• Growing Education: What's the Difference Between a Levy and a Bond?

    Funding for education in the state of Washington is complicated and can lead to questions about how schools receive the money needed to operate. The state of Washington is required to supply school districts with state funding for “basic education” which is based on what is referred to as a “prototypical model” representing the Legislature’s assumptions of what resources are required to provide the program of basic education.

    Unfortunately, when the funding provided by the state does not cover the actual costs to operate, construct and maintain a school district, districts often utilize bonds and levies to bridge the gap. This local funding allows school districts to provide the structures and services communities rely on, which allows students to grow and thrive.

    A levy rate is the amount of property tax per $1,000 of assessed property value to fund a voter approved levy amount. A levy rate of $1.00 means that for every $1,000 of property value, the owner of the property will have to pay $1.00 in taxes.

    Example: If a homeowner has a home valued at $200,000 and the levy rate is $1.00 for every $1,000 of assessed property value, the homeowner will pay $200 annually in property taxes.

    Districts can have the same levy rate but raise very different amounts of money because the total property value within a district’s boundary varies greatly across the state. Districts with a larger tax base will generate more money for the same tax rate when compared to a district with a smaller tax base.

    Depending on the type of levy (enrichment, capital (including tech), or transportation), voters can approve levies for one to six years. After the allotted number of years, the levy expires. Districts may then go back to their voters and ask for a continuation, or replacement levy.

    Voters can approve an enrichment levy for up to four years. After the allotted number of years, the levy expires. Districts typically then go back to their voters and ask for a continuation, replacement, or enrichment levy.

    Yes. This maximum dollar amount is known as the “Levy Lid.” As part of the changes the Legislature made to the way the state funds education in Washington, also known as the “McCleary decision,” levy rates are capped at $2.50 per $1,000 of assessed property value. A levy may not collect more than $2,500 per student maximum ($3,000 per student in Seattle only), a dollar threshold which is adjusted annually based on inflation.

    Yes, but the amount that districts receive varies based on a number of factors.
    For example: Enrollment, regional cost of living differences, poverty values, and the number of special needs or non-English speaking students are all factors in the amount of state funding a district receives. Most districts also receive additional federal funding, which is mostly determined by levels of poverty and special needs populations within a district.

    Yes, but the funding does not cover the actual costs of operating a school district. The Washington State Supreme Court decision on the McCleary lawsuit resulted in public school districts seeing a net funding increase in 2018. Even though the state increased the amount of funding it was providing to school districts, it also capped the amount of funding school districts can raise from local levies. The Legislature also applied restrictions to how funding can be used. For local school districts, this means that levies have been significantly impacted, causing widespread confusion in communities across the state.

    Yes! Washington State law provides two tax benefit programs for senior citizens and individuals who are disabled: property tax exemptions and property tax deferrals. For more information on qualifications, please contact your local county assessor’s office.