Seattle's Schools on the Brink: The 1895 Debt Vote That Could Have Cut the School Year to Six Months

The board of education of School District No. 1, composed of the city of Seattle, has called upon the voters to decide by ballot next Saturday, April 27, whether the floating warrant debt of the district shall be ratified and funded so that the district may be put on a strictly cash basis.

The amount of debt proposed to be ratified is about $387,000, of which some $40,000 bears 10 per cent interest and the remainder 8 per cent. The district already has a bonded debt of $450,000: $150,000 of 4 per cent bonds authorized in 1888 for additional school facilities; $200,000 of 3½ per cent bonds authorized in 1890 for new buildings; and $100,000 of bonds of an annexed district for which Seattle is liable.

The current warrant debt outstanding on March 1, 1895, was incurred by a special vote of the people in March, 1894, for the purchase of sites and the erection of school buildings. A large part of the remainder is due to delinquent taxes—something over $165,000. At the same time that delinquency has increased, the assessed valuation of the district has shrunk, and with it the legal limit of debt the board may contract without a vote of the people.

At a low valuation the district owns buildings worth about $500,000 and land worth about $277,000. Its cash, under the new law, is available only for current expenses and interest on warrants. Assets and liabilities are therefore roughly equal. The cash on hand is now being drawn upon for teachers' salaries and other expenses, and with the taxes due on the present levy it is estimated to be sufficient to run the schools on a cash basis until next year's taxes are due. The district employs more than 100 teachers, has thousands of school-age children, of whom over 6,000 are enrolled, and monthly expenses, exclusive of interest on debt, are about $15,000.

When the board incurred the debt now before the voters, it faced a hard choice. The constitution forbids creating a debt in excess of 5 per cent of the taxable valuation without a three-fifths vote, but until the last legislature there was no law authorizing such an election. The taxable valuation was shrinking, and the debt limit with it. Had delinquent taxes been paid, the limit would not have been exceeded by more than $25,000, if at all. When the limit was reached, the board could either close the schools until funds were available or keep them open and ask the legislature for a validating law, then submit the excess debt to the people. It chose the latter, and the warrant debt of about $387,000 was incurred.

The board now asks voters to ratify the floating debt so it can be funded with 6 per cent, twenty-year bonds. If ratified, warrants bearing 8 and 10 per cent will be replaced by bonds bearing no more than 6 per cent, saving the district about $12,000 a year in interest and putting it on a cash basis. If the debt is not ratified—and the law allows the question to be submitted only once—the district must continue paying 8 and 10 per cent on the warrants and levy a special tax of 5 mills on the dollar each year until the debt is extinguished. That levy, together with the common-school tax and enough to keep schools open ten months, would aggregate between 9 and 12 mills. The alternative would be to cut the school term from ten months to six.