,793 in 2003-04.  Tuition increased 90% at community colleges during the same time period, from $1,126 in 1993-94 to $2,142 in 2003-04.  During that time, inflation increased about 20% and per capita personal income in Washington increased 51%.[75]  At the same time, Washington’s state and local government spending on higher education has greatly increased in inflation-adjusted dollars, rising from $2.14 billion in 1990 to $3.33 billion in 2000.[76]

3. Spending Ranked with Other States

For the past two decades, per capita spending on higher education by Washington state has “consistently been above the U.S. average.”[77]  In fiscal year 2000, per capita state and local government spending on higher education was $80 more than the U.S. average.  In that year, Washington ranked 17th among the states in per capita spending (when state and local government spending on higher education is divided by the number of people in the state) and 28th when higher education spending was divided by each $1,000 of income.[78]

In addition, Washington’s per capita spending on the land and buildings of its higher education institutions is higher than in most other states.  In 1999-2000, Washington ranked 8th in the nation for per capita state and local government capital spending on higher education.[79]

Figure 13. Washington’s Rankings on Higher Education Compared to Other States in U.S.