[Which means the state has to come up with a funding source.]

Sorta'. There's actually a big clue in the term "levy SWAP", but apparently that has not been explained. 

"1. The levy swap would reduce local funding for local teacher pay and programs.
2. The levy swap would increase the state property tax to $3.50 per thousand in assessed value, close to the constitutional limit.
3. The state supreme court says levy reform is not required by the constitution.
4. Levy swap proposals would do nothing to increase education choices for families or encourage greater involvement by parents in their children’s education."

Search on "Analysis of proposed levy swap idea to change the way public education is funded in Washington state" for the rest of this article.