A Citizen's Guide to the $1 Billion Education Initiative
2004-11
In November, Washington voters will likely see on the ballot a proposed $1 billion 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. 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.
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.
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 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.
The Initiative’s funding would come from an increase in the state sales tax from 6.5% to 7.5%, beginning April 1, 2005. If Washington’s state sales tax increases to 7.5%, it would become the highest in the nation.
In many cities in Snohomish County the combined sales tax would rise to 9.9% under Initiative 884. In many cities of King and Pierce Counties including Seattle, Bellevue, Federal Way, Puyallup, and Tacoma, the combined sales tax would rise to 9.8%. In addition, many cities in Benton, Clallam, Franklin, Grays Harbor, Island, Kitsap, Mason, Thurston and Walla Walla Counties would have sales taxes of 9.3% or more under the Initiative.
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 state, with the retail sector showing the largest decline.
The sales tax increase would have the largest impact on Washington residents with the lowest incomes. The state’s poorest citizens would pay an additional 0.8% of their income in taxes, while citizens in the highest income level would pay 0.3% more.
The 15% increase in the sales tax would produce an additional $982.7 million in 2006, the first full fiscal year the new tax would be in effect. In fiscal year 2007 the new tax would raise an additional $1.04 billion and by fiscal year 2009, an additional $1.15 billion.
Impact on Households from an increase in the State Sales Tax from 6.5% to 7.5%
|
Household Income |
Additional Sales Tax |
Tax as % of Income |
$0 - $20,000 |
$93 |
0.8% |
$20,000 - $30,000 |
$129 |
0.5% |
$30,000 - $40,000 |
$161 |
0.5% |
$40,000 - $50,000 |
$195 |
0.4% |
$50,000 - $60,000 |
$235 |
0.4% |
$60,000 - $70,000 |
$263 |
0.4% |
$70,000 - $80,000 |
$292 |
0.4% |
$80,000 - $100,000 |
$331 |
0.4% |
$100,000 - $130,000 |
$386 |
0.3% |
Over $130,000 |
$547 |
0.3% |
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 the 2002-03, the average cost per student for a public education in Washington was $9,454.
Of the total $9 billion spent for K-12 education, $3.9 billion, or 42.5%, went towards basic instruction (teaching). The other $3.3 billion in the general fund was spent on special education, transportation, food services, interest on debts, and compensatory education. In addition, $1.1 billion was spent on the purchase, construction and remodeling of school sites, $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.
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.
The funds for higher education come primarily from the state’s general fund and tuition. Instruction and research are the two largest expenses for both two and four-year higher education. In 2003, $724 million was spent on instruction and $996 million on research in public four-year college and universities in Washington.
Spending on K-12 education and higher education in Washington has 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 K-12 public students increased by only 32%.
Spending on higher education in Washington increased by 98% in real terms from $1.68 billion in 1980 to $3.33 billion in 2000. During this time, the number of higher education students increased by only 2.6%.
Throughout the U.S., the money spent on schools has been dramatically increasing, even after figures are adjusted for inflation. Between 1960 and 2000, spending per student more than tripled from $2,235 in 1960 in inflation-adjusted dollars to $7,591 in 2000.
There are a number of different ways to rank states’ spending on public education. Washington ranked 34th out of the 50 states in K-12 spending per student in 2002-03. In K-12 education spending per capita, Washington ranked 15th out of the 50 states. When overall state and local K-12 spending was divided by each $1,000 of income in the state, Washington ranked 36th. Washington also ranked 18th in the country for the salaries of K-12 public school teachers in the 2002-03 school year.
In higher education, Washington ranked 17th among the states in state and local higher education spending per capita and 28th when higher education spending was divided by each $1,000 of income in fiscal year 2000.
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