Bill would let districts under enhanced oversight borrow from capital funds and sell assets with oversight

House Education Committee staff and the bill’s prime sponsor briefed members on Substitute Senate Bill 5,412 and took testimony from Senate sponsor June Robinson and district leaders.

The bill would allow a school district in binding conditions or under enhanced financial oversight to take a temporary interfund loan from its capital projects fund — subject to board resolution, specified disclosures and repayment within one calendar year — and would prohibit charging interest on such loans. If a district is under enhanced financial oversight, the transaction must be approved by the special administrator appointed by the oversight committee. The bill also authorizes a special administrator or oversight committee to direct the sale of district real property and deposit proceeds into a fund selected by the oversight committee; correspondingly, school boards may sell property authorized for sale by the committee.

"This bill gives the school district two tools to help with that process of getting back to a balanced budget," said State Senator June Robinson, who described the bill as addressing the Marysville School District’s current status under enhanced oversight and said the bill includes oversight guardrails. She said an interfund capital‑to‑operating loan without interest and the ability to deposit proceeds of property sales into the operating fund can help districts stabilize budgets.

Nonpartisan staff explained background: current law allows the superintendent of public instruction to impose binding conditions and establish a financial oversight committee for insolvent districts; the oversight committee may recommend dissolution or enhanced monitoring. Interfund loans currently are temporary transfers between funds approved by board resolution and subject to statutory requirements; the bill would specifically allow loans from capital projects funds in the circumstances described and requires OSPI to adopt implementing rules.

Representatives asked whether the bill could be expanded to allow pre‑binding districts to access the tool; sponsor Robinson said that was an amendment possibility but cautioned oversight levels differ and OSPI/ESD input would be needed to set thresholds. School leaders from Bellevue and other districts testified in favor of adding the ability for some districts in earlier stages (binding conditions) to sell property to stabilize budgets; Bellevue’s superintendent said the change could protect post‑pandemic investments in literacy and mental‑health supports.

Committee members asked clarifying questions about approvals, sale authority and whether the change could reduce the risk of districts advancing to insolvency and dissolution. The committee concluded the public hearing on SB 5,412 after receiving testimony and counted public sign‑ins; staff noted a fiscal estimate was available in committee materials.