Nonvoted Bonds.  A school district may contract indebtedness and issue bonds, up to a total value of 0.375 percent of the taxable property in the district, without a vote of the people for the following purposes:

• the purchase of sites for all buildings, playgrounds, physical education and athletic facilities, and structures authorized by law, or necessary or proper to carry out the functions of a school district;
• improving the energy efficiency of school district buildings or installing systems and components to utilize renewable or inexhaustible energy resources;
• major and minor structural changes and structural additions to buildings, structures, facilities, and sites necessary or proper to carrying out the functions of the school district; and
• the purchase of any real property, personal property, or property rights in connection with the district's duties.

Before issuing nonvoted bonds in excess of $250,000, a school district must publish a notice of intent to issue such bonds and hold a public hearing on the proposal. At the conclusion of public comment, the school district board of directors may determine, by resolution, whether to issue such bonds.

Excess Levies by Voter Approval.  The Washington State Constitution limits regular property tax levies to a maximum of 1 percent of the property's value. Upon majority voter approval, school districts are authorized to collect excess levies above the 1 percent constitutional property tax limit for enrichment, transportation vehicles, and capital projects.

Binding Conditions and Financial Oversight. Binding Conditions. School districts must annually prepare and submit a balanced budget to the Office of the Superintendent of Public Instruction (OSPI) in which expected expenditures do not exceed expected revenues. If a school district is not able to submit a balanced budget, the school board may deliver a petition to OSPI requesting permission to include receivables collectible in future years in order to balance the budget. If such permission is granted, it must contain binding conditions designed to improve the district's financial condition. Binding conditions typically take the form of benchmarks the district must achieve through actions locally determined by the school board, such as reaching a certain general fund balance by a defined date.

Financial Oversight. If a school district has been on binding conditions for two consecutive years and is unable to prepare a satisfactory financial plan, or is reasonably foreseeable and likely to have a deficit general fund balance within three years and is unable to prepare a satisfactory financial plan, the school district is considered financially insolvent. In these circumstances, a financial oversight committee must review the financial condition of the school district and recommend either enhanced financial oversight or dissolution of the district. Enhanced financial oversight may include, but is not limited to, appointing a special administrator, approving or limiting hiring and personnel actions, approving or limiting a district's authority to enter into contracts, and liquidating or disposing of fixed assets and contractual liabilities.

A district may contract indebtedness and issue bonds without a vote of the people for the purpose of erecting all buildings authorized by law, including those necessary or proper to carry out the functions of a school district, and providing the necessary furniture, apparatus, or equipment. This authority is subject to the statutory indebtedness limit of 0.375 percent.

A school district that contracts indebtedness for this purpose must have received voter approval to collect a capital levy and must not have been on binding conditions in the two years preceding the date of the contract.

• Reduces the amount of time that a school district must be out of binding conditions to authorize non-voted bonds for new construction, from three years to two years.

The committee recommended a different version of the bill than what was heard. PRO: Lake Washington grew from the 6th to 2nd largest district in the state in the last decade, which has placed an enormous pressure on the district for new schools and classrooms. Building in five years will cost more than it does today. This allows school districts to front-fund new construction in order to get students in school sooner and mitigate inflation costs. It does not require state funds or authorize new taxes. It corrects a statutory limitation and gives districts more tools in their toolbelt. It is a practical solution to address critical needs while maintaining full accountability and transparency. It is straightforward, necessary, and beneficial. It would expedite construction timelines, allow districts to take advantage of more favorable market conditions, and reduce borrowing costs which would result in savings for the school district.

OTHER: The language regarding binding conditions should be removed or it should only be applicable if a district is in binding conditions at the date of the contract, or maybe within a one-year window. Tukwila is currently in binding conditions and may want to use this tool after leaving binding conditions.