Option C: Uniform Mil Rate Collection

In Option C, we use the most straightforward approach to shifting the existing excess M&O levies to state collection: a uniform mil rate applied to every school district across the state (and thereby, a uniform mil rate for basic education for everyone in the state). This approach still must fit within the existing $3.60 state-based authority, or course, so it is very basic and straightforward... sort of. There’s a bit of a twist, added to prevent year-to-year rate volatility, and to ensure tax rates stay as low as possible while still sufficiently contributing to the statewide reformed definition of basic education.

A quick definition for mil rate: a mil rate, for those who don’t spend time reading tax policy, is the levied tax rate per thousand of assessed value. For example, a mil rate of $1.00 means that if you have property worth $100,000, you would have a tax bill of $100. An easy way to remember this is that milli- is the prefix for one-thousandth (think: milliliter, millimeter).

Option C is a direct response to feedback I’ve received about our state’s Constitutional uniformity of tax requirement. While I think the details of that requirement still must be investigated, explored, understood, and discussed (and if need be and collectively decided, reconsidered) before defaulting to Option C, providing Option C is essentially a means by which we can guarantee that Tenet 2 can work, and work reasonably well. As I mentioned before, I think Option B is better, but it’s good to have options.

Let me go through the formula for Option C, as I did for Option B:

1. 1)The first step is to calculate what the mil rate would be, for each of the 295 school districts across the state, if they were to maximize their current local levy revenues (i.e., if they were to collect local M&O levies at their full current authorized rate). This is just for calculation purposes right now, and it gives us 295 different mil rates, one for each school district.
   

2. 2)Next, we determine what the lowest 25% of those mil rates are. Said another way, we determine what 25% of 295 is (it rounds up to 74, as it turns out), then we calculate a straight average those 74 mil rates.
   

3. 3)Finally, we apply that average mil rate to all of the 295 districts in the state. And, we perform this calculation each year - because assessed values change, because state funding levels change, and for another reason I discuss below. And viola - we have a uniform mil rate across the state, derived from an average of the lowest 25% of the state’s local levy lid mil rates, all of which still must fit within the existing $3.60 authority.
   

What does this turn out to be? For 2010, based on some assumptions of property values and very low growth in appreciation (from already-adjusted-lower property value levels), the uniform mil rate comes out to $1.12. Check the mil rate on your current local levy; for most districts across the state, this is a lot lower.

For those of you who were reading closely, you’ll notice that I didn’t immediately get rid of grandfathering - we absolutely still get rid of that, in this way: Districts with grandfathered levy lids would have their rates ratcheted down over the eight-year implementation period, decreased at one percentage point per year, until full implementation in 2018 - at which point all districts would be set to 28%. You can see how this works in the modeling PDF for Option C.

Let me anticipate a few questions here, and give some frank answers.

Q1: Why not put all districts to 28% right away?

A1: Because doing that would skew the lowest 25% to a point that this portion of funding basic education reform - shifting existing M&Os to state collection - wouldn’t generate enough revenue. Yes, we could set everyone to 28% and then change the averaging group from 25% to 33% - that could work. But I had to choose, and chose averaging the lowest quarter of mil rates, and adjust mil rates down from grandfathered levels throughout the course of implementation. If you think that’s the wrong choice, email me and tell me so... I’d like to hear from you.

Q2: Why not just collect the entire $3.60 authority? Why create these formulas?

A2: Because I don’t believe that’s fair to high assessed-value districts like Seattle, Lake Washington, Bellevue, other King County districts, many island county district residents, and other high-AV districts. With the approach I’m suggesting, the statewide uniform mil rate isn’t too terribly far from what they have now. I want to keep their state-collected tax rates (and everyone’s) as low as possible... while STILL, THEN, enabling those districts to vote for enrichment-based excess levies that are collected directly by their own district, as long as their voters support doing so (see Tenet 5 for more on this).

Q3: If this absolutely addresses the Constitutionally required uniformity of tax, then why bother with Options A and B?

A3: Because I feel strongly that we need to investigate all options, and figure out the best and the fairest way forward; if that means taking a close look at existing laws, and potentially changing them, then so be it. It is more work, it requires not jumping to the first and easiest solution... but that’s just the sort of extra, detail-work I believe we need to do when we’re talking about policy that affects millions of people, billions of dollars, and the students in Washington for the next generation. I think it’s also important for everyone in our state to know that we are, indeed, truly, looking at all the options and figuring out the best way forward.

Q4: This is where your question could go. If you’d like to ask a question about this or any other element of my plan, send me an email using the link on the Summary page, or any other page you find links.

Summary: