McCleary: A Major Opportunity For Washington State

by John Stafford

McClearyThe McCleary decision (McCleary vs. State of Washington, 2012) is one of the most momentous events for public policy in modern state history.  It asserts that the state is failing in its paramount duty:  “…to make ample provision for the education of all children residing within its borders” (Washington State Constitution, Article IX, section 1).  This decision calls for a major increase in funding for K-12 education – roughly $4.5 billion per biennium by 2018.  The upcoming legislative session will be dominated by negotiations on how to meet this demand.  This article offers seven observations on McCleary.

  1. The McCLeary decision represents a direct indictment of Washington State governance.  High income states tend to spend more per pupil on education – but not Washington State.  We are 44th in the nation in per pupil spending as a percentage of personal income.  The state’s courts have ruled repeatedly that public education is not appropriately funded (e.g., 1977, 1978, 1983, 2007, 2009).  Moreover, citizens have voted for increases in educational funding (e.g., I-728 and I-732 in 2000).  For a variety of reasons, these efforts have not led to sufficient reform.  Thus, despite repeated judicial interventions and citizen initiatives, the state’s educational financing system remains dysfunctional.  Worse, prior to McCLeary, there were no consequential plans afoot from the governor or the Legislature to address this glaring problem.
  2. The McCLeary decision represents an indirect indictment of Washington State’s taxation system.  The biggest factor driving inadequate education funding is a poorly designed tax system.  With no personal income tax, constraints on property tax increases and a corporate tax code filled with exemptions, Washington operates at a severe competitive disadvantage relative to other states.  In my last article (“Washington State’s Broken Tax System,” September 2, 2014), I noted that between 1995 and 2011, Washington fell from 11th to 37th in tax revenue as a percent of personal income.  A broken tax system leads to a broken educational financing system.  Period.
  3. Holding the Legislature in contempt of court is entirely appropriate.  Despite a court order to develop a funding plan by April, 2014, the Legislature did nothing.  Thus, the Supreme Court’s decision to find the Legislature in contempt is appropriate.  I disagree with the former Washington governors who argued against the ruling for two reasons:  their argument was an after-the-fact attempt to defer a contempt finding rather than a before-the-fact effort to change the compliance deadline; and the Court’s directive for the Legislature to develop a funding plan for McCleary prior to the 2015 session was both reasonable and desirable.
  4. There is no easy way to fund McCLeary.  In the upcoming legislative session, there will be large claims for extra funding for K-12 education, higher education and the state transportation budget.  The improving economy will provide some additional revenue, but not nearly enough to meet these demands.  Thus, a tax increase and/or spending cuts will be mandatory.  Citizens (and the Court) should be wary of accounting gimmickry, whereby funds are taken from a non-education account and moved into education in order to comply with McCleary, leaving the raided accounts to be backfilled later.  Many analysts (including retiring Senator Adam Kline) claim that several hundred million dollars of the initial wave of McCleary funding was “achieved” in this manner.
  5. I-1351 should be rejected.  This initiative calls for a reduction in class sizes.  This is an important endeavor, as Washington State has average class sizes that are among the highest in the nation.  However, the initiative should be rejected for fiscal reasons:  the money necessary to finance it is considerable (several billion dollars per biennium); this funding is incremental to McCleary; and no one in the state has any idea how to pay for it.  I-1351 is exactly the right initiative at exactly the wrong time.  The focus should be entirely on McCleary.
  6. McLeary should provide the impetus to overhaul the state’s tax system.  A confluence of factors make this an ideal time to modify Washington State’s tax system:  the current system is broken (as noted above); McCleary requires significant additional funding that the current system is not well-equipped to provide; and the improvement in economic conditions makes tax reform more viable.  A restructuring should include a combination of strategies (e.g., a major repeal of corporate tax breaks, an income tax on higher income earners, a capital gains tax, a reduction in regressive taxes, etc.),  leading to a modest net tax increase.  An inferior approach is the mere tweaking of the existing system – with Democrats working for the closing of several tax loopholes and Republicans calling for “education first, other priorities later” (which is, of course, code for cutting social programs to pay for McCleary).
  7. McCleary represents an opportunity to rethink public education in Washington State.  Anytime an institution (in this case the education system) is infused with a substantial amount of additional funding, an opportunity exists to redesign the system.  The McCleary funding can support significant new investment in early learning; efforts to more tightly integrate early learning, K-12, and higher education (rather than managing them as separate, standalone entities); and other reforms.  McCleary should not just be about educational finance; it should be about education system design.

The Legislature can address the McCleary requirements using one of two philosophical approaches.  The first is a narrow, partisan approach that sees McCleary as a burdensome problem to be begrudgingly solved using incremental adjustments to the existing system.  The second is an expansive approach that sees McCleary as a unique opportunity to simultaneously restructure three major and persistent state problem areas – tax policy, tax level and education system design.  The adoption of this second approach will require powerful leadership and bipartisan support – attributes that thus far have not emerged.  Indeed, all initial indications – the approach to generating the first $1 billion in McCleary funding; the failure of the parties to meet to develop an April, 2014 funding plan; and current rhetorical posturing (the depressing “close some loopholes” versus “education first” debate) – indicate that the narrow approach will be pursued — to the immense detriment of the state.  Rahm Emanuel stated that, “you never want a serious crisis to go to waste.”  The McCleary challenge provides a rare opportunity for Washington State to restructure its troublesome tax policy, tax level and education system.  One hopes that this occasion is not squandered.

John Stafford is a substitute teacher for Seattle Public Schools and a former management consultant in corporate strategy.  He recently completed a run for State Senate in the 37th District.  He is writing a monthly article on public policy for the South Seattle Emerald.