Staff summarizes state budget and legislative changes affecting district revenue, special education and levy limits

A staff member briefed the Mukilteo School District board on May 13 about how the 2025–27 Washington state operating budget and recently enacted changes could affect district revenue and planning.

The presenter said the legislature’s final package produced about $8.5 billion in additional revenue compared with earlier proposals that had shown $15–16 billion of proposed revenue in initial drafts. The budget’s total increase in spending was described as about $5.9 billion; of that, $4.9 billion was characterized as maintenance‑level adjustments (costs to continue current services plus inflation) and roughly $1.0 billion as new policy‑level spending.

K‑12 funding: staff said the public K‑12 portion of the final budget increased by about $2.5 billion overall, but roughly $2.1 billion of that was maintenance‑level spending. The remaining new policy funding for K‑12 across the state was therefore limited compared with some advocacy requests.

Special education: staff identified several changes the district will track closely: - Elimination of the arbitrary 16% enrollment cap on special‑education funding (staff noted Mukilteo’s current identified rate is about 14.39% so the cap change had no immediate local financial impact). - Consolidation and upward adjustment of special‑education funding multipliers: the prior two tiers referenced in state funding (1.06 and 1.12 in past practice) were merged and raised to a single multiplier of 1.16 in the negotiated package, which increases funding but to a lower level than some proposals requested. - Safety net threshold: the safety‑net reimbursement threshold (used to claim extraordinary cost reimbursements) was lowered from 2.2 times the average FTE expenditure to 2.0 times, which in staff examples would change the example threshold from about $41,763 to $37,966 and add roughly $3,800 per qualifying student in potential reimbursement. The state will also move some safety‑net payments to quarterly reimbursements in certain second‑year out‑of‑district placements.

Material, supplies and operating costs: the legislature collapsed several categorical allocations into a single per‑pupil amount; staff said the new blended line would be $1,614 per pupil, an increase of about $35 over maintenance level in the negotiated budget. Staff cautioned that some district expense categories (for example, insurance) have risen faster than that amount in recent years.

Substitute pay: a bill to increase substitute funding did not pass; substitute reimbursement remains at $151.86 per funded day. The presenter reminded the board that state law requires districts to provide at least 10 days of sick leave and that classified substitute funding remains limited.

Levy lid adjustments: staff reviewed House Bill 2049 and said the law allows a one‑time increase of $500 per pupil in the district’s local levy cap beginning in 2026. The example presented showed the statewide per‑pupil maximum rising from about $3,247 in 2025 to about $3,851 in 2026; the levy cap would rise to about $5,035 by 2031 for all districts. Staff noted Mukilteo does not currently receive levy‑equalization aid; the legislature increased levy equalization funding in the budget, but that aid is intended to provide partial offset for districts with lower tax bases.

Board members asked whether the levy changes exacerbate disparities between districts that can pass levies and those that cannot; staff replied that the statutory change does not help districts that are unable to pass local levies. Several directors asked about funding sufficiency for rising insurance and operating costs; staff said the negotiated increases do not fully close the gap with inflation and local budgeting will continue to be necessary.

Staff said the district will present more detailed budget modeling in coming work sessions and budget presentations in June and July to translate state actions into local revenue estimates and options for board decisions.