Bill would let near‑insolvent districts sell property with OSPI approval; sponsor and districts say it could prevent dissolutions

A bill that would let school districts sell real property before they enter binding financial conditions drew testimony about whether the policy would protect local communities or risk stripping districts of valuable assets.

Ethan Moreno briefed HB 2,551, explaining the Board of Directors of a district with an estimated ending fund balance equal to 3% or less of estimated total revenues could request authorization from the superintendent of public instruction to sell district real property. Under the bill the superintendent may grant authorization only if the sale is necessary to restore financial stability, necessary to prevent adverse impacts to student learning, and the proceeds will be used to alleviate the financial burdens that threatened solvency. The bill directs OSPI to adopt implementing rules and requires transparency and accountability.

Representative Fey, the sponsor, described the bill as an early‑intervention flexibility tool for districts that are close to, but not yet in, binding conditions. “It’s to allow school districts that are close to the situation of all the binding conditions … to be able to sell the property before they get into binding conditions, to hopefully avoid getting into that situation,” Fey said.

Charlie Brown, representing Tacoma School District, testified the district had to cut $70 million in the last two years and said allowing a pre‑binding sale of property could be a useful tool. Charlie Brown said the idea is to provide flexibility, not to bypass OSPI review: districts seeking this option would still need OSPI approval.

Members asked practical questions: whether any real property type could be sold under the bill (staff: bill uses the term 'real property' without additional classification), whether sales of property acquired through eminent domain would be treated differently (staff: the bill does not modify requirements for property acquired through or under the threat of eminent domain), and what happens to excess proceeds after a sale (question from Representative Rood); witnesses said the bill would require transparency and OSPI would review proposed sales but committee members pressed for clearer guardrails on protecting appreciating assets and for guidance on how proceeds would be overseen.

OSPI witnesses endorsed the policy intent but recommended alternative thresholds in related testimony: while HB 2,551 sets a 3% trigger for authorization, OSPI staff later recommended considering higher thresholds (6%–8%) in companion proposals to prompt earlier corrective action.

The committee closed public testimony on HB 2,551; no committee action was taken during the session.