BUDGET APPROPRIATIONS

SCHOOL DISTRICTS ‑- SPECIAL LEVIES ‑- LEVY REDUCTION FUNDS ‑- BUDGET APPROPRIATIONS

 1.  The Local Education Program Enhancement Funds appropriated by the Legislature in section 506 of chapter 7, Laws of 1987, 1st Ex. Sess., are block grant funds and therefore are "levy reduction funds" as defined in RCW 84.52.0531 as amended by the 1987 Legislature.

 2.  The Legislature is not legally required to specify whether appropriations for new programs or program enhancements are "levy reduction funds," but labeling by the Legislature greatly aids in determining legislative intent.

                                                              - - - - - - - - - - - - - 

                                                                 January 29, 1988 

Honorable Daniel K. Grimm
Chairman, House Ways & Means Committee
204 House Office Building
Olympia, Washington 98504

Cite as:  AGO 1988 No. 1                                                                                                                  

 Dear Representative Grimm:

             By letter previously acknowledged, you have requested our opinion on the following questions (which we have renumbered and edited slightly):

                         1.         Are the Local Education Program Enhancement Funds appropriated in section 506 of chapter 7, Laws of 1987, First Extraordinary Session, to be considered "levy reduction funds"?

                         2.         If the answer to question 1 is no, under what circumstances would new programs or program enhancements apply to reduce "grandfather" levy authority?

                         3.         In this regard, must the Legislature stipulate in the appropriations bill or other legislation that a specific new program or program enhancement shall be included as levy reduction funds?

                         4.         Conversely, what is the effect of language in an appropriations bill which states that a particular  [[Orig. Op. Page 2]] funding enhancement is not to apply as levy reduction funds?

             We answer you first question in the affirmative for the reasons set forth in the following analysis.  We answer your second, third, and fourth questions in the manner set forth herein.

                                                                      ANALYSIS

             Each of your questions relates to the term "levy reduction funds" which is defined in section 101, chapter 2, Laws of 1987, First Extraordinary Session (hereinafter "section 101").1/

              As you know, section 101 substantially amended RCW 84.52.0531, which deals with the maximum amount that may be levied by a local school district for maintenance and operation support.  Before turning to your specific questions, it is useful to compare RCW 84.52.0531 as it existed before the 1987 amendments with that statute as amended by section 101.

             Under RCW 84.52.0531(1) as it existed before the 1987 amendments, the maximum amount that could be levied by a school district for maintenance and operation support was the sum of 10 percent of a school district's prior year basic education allocation plus 10 percent of a school district's prior year state allocation, exclusive of federal funds, for the following:  pupil transportation; handicapped education costs; programs for the gifted; and compensatory education, including but not limited to remediation assistance, bilingual education, and urban, rural, and racial disadvantaged programs.  Laws of 1985, ch. 374, § 1, p. 1510.2/

             Under the prior law, districts could exceed the levy limitation imposed under RCW 84.52.0531(1) for excess levies to be collected during calendar years 1985 through 1993.  For calendar years 1986, 1987, and 1988, districts could raise a  [[Orig. Op. Page 3]] percentage of the levy base equal to the greater of:  (1) the district's actual levy percentage in 1985; (2) the actual levy percentage for all school district levies in the educational service district of the district in 1985; or (3) the average levy percentage for all school district levies in the state in 1985.  Laws of 1985, ch. 374, § 1, p. 1510 (former RCW 84.52.0531(5)(a)).  Beginning in 1989, the levy percentage was to be reduced in incremental reductions equal to one‑fifth of the difference between the 1985 levy percentage and 10 percent until all the districts would be at the 10-percent level in 1993.  Laws of 1985, ch. 374, § 1, p. 1510 (former RCW 84.52.0531(5)(b)).

             Section 101 changed the way in which the maximum amount that may be levied by a school district for maintenance and operation support is calculated in several significant respects.3/

              First, the percentage limitation on levies was raised from 10 percent to 20 percent.  RCW 84.52.0531(5)(d), (6)(d).

             Second, section 101 expanded the levy base against which the new levy percentage is applied.  The levy base now includes, for the first time, categorical allocations for state‑wide block grant programs, RCW 84.52.0531(4)(b)(vi), and for food services, RCW 84.52.0531(4)(b)(v).  The levy base now also includes federal categorical allocations for the programs that make up the levy base as well as any other federal allocations for elementary and secondary school programs, including direct grants, other than federal impact aid funds and allocations in lieu of taxes.  RCW 84.52.0531(4)(b), (c).

             Third, the new law contains a "grandfathering" provision for those districts whose 1985 levy percentages exceed the new levy limit of 20 percent.  This provision is similar to prior law.  Unlike prior law, however, the new law contains no timetable for reducing the levy percentages in grandfathered districts (i.e., those districts whose 1985 levy percentages exceed 20 percent) down to the new 20-percent levy limit.  Instead, these "grandfathered" districts are required to reduce their levy percentages down to a maximum of 30 percent in 1989.  RCW 84.52.0531(6)(a).  After that one‑time reduction, districts that have levy percentages above the 20-percent lid are required to reduce their levy percentages only when the state provides new  [[Orig. Op. Page 4]] money to the districts in the form of "levy reduction funds."4/

             "Levy reduction funds" are defined in RCW 84.52.0531(7) in part as follows:

             "Levy reduction funds" shall mean increases in state funds allocated to a district for programs included under subsection (4) of this section that are not attributable to enrollment or workload changes, compensation increases, or inflationary adjustments recognized in state allocation formulas.  Any other increases in state allocations from the district's allocations for the prior school year that are not specifically excluded in this subsection shall be considered levy reduction funds.

 . . .

            The following example illustrates how receiving levy reduction funds will affect a district's levy percentage.  Assume that in the prior year a district's levy base was $10,000,000, its maximum levy percentage was 30 percent, and it raised the maximum of $3,000,000 under its maintenance and operation levy.  Next assume that in the current year the district's levy base is increased to $10,300,000 and the entire $300,000 increase is levy reduction funds.  Under section 101, the district's maximum levy percentage in the current year will be equal to the amount raised by local levy in the prior year, minus the levy reduction funds received in the current year, divided by the prior year's levy base ($3,000,000 ‑ $300,000¸$10,000,000 = 27%).  Thus, receiving $300,000 in levy reduction funds reduces the district's levy percentage from 30 percent to 27 percent and reduces the maximum dollar amount that can be raised by the levy from  [[Orig. Op. Page 5]] $3,000,000 to $2,700,000.5/

             To summarize, the 1987 amendments to the levy lid law changed how the maximum amount that may be levied by a school district for maintenance and operation support is calculated in three major ways:  (1) the percentage limitation on levies was raised from 10 percent to 20 percent; (2) the levy base against which the new levy percentage was applied was expanded; and (3) those districts with levy percentages above 30 percent must reduce their percentages to 30 percent in 1989 but do not have to come down to 20 percent until the State provides new money to the districts in the form of levy reduction funds.

             Comparing the final version of section 101 with RCW 84.52.0531 as it existed before the 1987 legislative session only sets half the stage, however.  Before we can properly answer your questions, we also need to review the history of section 101.

             Section 101 first appeared in House Bill 455.  House Bill 455 was read for the first time on January 28, 1987.  Section 101 in House Bill 455 differed from the final version of section 101 in the following pertinent respects. First, House Bill 455 distinguished between excess levies in 1987 for collection in 1988 and excess levies in 1988 for collection in 1989 and thereafter.  The increase in levy percentage from 10 percent to 20 percent, as well as the other changes in excess levy funding contained in section 101, applied to levies in 1988 for collection in 1989 and thereafter.  Excess levies in 1987 for collection in 1988 were treated the same as under prior law (i.e., the same 10 percent limit, the same definition of levy base, and the same "grandfathering" provision).

            Second, the definition of levy base in section 101 as it appeared in House Bill 455 did not include allocations for state‑wide block grant programs or for food services.

             Third, the definition of levy reduction funds was somewhat different.  Levy reduction funds were defined in House Bill 455 as:

             those state moneys appropriated by the legislature for increases above the appropriation for the prior school  [[Orig. Op. Page 6]] year which are not allocated for enrollment or workload increases, compensation, or inflationary increases covering the period from the prior school year, as estimated by the economic forecasting council and assumed in the appropriation act.  Any increase not specifically excluded in this subsection shall be considered levy reduction funds.  The legislature may grant exceptions to these provisions through specific designation of appropriated moneys to be either included or excluded as levy reduction funds.

             The next version of the bill was Substitute House Bill 455.  Substitute House Bill 455 was proposed by the Committee on Education and was substituted for House Bill 455 on February 25, 1987.  Section 101 of Substitute House Bill 455 maintained the distinction between levies in 1987 and levies in 1988 and thereafter.  For levies in 1987, however, the reference to the 10-percent limit was dropped and districts simply were permitted to levy the higher of their levy percentage in 1985, the average levy percentage for all districts in their educational service district in 1985, or the average levy percentage for all districts in the state in 1985.

            For excess levies in 1988 for collection in 1989 and thereafter, Substitute House Bill 455 added food services to the levy base.  Also, the first sentence of the definition of "levy reduction funds" was revised to read "increases in state allocations received by a district which are not attributable to enrollment or workload changes, compensation increases, or inflationary adjustments recognized in state allocation formulas."  In addition, Substitute House Bill 455 eliminated the provision that the Legislature could grant exceptions to the definition of levy reduction funds by specifically designating in an appropriation bill that certain moneys were to be included or excluded from the definition.

             The next version of the bill was Second Substitute House Bill 455, which was proposed by the Committee on Ways and Means and was substituted for Substitute House Bill 455 on March 9, 1987.  As substituted, this version was, for our purposes, very similar to its predecessor, Substitute House Bill 455.  The principal difference was in the first sentence of the definition of "levy reduction funds" which was again revised, this time to specifically refer to increases in state allocations included within a district's levy base as the base was defined elsewhere in the section.

            Second Substitute House Bill 455 was passed by the House, with amendments not related to section 101, on March 18, 1987.  The Senate failed to pass the bill and, on April 26, 1987, returned it to the House.  The bill remained in the House without  [[Orig. Op. Page 7]] substantial action until May 18, 1987, when it was returned from third reading to second reading for purposes of amendment.

             At that point, Representatives Grimm and Ebersole offered a striking amendment that, along with several changes in other sections of the bill, amended section 101 in two substantial respects.  First, state‑wide block grant programs were added, for the first time, to the definition of the levy base.  The timing of this amendment is important because the 1987-1989 operating budget, which contains the appropriation for Local Education Program Enhancement Funds, was passed by both houses on May 18, 1987, the same day this amendment was offered.

             Second, separate treatment of levies in 1987 for collection in 1988 was eliminated.  All levies to be collected after the effective date of the bill, September 1, 1987, were now treated the same (i.e., under the new provisions).  This second change was also important.  Under prior versions of the levy lid law, increases in funding for 1987 were outside the definition of levy reduction funds.  Now, again for the first time, new moneys appropriated for education by the Legislature in the 1987 session were subject to being considered levy reduction funds.

             The striking amendment offered by Representatives Grimm and Ebersole was adopted.  Second Substitute House Bill 455 as so amended was passed by the House and sent to the Senate.  This time, the Senate amended the bill by striking all the House's new provisions, including the new levy lid procedure, and, with respect to the levy lid, by simply pushing forward the year in which "grandfathered" districts would have to begin reducing their levy percentages from 1989 to 1990.  All this action took place on May 18, 1987.

             On May 20, 1987, the House refused to concur in the Senate amendments and asked the Senate to recede from its amendments.  On May 21, 1987, the Senate reconsidered its amendments and did not adopt them.  It then passed Second Substitute House Bill 455 in substantially the same form as passed by the House on May 18, 1987 (i.e., with block grants specifically in the definition of levy reduction funds and with all future levies treated the same).  On the same day, the House concurred in the Senate amendments (which were minor and unrelated to section 101) and passed Second Substitute House Bill 455 in its final form.

             Before turning to your first question, we need to make one other observation.  The particular issues raised by your questions relate to the amount of money a local school district can raise for maintenance and operation by local levy.  More generally, however, the issues raised by your questions relate to the scope of the local districts' power to tax.  An affirmative answer to your first question limits the taxing power of the  [[Orig. Op. Page 8]] local districts; a negative answer extends the taxing power of the local districts.  Taxing powers of municipal corporations, such as school districts, are strictly construed.  Pacific First Fed. Sav. & Loan Ass'n v. Pierce Cy., 27 Wn.2d 347, 351, 178 P.2d 351 (1947);State ex rel. Tacoma Sch. Dist. 10 v. Kelly, 176 Wash. 689, 690, 30 P.2d 638 (1934).  In reaching our conclusion herein, we have borne in mind this presumption against the taxing power of school districts.

             With the stage now fully set, we turn to your first question.

 Question 1:

             Are the Local Education Program Enhancement Funds appropriated in section 506 of chapter 7, Laws of 1987, First Extraordinary Session, to be considered "levy reduction funds"?

             Chapter 7, Laws of 1987, First Extraordinary Session, is the operating budget for the July 1, 1987 to June 30, 1989 biennium.  As mentioned above, the budget was passed by both houses on May 18, 1987.

             Part V of chapter 7, which includes sections 501 through 522, deals with education.  Section 506 of chapter 7 (hereinafter "section 506") is a general fund appropriation for the Superintendent of Public Instruction in the amount of $49,500,000.6/

             The appropriation contained in section 506 is entitled "Local Education Program Enhancement Funds."  The purpose of the appropriation is to provide a grant, in addition to the district's basic education allocation, to each school district based on full-time student enrollment to meet the educational needs of the district.  Laws of 1987, 1st Ex. Sess., ch. 7, § 506(1), p. 2728.  For the 1987-89 biennium, each school district will receive, in addition to the basic education allocation, a grant of no less than $67.50 per full-time equivalent student, with grants to be distributed on a school-year basis.  Id., § 506(3).  New or existing programs enhanced by the funds provided to districts by a grant under section 506 are not to become a part of the state's basic education obligation as set forth by  [[Orig. Op. Page 9]] the Constitution.  Id., § 506(5).7/

              Finally, the activities for which the local grants may be used are limited to the following:  innovative programs to increase the adult-pupil ratio without increasing the number of certificated staff; dropout prevention and retrieval programs; drug and alcohol abuse programs; early childhood programs; in-service training programs for staff development; and programs that develop and promote logical reasoning and improved analytical skills.  Id., § 506(8).8/

              To determine whether the Local Education Program Enhancement Funds are "levy reduction funds," we must examine the three criteria contained in the statutory definition.  The three criteria are:  (1) the funds must be for one of the programs  [[Orig. Op. Page 10]] included under RCW 84.52.0531(4) (i.e., for one of the programs that makes up the levy base); (2) the funds must constitute an "increase" in state funds allocated to a district from the district's allocations for the prior school year; and (3) the increase must not be attributable to enrollment or workload changes, compensation increases, or inflationary adjustments recognized in state allocation formulas.  RCW 84.52.0531(7).

             The first criterion the Local Education Program Enhancement Funds must meet to qualify as levy reduction funds is that they be allocated to a district for a program included under RCW 84.52.0531(4).  These are the programs that make up the district's levy base.  Specifically included in the definition of the levy base are "state‑wide block grant programs."  RCW 84.52.0531(4)(b)(vi).

           The Local Education Program Enhancement Funds are definitely allocated state‑wide.  Under the express terms of the appropriation, the moneys are to be made available to "each" school district in the state.  Laws of 1987, 1st Ex. Sess., ch. 7, § 506(1)(3), p. 2728.

           We are less certain about whether the appropriation is for a "block grant" program.  First, the Local Education Program Enhancement Funds appropriation is not specifically referred to as a "block grant" program.  The moneys received by the districts under this program are repeatedly referred to as "grants."  Id., § 506(1), (2), (3), (4), (5), (7), (8), (10).  Nowhere, however, are they specifically referred to as "block grants."

             Second, we are not aware that the term "block grant" has been defined in any published court opinion in this state.  We do know, however, that the term ordinarily means a grant of money not tied to and not required to be spent on a particular program.  With a block grant, the recipient has some discretion on how the money can be spent (although the government typically defines a group or category of programs on which it can be spent).  Another characteristic of past educational block grants in Washington has been that the funding formula is on a per-pupil basis without regard for whether a district has a high or low incidence of the problem being addressed.  See Findings of Fact and Conclusion of Law, dated September 7, 1983, as entered by Judge Robert J. Doran inSeattle Sch. Dist. 1 v. State, Thurston County Superior Court No. 81-2-1713-1 (Findings of Fact 10.5-10.12 and Conclusion of Law 45).

             Here, while the funds at issue do not have to be spent on a particular program, they must be used to fund one or more of the six programs identified in section 506(8)(a)-(f) at the discretion of the local districts.  Also, the funding formula is on a flat per-pupil basis.  Laws of 1987, 1st Ex. Sess., ch. 7, §  [[Orig. Op. Page 11]] 506(3), p. 2728.  The funds provided for in section 506 thus meet what we understand to be the basic criteria for a block grant program.  In the absence of any statutory definition of the phrase "block grant program" in section 101, and in the absence of any evidence of contrary legislative intent in the appropriation in section 506, we conclude that the funds at issue are allocated for a "state‑wide block grant program."9/

             The second criterion the Local Education Program Enhancement Funds must meet to qualify as "levy reduction funds" is that they be an increase in state funds allocated to a district for a particular program as compared with the district's allocation for that program for the prior school year.

             The first problem we face in analyzing this second criterion is to decide what the relevant program is.  Is it the state‑wide block grant program as a whole or is it each individual program that is or may be funded under the block grant program?  The specific reference in the definition of levy reduction funds in RCW 84.52.0531(7) is to "increases in state funds allocated to a district for programs included under subsection (4)".  The programs included under subsection (4) include "state‑wide block grant programs".  This suggests that the relevant program is the grant program as a whole.  We are also aware of the administrative difficulties that would occur if each district had to make a program-by-program inquiry to determine whether state funding for a particular program had increased over the prior year.  We conclude, therefore, that to determine whether all or part of the Local Education Program Enhancement Funds constitute  [[Orig. Op. Page 12]] an increase in state funds, we should look at the grant program as a whole.

             With this focus in mind, our inquiry becomes whether all or part of the funds allocated to a district under the Local Education Program Enhancement Funds program are an increase in block grant moneys over the block grant moneys allocated to the district for the prior year.  For levies to be collected during calendar year 1988, the prior school year is the most recent school year completed prior to the year in which the levies are to be collected,i.e., 1986-87.  RCW 84.52.0531(8).  The Local Education Program Enhancement Funds will be distributed for the first time during the 1987-88 school year.  None of these funds, or any other state‑wide block grant funds, were allocated to the districts for the 1986-87 school year.  Thus, the entire funding allocated to the districts in the 1987-88 school year under section 506 should be an increase in block grant funding from the 1986-87 school year.

             Some may argue, however, that where the funding level in the prior year is zero, funds allocated in the current year should not be considered an "increase" in funding but should, instead, be treated merely as the funds necessary to start up the program.  From a policy perspective, one might argue that it is inappropriate to treat first-time funding for a program as "levy reduction funds."  But our task is not to define policy; rather, our task is to interpret the policy as the Legislature has defined it.

             The noun "increase" means "addition or enlargement in size, extent, quantity, number, intensity, value, substance."  The intransitive verb "increase" means "to become greater in some respect (as in size, quantity, number, degree, value, intensity, power, authority, reputation, wealth)" and the transitive verb "increase" means "to make greater in some respect  . . . [to] add to".  Webster's Third New International Dictionary 1145 (1981).  One can add a positive number to zero just as one can add a positive number to another positive number.  Thus, one can add $49,500,000 to zero and $49,500,000 is the amount of the increase.  Similarly, one can make zero greater by adding to it just as one can make a positive number greater by adding to it.  Thus, $49,500,000 is greater or larger than zero just as $50,000,000 would be greater or larger than $49,500,000.  Under any of these definitions of the word "increase," the appropriation for the Local Education Program Enhancement Funds for the 1987-88 school year is an increase in funding over  [[Orig. Op. Page 13]] 1986-87.10/

             In addition, a similar argument was made and rejected in State ex rel. Wyrick v. Ritzville, 16 Wn.2d 36, 39, 132 P.2d 737 (1942), where the court held that payment of a salary to a city official during his term of office where he had not previously been compensated constituted an increase in compensation, for purposes of the constitutional prohibitions against increasing the salaries of public officials during their terms of office, just as much as if the city had increased an official's previously existing salary.

             The third criterion the Local Education Program Enhancement Funds must meet to qualify as "levy reduction funds" is that the increase in funds not be attributable to enrollment or workload changes, compensation increases, or inflationary adjustments recognized in state allocation formulas.  It seems obvious that the increase in block grant funding under the Local Education Program Enhancement Funds program is not attributable to enrollment changes, compensation increases, or inflationary adjustments.  There is at least an issue as to whether the increase is attributable to workload changes.

             Like the term "block grant program," the term "workload changes" is undefined in the statute.  If this exception were given a very broad interpretation, it might be possible to argue that first-time funding of a program to address such problems as the high incidence of dropouts and drug and alcohol abuse is the result of changes in district workloads, in the sense that the problems a district needs to address today are different than  [[Orig. Op. Page 14]] those of five, ten, or twenty years ago.  Under such a broad interpretation, "workload" would refer to the educational problems a district has to address or the educational goals a district strives to achieve.  If the problems or goals have changed over time and money is appropriated to enable a district to address the changed problems or achieve the changed goals, then the funds might be said to be attributable to workload changes.

             We have looked closely at the language of section 101 and find three reasons to suggest that the Legislature intended a narrower meaning for the term "workload changes".

             First, the increase in funds at issue here is not similar to an increase due to "enrollment changes."  The specific statutory phrase which contains the "workload changes" exception is "enrollment or workload changes."  It is a rule of statutory construction that the meaning of doubtful words may be determined by reference to their relationship with associated words and phrases.  Shurgard Mini-Storage v. Department of Rev., 40 Wn. App. 721, 727, 700 P.2d 1176 (1985);Mercer Island v. Kaltenbach, 60 Wn.2d 105, 109, 371 P.2d 1009 (1962).  Under this rule of construction, the term "workload changes" may be determined by reference to the associated term "enrollment changes."

             The most obvious example of an enrollment change would be an increase in a district's overall enrollment.  If a district's enrollment increased, the district's basic education allocation would increase correspondingly.11/

              Under the "enrollment changes" exception, these additional funds would not be levy reduction funds.  Similarly, if the number of students increased in a particular program, such as the learning assistance program, then the district's funding for this program would increase.12/

              Again, these additional funds would be attributable to "enrollment changes" and would not be levy reduction funds.

             An example of an increase in funds attributable to "workload changes" that would be similar to the "enrollment changes" just discussed would be a change in the allocation formula for pupil transportation whereby funds would be allocated to districts to transport students who live nearer to school than the current one  [[Orig. Op. Page 15]] radius mile.13/

              In that situation, the increase in funding would be attributable to an extension of an existing program, at the same level of funding, to a larger number of students rather than an enrichment of an existing program by increasing the funding for a fixed number of students.  It would, therefore, be similar to an increase attributable to enrollment changes.

             If we read the "workload changes" exception in concert with the "enrollment changes" exception, then the "workload changes" exception should be limited to situations where the increase in funding is attributable to an extension of an existing program, at the same level of funding, to a larger number of students.  In the case at hand, the funding is not attributable to the extension of an existing program, at the same level of funding, to a larger number of students.  Rather, the increase in funding is first-time funding for an entirely new program,  i.e., the new state‑wide block grant program.

             Second, if the "workload changes" exception applied here, the result would be inconsistent with the results obtained when the other exceptions in RCW 84.52.0531(7) are applied.  Expanding on the rule of statutory construction mentioned above, the "workload changes" exception should be read together not only with the "enrollment changes" exception but also with the companion exceptions for "compensation increases" and "inflationary adjustments".  The meanings of each exception should be consistent and harmonized to the extent possible.  Burlington Northern, Inc. v. Johnston, 89 Wn.2d 321, 326, 572 P.2d 1085 (1977) (all provisions of a statute must be considered in their relation to each other and, if possible, harmonized to insure proper construction of each provision).

             Considering the enrollment, compensation, and inflation exceptions together, the legislative intent appears to be to ensure that increases in state funds not constitute "levy reduction funds" if the funds are necessary for a district to maintain a program at the same level as in the prior year.  For example, if a district receives an increase in state funds over the prior year due to an enrollment increase, those funds will not be treated as "levy reduction funds"‑-apparently because the district will need the additional funds to provide the same level of service to the expanded student base.  Similarly, if a district receives an increase in state funds due to an inflationary adjustment, those funds will not be treated as levy reduction funds‑-again apparently because the additional funds  [[Orig. Op. Page 16]] are necessary for the district to provide the same level of service in the current year, in real dollars, as it provided in the past year.

             If we are to harmonize the "workload changes" exception with these other exceptions, then we must determine whether the increase in funding provided for in section 506 is necessary to enable the districts to maintain their positions relative to the prior year.  To phrase the inquiry in another way, would the districts be in a better position in the current year if the increase in section 506 funding were not treated as "levy reduction funds"?

             If these funds were not treated as levy reduction funds, the districts would be better off than last year because they would have at least $67.50 per student more to spend on the same set of problems.14/

              From this perspective, it seems clear that the increased funding provided under section 506 is different from the maintenance funding recognized in the other exceptions.15/

             The third reason why we think the "workload changes" exception does not apply here is because the second sentence of the definition of "levy reduction funds" provides that "[a]ny  [[Orig. Op. Page 17]] other increases in state allocations from the district's allocations for the prior school year that are not specifically excluded in this subsection shall be considered levy reduction funds."  RCW 84.52.0531(7).  We believe this statement refers to a legislative intent that the definition of "levy reduction funds" be interpreted broadly and the exceptions narrowly.  Applying the "workload changes" exception to situations where the Legislature provides funding to permit districts to specifically address long-standing problems would not, in our view, be consistent with what we perceive to be the Legislature's intent that the exceptions be narrowly interpreted.

             To summarize, the funding provided for in section 506 meets each of the three criteria necessary to constitute "levy reduction funds":  (1) the funding appears to be for one of the programs that makes up the levy base,i.e., a state‑wide block grant program; (2) the funding in the current year is an increase over the funding in the prior year; and (3) none of the exceptions apply, including the "workload changes" exception.  It thus appears that the grant funds provided for in section 506 are "levy reduction funds".  Before reaching this conclusion, however, we need to address two other arguments.

             The first argument focuses on the fact that the Legislature provided a statutory increase in funding for basic education in the 1987-89 biennium and, in the appropriation bill for the 1987-89 biennium, specifically denominated a portion of that increase as "levy reduction funds".16/

              The argument is that,  [[Orig. Op. Page 18]] because the Legislature specifically identified in the appropriations bill a portion of the increase in the basic education allocation as levy reduction funds but did not similarly identify any of the increase in the block grant program funding, the Legislature must have intended that the Local Education Program Enhancement Funds not be treated as levy reduction funds.

             This argument might have had some force if the legislative history were different.  If the version of the levy lid law (section 101) that was before the Legislature when it appropriated the Local Education Program Enhancement Funds had included state‑wide block grant programs as part of the levy base, and therefore had increases in funding for block grant programs been subject to consideration as levy reduction funds, then the Legislature's failure to designate any of the section 506 funds as levy reduction funds might have been evidence that the Legislature did not consider them to be such.  That was not the case, however.

             The budget bill was passed on May 18, 1987.  On the same day, Representatives Grimm and Ebersole offered a striking amendment to Second Substitute House Bill 455 that, for the first time, included block grant funding for state‑wide programs in the levy  [[Orig. Op. Page 19]] base.  And, because levy reduction funds are defined as increases in funding for levy base programs, this was the first time in the legislative history of House Bill 455 and its progeny that an increase in funding for a block grant program could have been considered as levy reduction funds.  As discussed above, this amendment was adopted by the House on May 18, 1987 and, with minor changes, by the Senate on May 21, 1987.

             Given that the budget bill was passed before the levy lid law, and that the version of the levy lid law being considered at the time the budget was passed did not provide for the possibility that increases in funding for block grant programs might be considered levy reduction funds, we do not place any importance on the Legislature's silence in the appropriations bill on whether the funds appropriated in section 506 were levy reduction funds.17/

             A second argument against Local Education Program Enhancement Funds being considered levy reduction funds is that these funds may be used by the districts only for one or more of the programs identified in section 506(8).  This requirement may work a hardship on some of the districts that will have to reduce their levy percentages, depending on whether a district funded programs identified in section 506(8) in the prior year.

             For a district that did fund one or more of the programs identified in section 506(8), the receipt of "new" state money to fund these programs should permit the district to replace its local funding with state funding without having to cut any other programs.  Contrast this with a district that did not fund any of the programs in section 506(8), or that did fund one or more such programs but wants to enhance their funding.  To fund new programs, or to enhance existing programs, these districts will have to give up local money (as a result of reducing their levy percentages) that was previously being spent onother programs.  [[Orig. Op. Page 20]] Although these districts will receive the same total amount of money in the current year from state allocations plus local levy moneys, the money may have to be allocated in a different way.  As a result of this reallocation, these districts may have to cut programs.

             This is an equitable argument in favor of excluding grant funds from the definition of "levy reduction funds."  But we cannot read such an exclusion into the definition as set forth in the statute.  The only place this "forced reallocation" argument could possible fit into the definition is under the "workload changes" exception.  The argument would be that to the extent a district uses the "new" block grant funding to undertake a new program or enhance an existing program, its workload would change in the year it receives the funds compared with the prior year.  Also, to the extent other programs are cut or reduced because of the loss of local moneys, a district's workload would further change.

             The problem with this argument is that the exception from the definition of levy reduction funds is for increases in funding that are "attributable" to workload changes.  The verb "attribute" means "to explain as caused or brought about by."  Webster's Third New International Dictionary 142 (1981).  Although the increase in funding provided for in the grant program may "cause" workload changes, workload changes did not cause the funding increase.

             In summary, based on our reading of the statutory language, and in the absence of any definition of such key terms as "state‑wide block grant program" and any statements in the record to the contrary, we conclude that the Local Education Program Enhancement Funds provided for in section 506 of the budget should be considered "levy reduction funds."

             We recognize that this conclusion will mean that districts whose levy percentages are between 20 and 30 percent may have to reduce their 1988 levy collections below the level they had anticipated and for which they may have already budgeted.  We are not unmindful of the difficulties this may cause.  We also recognize that because of the timing between passage of the budget bill and the final amendments to and final passage of the levy lid law, and because of the lack of reference in one bill to the other bill, the Legislature may not have intended the result we reach.  If the Legislature did not intend this result, the problem can be corrected.

             As we mentioned, one of the key terms in section 101 is "state‑wide block grant program."  The term is not defined in the statute.  We are unaware of any standard definition of the term in the case law.  However, generally speaking, block grants have  [[Orig. Op. Page 21]] certain characteristics.  The grants provided for in section 506 appear to have these characteristics.  In the absence of any legislative statements to the contrary, we have considered the grants to be part of a "state‑wide block grant program" as that term is used in RCW 84.52.0531(7).  If the Legislature did not intend the grant program provided for in section 506 to be considered a "state‑wide block grant program," then it could have so indicated in section 506.  Not having done that, for reasons that may be perfectly understandable given the timing of the two bills at issue here, the Legislature is free to pass a supplemental appropriation this session making it clear that the appropriation for the Local Education Program Enhancement Funds is not for a "state‑wide block grant program" as that term is used in section 101 of the levy lid law.

             If the Legislature considered the grants at issue to be block grant funds but still did not intend that they be considered levy reduction funds, then it could deal with the problem by amending the levy lid law.  It would have a number of options.  For example, block grant programs could be removed from the levy base in RCW 84.52.0531(4)(b), block grant programs could remain in the base but increases in funding for block grant programs could be excluded from the definition of levy reduction funds in RCW 84.52.0531(7), or the term "increases" could be defined to exclude first-time funding of block grant programs.

             Regardless of whether the Legislature adopts one of the preceding suggestions and clarifies the applicability of the definition of "levy reduction funds" to the grants at issue here, the possibility will still exist for confusion over the applicability of the definition to any number of future increases.  We would suggest, therefore, that regardless of whether the Legislature intended the result we reach herein, it consider adding a proviso to the definition of "levy reduction funds" that would permit the Legislature to grant exceptions to the definition through specific designation of appropriated moneys to be either included or excluded as levy reduction funds.  A similar proviso was contained in the original definition of "levy reduction funds" in House Bill 455 but was subsequently deleted.

 Question 2:

             If the answer to question 1 is no, under what circumstances would new programs or program enhancements apply to reduce "grandfather" levy authority?

             Because the answer to question number one is yes, we address your second question, as well as your third and fourth questions, only briefly.  As to your second question, new programs or program enhancements will require "grandfathered" districts,  [[Orig. Op. Page 22]] i.e., districts whose levy percentages are above 20 percent, to reduce their levy percentages if the funding for the new programs or program enhancements comes within the definition of levy reduction funds in RCW 84.52.0531(7).

 Question 3:

             In this regard, must the Legislature stipulate in the appropriations bill or other legislation that a specific new program or program enhancement shall be included as levy reduction funds?

             The Legislature is not required to stipulate in the appropriations bill or other legislation that a specific new program or program enhancement shall be included as levy reduction funds.  Funding for a new program or program enhancement will be included as levy reduction funds on the basis of whether the funds come within or fall outside the statutory definition of levy reduction funds.

             We have already noted, however, that key terms like "state‑wide block grant program," "increase," and "workload changes" are not defined in the statute.  To the extent the definition of levy reduction funds, or any part of it, is vague or ambiguous, it may not be clear whether a new program or program enhancement is to be included as levy reduction funds.  The program provided for in section 506 is a perfect example.  In such a case, a legislative designation in the appropriations bill labelling funding for a specific new program as levy reduction funds would clarify the matter.

 Question 4:

            Conversely, what is the effect of language in an appropriations bill which states that a particular funding enhancement is not to apply as levy reduction funds?

             Our answer to this question is basically the same as our answer to your third question.  To the extent the statutory definition of levy reduction funds is vague or ambiguous and, as a result, there is doubt about whether a particular funding enhancement is to apply as levy reduction funds, then language in an appropriations bill stating that the funding is not levy reduction funds would clarify the issue (just as would language stating that the funding is levy reduction funds).

             We do have one caveat to our answers to your third and fourth questions.  There is a limit beyond which the Legislature cannot go in an appropriations bill.  The Legislature cannot use an appropriations bill to modify or amend the general law.  As the  [[Orig. Op. Page 23]] court said in Flanders v. Morris, 88 Wn.2d 183, 191, 558 P.2d 769 (1977):

             We realize that in certain instances the legislature must place conditions and limitations on the expenditures of monies, but to the extent that such conditions or limitations have the effect of modifying or amending the general law they are unconstitutional enactments.  An appropriations bill may not constitutionally be used for the enactment of substantive law which is in conflict with the general law as codified.

 AccordService Employees Int'l Union, Local 6 v. Superintendent of Instruction, 104 Wn.2d 344, 351, 705 P.2d 776 (1985).

             Thus, where it is clear that a particular funding enhancement either comes within or falls outside the definition of levy reduction funds, the Legislature cannot change that result in the appropriations bill.  Where the statutory definition is unclear, or where it is unclear whether the definition applies to a particular funding enhancement, then the Legislature has a much freer hand in the appropriations bill to clarify potential confusion without crossing the line and impermissibly modifying or amending the statutory definition.

             We hope the foregoing will be of assistance to you.

 Sincerely,
KENNETH O. EIKENBERRY
Attorney General

MARK S. GREEN
Assistant Attorney General
 [[Orig. Op. Page A-24]]  

                                                                   APPENDIX A

             RCW 84.52.0531, prior to the 1987 amendments, provided, in part, as follows:

             The maximum dollar amount which may be levied by or for any school district for maintenance and operation support under the provisions of RCW 84.52.053 shall be as follows:

            (1) For excess levies in 1985 for collection in 1986 and thereafter, the sum of:

            (a) That amount equal to ten percent of each school district's prior year basic education allocation; plus

            (b) That amount equal to ten percent of each school district's prior year state allocation, exclusive of federal funds, for the following programs:

            (i)  Pupil transportation;

            (ii) Handicapped education costs;

            (iii) Gifted; and

            (iv) Compensatory education, including but not limited to remediation assistance, bilingual education, and urban, rural, racial disadvantaged programs; plus

            (c) In the case of nonhigh school districts only, an amount equal to the total estimated amount due by the nonhigh school district to high school districts pursuant to chapter 28A.44 RCW, as now or hereafter amended, for the school year during which collection of the levy is to commence, less the increase in the nonhigh school district's basic education allocation as computed pursuant to subsection (4) of this section due to the inclusion of pupils participating in a program provided for in chapter 28A.44 RCW in such computation.

             * * *

            (5) Any district is authorized to exceed the levy limitations imposed by subsection (1) for taxes to be collected during calendar years 1985 through 1993 as follows:

            (a) For excess levies to be collected in calendar year 1986, 1987, and 1988, a base year levy percentage shall be established.  This base year levy percentage shall be equal to the greater of:  (i) The district's actual levy percentage for calendar year 1985, (ii) the average levy percentage for all school district levies in the state in calendar year 1985, or (iii) the average levy percentage for all school district levies in the educational service district of the district in calendar year 1985.

            (b) The base year levy percentage established in (a) of this subsection shall be reduced in even increments beginning in calendar year 1989.  The incremental  [[Orig. Op. Page A-25]] reduction shall equal one‑fifth of the percentage points the base year levy percentage exceeds the amount authorized in subsection (1) of this section.

            (c) For excess levies to be collected in calendar year 1993, the maximum dollar amount which may be levied by or for any school district shall not exceed the amount authorized in subsection (1) of this section.  The provisions of this subsection shall not apply to excess levies to be collected after calendar year 1993.

             * * *

 [[Orig. Op. Page B‑26]]

                                                                    APPENDIX B

            RCW 84.52.0531, as amended by section 101, chapter 2, Laws of 1987, First Extraordinary Session, provides as follows:

             The maximum dollar amount which may be levied by or for any school district for maintenance and operation support under the provisions of RCW 84.52.053 shall be determined as follows:

            (1) For the purpose of this section, the basic education allocation shall be determined pursuant to RCW 28A.41.130, 28A.41.140, and 28A.41.145, as now or hereafter amended:  PROVIDED, That when determining the basic education allocation under subsection (4) of this section, nonresident full time equivalent pupils who are participating in a program provided for in chapter 28A.44 RCW or in any other program pursuant to an interdistrict agreement shall be included in the enrollment of the resident district and excluded from the enrollment of the serving district.

            (2) For the purposes of subsection (5) of this section, a base year levy percentage shall be established.  The base year levy percentage shall be equal to the greater of:  (a) the district's actual levy percentage for calendar year 1985, (b) the average levy percentage for all school district levies in the state in calendar year 1985, or (c) the average levy percentage for all school district levies in the educational service district of the district in calendar year 1985.

            (3) For excess levies for collection in calendar year 1988 and thereafter, the maximum dollar amount shall be the total of:

            (a) The district's levy base as defined in subsection (4) of this section multiplied by the district's maximum levy percentage as defined in subsections (5) and (6) of this section; plus

            (b) In the case of nonhigh districts only, an amount equal to the total estimated amount due by the nonhigh school district to high school districts pursuant to chapter 28A.44 RCW for the school year during which collection of the levy is to commence, less the increase in the nonhigh school district's basic education allocation as computed pursuant to subsection (1) of this section due to the inclusion of pupils participating in a program provided for in chapter 28A.44 RCW in such computation; less

            (c) The maximum amount of state matching funds under section 102 of this 1987 act for which the district is eligible in that tax collection year.

            (4) For excess levies for collection in calendar year 1988 and thereafter, a district's levy base shall be the  [[Orig. Op. Page B‑27]] sum of the following allocations received by the district for the prior school year, including allocations for compensation increases, multiplied by the percent increase per full time equivalent student in the state basic education appropriation between the prior school year and the current school year:

            (a) The district's basic education allocation as determined pursuant to RCW 28A.41.130, 28A.41.140, and 28A.41.145;

            (b) State and federal categorical allocations for the following programs:

            (i) Pupil transportation;

            (ii) Handicapped education;

            (iii) Education of highly capable students;

            (iv) Compensatory education, including but not limited to learning assistance, migrant education, Indian education, refugee programs, and bilingual education;

            (v) Food services; and

            (vi) State‑wide block grant programs; and

            (c) Any other federal allocations for elementary and secondary school programs, including direct grants, other than federal impact aid funds and allocations in lieu of taxes.

            (5) For levies to be collected in calendar year 1988, a district's maximum levy percentage shall be determined as follows:

            (a) Multiply the district's base year levy percentage as defined in subsection (2) of this section by the district's levy base as determined in subsection (4) of this section;

            (b) Reduce the amount in (a) of this subsection by the total estimated amount of any levy reduction funds as defined in subsection (7) of this section which are to be allocated to the district for the 1987-88 school year;

] [[Orig. Op. Page B‑28]]

            (c) Divide the amount in (b) of this subsection by the district's levy base to compute a new percentage; and

            (d) The percentage in (c) of this subsection or twenty percent, whichever is greater, shall be the district's maximum levy percentage for levies collected in calendar year 1988.

            (6) For excess levies for collection in calendar year 1989 and thereafter, a district's maximum levy percentage shall be determined as follows:

            (a) Multiply the district's maximum levy percentage for the prior year or thirty percent, whichever is less, by the district's levy base as determined in subsection (4) of this section;

            (b) Reduce the amount in (a) of this subsection by the total estimated amount of any levy reduction funds as defined in subsection (7) of this section which are to be allocated to the district for the current school year;

 [[Orig. Op. Page B‑29]]

            (c) Divide the amount in (b) of this subsection by the district's levy base to compute a new percentage; and

            (d) The percentage in (c) of this subsection or twenty percent, whichever is greater, shall be the district's maximum levy percentage for levies collected in that calendar year.

            (7) "Levy reduction funds" shall mean increases in state funds allocated to a district for programs included under subsection (4) of this section that are not attributable to enrollment or workload changes, compensation increases, or inflationary adjustments recognized in state allocation formulas.  Any other increases in state allocations from the district's allocations for the prior school year that are not specifically excluded in this subsection shall be considered levy reduction funds.  If levy reduction funds are dependent on formula factors which would not be finalized until after the start of the current school year, the superintendent of public instruction shall estimate the total amount of levy reduction funds by using prior school year data in place of current school year data.

            (8) For the purposes of this section, "prior school year" shall mean the most recent school year completed prior to the year in which the levies are to be collected.

            (9) For the purposes of this section, "current school year" shall mean the year immediately following the prior school year.

            (10) The superintendent of public instruction shall develop rules and regulations and inform school districts of the pertinent data necessary to carry out the provisions of this section.

 [[Orig. Op. Page C-30]]

                                                                    APPENDIX C

NEW SECTION.Sec. 506.     FOR THE SUPERINTENDENT OF PUBLIC INSTRUCTION‑-LOCAL EDUCATION PROGRAM ENHANCEMENT FUNDS

            General Fund Appropriation                             $                                              49,500,000

             The appropriation in this section is subject to the following conditions and limitations:

            (1) The purpose of this section is to provide a grant in addition to the district's basic education allocation, to each school district based on full time equivalent student enrollment to meet the educational needs of each district.

            (2) School districts shall be eligible to receive a grant in addition to their basic education allocation. This additional grant shall be distributed to local school districts from the superintendent of public instruction on the basis of full time equivalent students.  For districts enrolling not more than one hundred average annual full time equivalent students, except as otherwise specified, and for small school plants within any school district, which small plants have been judged to be remote and necessary by the state board of education, the grant shall be distributed as follows:

            (a) For grades K-6, for districts enrolling not more than sixty average full time equivalent students, the grant shall be based on sixty full time equivalent students;

            (b) For grades 7 and 8, for districts enrolling not more than twenty average full time equivalent students, the grant shall be based on twenty full time equivalent students; and

            (c) For districts that have high schools with sixty or fewer full time equivalent students, the grant shall be based on sixty full time equivalent students.

            (3) For the 1987-89 biennium, each school district shall receive, in addition to the basic education allocation, a grant of no less than $67.50 per full time equivalent student.  Grants shall be distributed on a school year basis.  A maximum of $24,750,000 may be allocated for the 1987-88 school year.

            (4) For the purposes of this section, each school board shall:

            (a) Assess the needs of the schools within the district;

            (b) Assign priority to addressing the identified needs;

            (d) Develop an evaluation methodology to assess specifically how the expenditure of the grants  [[Orig. Op. Page C-31]] demonstrate a direct educational benefit to the pupils within the district.

            (5) New or existing programs enhanced by the funds provided to districts by a grant under this chapter shall not become a part of the state's basic education obligation as set forth by the Constitution.

            (8) Local district grants may be used to fund any or all of the following activities:

            (a) Innovative programs to increase the adult-pupil ratio without increasing the number of certificated staff, including but not limited to:

            (i) Providing stipends to competent retired teachers to return them to the classroom as "team teachers" or classroom assistants;

            (ii) Providing stipends to teachers' aides;

            (iii) Providing incentives to administrators who spend a portion of their work day in the classroom team teaching or providing classroom assistance;

            (iv) Providing recognition to citizen volunteers who assist in the classroom;

            (v) Providing training programs for classroom assistants, including volunteers; and

            (vi) Purchasing equipment that directly relates to classroom instruction or assists the teacher in minimizing time away from teaching.

            (b) Dropout prevention and retrieval programs, including, but not limited to:

            (i) Curriculum development;

            (ii) Public and private sector partnerships in expanding offerings in programs such as "Choices" and the "Registry" program;

            (iii) Alternative learning program development;

            (iv) Enhancement of vocational, career, college, and pupil advisory programs;

            (v) Elementary school advisory programs;

            (vi) Mentor pupil programs such as "Natural Helpers"; and

            (vii) Curriculum materials and equipment purchases.

            (c) Drug and alcohol abuse programs, including, but not limited to:

            (i) In-service staff training programs for the identification of students at-risk; and

            (ii) Community services networking to direct students who are substance abusers to appropriate treatment facilities.

            (d) Early childhood programs, including but not limited to:

            (i) A parents as first teachers program that provides for resource materials on home learning activities, private and group educational guidance, individual and group learning experiences for the parent and child, and other appropriate activities to enable parents to improve  [[Orig. Op. Page C-32]] learning in the home, understand the relationship between developmental stages and behavior, and monitor their children's growth and development relating to understanding and use of language; perception through sight and hearing; motor development and hand-eye coordination; and health, physical development, and emotional, social, and mental development;

            (ii) Nutritional programs;

            (iii) Parental participation programs; and

            (iv) Child day-care programs.

            (e) In-service training programs for staff development including, but not limited to:

            (i) Funding speakers or group leaders to deliver in-service training to staff;

            (ii) Program materials and equipment;

            (iii) Tuition, registration fees, and associated fees for attendance at seminars, workshops, or courses that directly relate to enhancing adult training for classroom duties; and

            (iv) Travel reimbursement directly related to in-service training.

            (f) Programs that develop and promote logical reasoning and improved analytical skills, including programs for highly capable students.

            (10) Small or rural districts may enter into cooperative agreements to provide educational enhancements through the sharing of grant funds.

            (11) The superintendent of public instruction shall make a comprehensive report to the legislature on the use of the local district grants and the educational benefits derived therefrom by January 31, 1989.

            Note that subsections (4)(c), (6), (7), and (9) of section 506, chapter 7, Laws of 1987, First Extraordinary Session, were vetoed by the Governor.

                                                          ***   FOOTNOTES   ***