School district insolvency bill passes Legislature

OLYMPIA — The state Legislature Monday passed a bill requested by State Superintendent Randy Dorn that would establish procedures for determining if a school district is unable to meet its financial obligations.

In addition to formally defining what constitutes financial insolvency, House Bill 2617 would create a financial oversight committee when a district becomes financially insolvent. The committee would make recommendations to the Office of Superintendent of Public Instruction about whether the district should dissolve or placed under enhanced financial monitoring.

Recent cuts to the state education budget raise the possibility that districts might have trouble paying its bills. “This is not a bill about school district consolidation,” Dorn said. “We want districts to succeed. HB 2617 is about a worst-case scenario. With continued cuts in school budgets, districts need a plan in place if they can’t pay their bills.”

There is recent history of district dissolution. In 2007, Vader School District needed state resources to help it through the dissolution process. Dorn used that experience to influence some of the details in HB 2617.

The bill now goes to Governor Gregoire for signing.

There are 295 school districts in the State of Washington. Many of them are small, including some with only three schools. Districts rely on property taxes and special levies to survive financially.