BONDS & LEVIES:
The Seeds of
School Funding

Funding for education in the state of Washington is complicated and can lead to questions about how schools receive the money needed to operate. The state of Washington is required to supply school districts with state funding for “basic education” which is based on what is referred to as a “prototypical model” representing the Legislature’s assumptions of what resources are required to provide the program of basic education.

Unfortunately, when the funding provided by the state does not cover the actual costs to operate, construct and maintain a school district, districts often utilize bonds and levies to bridge the gap. This local funding allows school districts to provide the structures and services communities rely on, which allows students to grow and thrive.

Bonds are for Building

Bonds are for building

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Bonds are for building

A bond is a long-term investment that authorizes the district to purchase property for schools, construct new schools, or modernize existing schools. Bonds are sold to investors who are repaid with interest over time from property tax collections, generally between 12-20 years.

Bonds require a super majority to pass (60%)

Bonds 60% Super Majority Vote

Levies are for Learning

Levies are for learning

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Levies are for learning

A levy is a short-term, local property tax passed by the voters of a school district that generates revenue for the district to fund programs and services that the state does not fund or fully fund as part of “basic education.”

Levies require a simple majority to pass (50% + 1)

Levies 50% +1 Simple Majority

* The statement “levies are for learning” primarily refers to enrichment levies.

Bonds are for Building

Bonds are for building

Click to learn more

Bonds are for building

A bond is a long-term investment that authorizes the district to purchase property for schools, construct new schools, or modernize existing schools. Bonds are sold to investors who are repaid with interest over time from property tax collections, generally between 12-20 years.

Bonds require a super majority to pass (60%).

Levies are for Learning

Levies are for learning

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Levies are for learning

A levy is a short-term, local property tax passed by the voters of a school district that generates revenue for the district to fund programs and services that the state does not fund or fully fund as part of “basic education.”

Levies require a simple majority to pass (50% + 1).

* The statement “levies are for learning” primarily refers to enrichment levies.

Grow & thrive with local support

There are three main types of levies. Click on a sign to read more.

A replacement levy is the renewal of an existing enrichment levy that is about to expire. Typically, if a district is asking for a replacement levy to be approved by voters, it means that it is simply the continuation of an existing tax.

Capital/Tech

Capital levies (which includes tech levies) fund things like modern technology, enhanced building security, and renovation projects. Capital levies can be approved for up to six years.

Enrichment

Enrichment levies, also known as Educational Programs and Services (EP&O) and Maintenance and Operations (M&O levies), allow a school district to provide things like teachers, support staff, supplies and materials, or services that the state only partially funds. Funding provided by the state does not fully cover the actual costs to operate a school district, so enrichment levies bridge the gap in funding. Enrichment levies can be approved for up to four years.

Transportation

Transportation levies fund things like new buses or major repairs to older buses to prolong their useful life. Transportation levies can be approved for up to two years.

Enrichment levies

Enrichment levies, also known as Educational Programs and Services (EP&O) and Maintenance and Operations (M&O levies), allow a school district to provide things like teachers, support staff, supplies and materials, or services that the state only partially funds. Funding provided by the state does not fully cover the actual costs to operate a school district, so enrichment levies bridge the gap in funding. Enrichment levies can be approved for up to four years.

Capital/Tech levies

Capital levies (which includes tech levies) fund things like modern technology, enhanced building security, and renovation projects. Capital levies can be approved for up to six years.

Transportation levies

Transportation levies fund things like new buses or major repairs to older buses to prolong their useful life. Transportation levies can be approved for up to two years.

Garden-variety questions

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A levy rate is the amount of property tax per $1,000 of assessed property value to fund a voter approved levy amount. A levy rate of $1.00 means that for every $1,000 of property value, the owner of the property will have to pay $1.00 in taxes.

Example: If a homeowner has a home valued at $200,000 and the levy rate is $1.00 for every $1,000 of assessed property value, the homeowner will pay $200 annually in property taxes.

Districts can have the same levy rate but raise very different amounts of money because the total property value within a district’s boundary varies greatly across the state.

  • For example, a levy rate of $1.00 in a district with an average property value of $200,000 will generate $200 per household in levy funding.
  • On the other hand, a district with a $1.00 levy rate and an average property value of $700,000 will generate $700 per household for the same level of property tax.

Depending on the type of levy (enrichment, capital (including tech), or transportation), voters can approve levies for one to six years. After the allotted number of years, the levy expires. Districts may then go back to their voters and ask for a continuation, or replacement levy.

Voters can approve an enrichment levy for up to four years. After the allotted number of years, the levy expires. Districts typically then go back to their voters and ask for a continuation, replacement, or enrichment levy.

Yes. This maximum dollar amount is known as the “Levy Lid.” As part of the changes the Legislature made to the way the state funds education in Washington, also known as the “McCleary decision,” levy rates are capped at $2.50 per $1,000 of assessed property value. A levy may not collect more than $2,500 per student maximum ($3,000 per student in Seattle only), a dollar threshold which is adjusted annually based on inflation.

When a bond issue is approved by voters, the school district receives a “rating” on its financial condition. This “rating” communicates the level of risk to investors who may purchase the district’s bonds. The higher a district’s rating, the lower the risk to investors and the lower the interest rate district taxpayers will pay for that bond.

Yes, but the amount that districts receive varies based on a number of factors.
For example: Enrollment, regional cost of living differences, poverty values, and the number of special needs or non-English speaking students are all factors in the amount of state funding a district receives. Most districts also receive additional federal funding, which is mostly determined by levels of poverty and special needs populations within a district.

Yes, but the funding does not cover the actual costs of operating a school district. The Washington State Supreme Court decision on the McCleary lawsuit resulted in public school districts seeing a net funding increase in 2018. Even though the state increased the amount of funding it was providing to school districts, it also capped the amount of funding school districts can raise from local levies. The Legislature also applied restrictions to how funding can be used. For local school districts, this means that levies have been significantly impacted, causing widespread confusion in communities across the state.

Many school districts can qualify for additional financial assistance from the state of Washington to help build or modernize facilities. The state determines the amount of square footage that each student needs (the amounts are different for elementary, middle, and high schools) and assigns a dollar amount per square foot based on current average construction cost estimates. Both new construction and remodeling projects can be eligible for state assistance. While these matching funds are helpful for bond projects, only a limited percentage of actual costs are typically covered using this formula, leaving the rest of the cost to the school district and the local community (via a bond or capital levy).

School district boards and county governments can pass policies requiring developers to pay “impact fees” on all new construction to help pay for new schools. An impact fee is a fee that is imposed by a local government on a new or proposed development project to pay for all or a portion of the costs of providing public services to the new development, such a school. Impact fees are more common in high growth areas where new homes are creating the need for additional classrooms or schools.

Yes! Washington State law provides two tax benefit programs for senior citizens and individuals who are disabled: property tax exemptions and property tax deferrals. For more information on qualifications, please contact your local county assessor’s office.