State School Fund proposal won’t keep pace with needs, education advocates say

OSBA Board President Maureen Wolf asked legislators Wednesday to keep their eyes on Oregon’s priorities when considering the State School Fund for 2021-23.

“I know this Legislature seeks to prioritize our children,” she told the Joint Ways and Means Education Subcommittee. She implored the Legislature to increase the State School Fund allocation to avoid school cuts.

Senate Bill 5514 would appropriate $9.1 billion for the State School Fund for 2021-23, the same as in Gov. Kate Brown’s budget proposal in December. Education advocates are asking the Legislature for $9.6 billion.

The State School Fund debate often revolves around efforts to pin down the “current service level,” the amount needed to maintain programs and staffing in the face of inflation.

Legislative leaders have positioned $9.1 billion as holding the State School Fund “harmless from cuts” based on analysis from the Legislative Fiscal Office and other state agencies. The LFO analysis places the current service level about $2.5 million below this biennium’s $9 billion, mainly because of a reduction in Public Employees Retirement System rates.

Education advocates say the calculations required by state statutes underestimate actual costs. The Oregon Association of School Business Officials places the current service level at $9.6 billion, based on expense reports from select districts.

At $9.1 billion, the Tigard-Tualatin School District would need to cut the equivalent of 15 school days or as many as 80 staff members, said Wolf, the school board chair.

Wolf and other education leaders pointed out that the $500 million difference would cancel out the much-celebrated investment from the 2019 Student Success Act.

Oregon Education Association President John Larson told legislators the proposed State School Fund would send Oregon in the wrong direction.

“Investment will not happen, but cuts will,” he said.

At less than $9.6 billion, InterMountain Education Service District schools would be forced to cut staff or learning time just as schools are trying to make up for the learning loss during this COVID-19 disrupted school year, Superintendent Mark Mulvihill said in an interview earlier this week.

Schools, just starting to recover from reductions following the 2008 recession, have few extras left to cut, he said, making staff and school days the main way to absorb general fund budget losses.

The State School Fund is schools’ most flexible funding source, allowing local leaders to decide how the money can best be spent for students, Mulvihill said.

“If $9.1 billion is the number, they are going to have to be very creative with the use of other dollars to avoid cuts,” he said.

The State School Fund provides roughly two-thirds of schools’ money, but Measure 98’s High School Success Fund and the Student Success Act have added new money streams. Those grants, though, come with stipulations on use.

Mulvihill said the additional money has allowed districts to add targeted programs, such as high-cost career and technical education classes, and tackle equity issues, such as dropping sports fees.

If legislators view those funds as replacing State School Fund money, those innovative programs that reach many students on the fringes would again be endangered as districts try to protect core programs.

“Nothing is permanent until it gets into your general fund budget that rolls over,” he said.

Legislative leaders are considering a budget picture that is looking better than the dire predictions of a deep recession when the pandemic first hit. The most recent economic report pegged Oregon revenue to exceed this biennium’s budget estimates enough to trigger a kicker tax refund.

The economy is improving, but Oregon faces a budget shortfall for 2021-23 and possibly beyond. Balancing that though, the state has about $3.1 billion in reserve funds, with federal emergency aid flowing in and more possible. The state will get its next economic and revenue report in May.

School leaders worry, however, that legislators will think the more than $1.7 billion headed to Oregon K-12 schools through the federal Elementary and Secondary School Emergency Relief Fund has schools covered.

Mulvihill said the one-time federal money is no replacement for general funds.

The federal funds are good for facilities upgrades, health measures and short-term COVID-19 responses, he said, but they can’t address ongoing expenses. It is too early to tell students’ real needs next school year, such as mental health issues, food insecurity and learning loss, he said.

“I can tell you they are going to be substantial, and they are going to be expensive,” Mulvihill said. “Federal money won’t provide the speech therapists or the counselors or nurses.”

Malheur ESD Superintendent Mark Redmond echoed that sentiment in his testimony Wednesday.

“I think we have incurred some costs that maybe will never go away,” Redmond said.

OASBO’s $9.6 billion estimate for the current service level does not build in any extra costs for COVID-19, Executive Director Angie Peterman said in an interview earlier this week.

One of the biggest problems with a $9.1 billion State School Fund, Peterman said, is that it creates a lower floor that drops the “current service level” into the future, hobbling school improvement goals.

“At the end of the day, we start behind the eight ball as we try to provide services for the next biennium,” she said.

- Jake Arnold, OSBA
jarnold@osba.org