Economic forecast sets more bountiful table for State School Fund discussion
Wednesday, February 22, 2023
Oregon economists told legislators Wednesday that they have more money than expected to spend on the state’s needs.
The March Oregon Economic and Revenue Forecast showed net general fund and lottery resources increased an additional $504 million for this biennium and $715 million for the 2023-25 biennium, according to the Legislative Revenue Office summary. During a joint meeting of House and Senate revenue committees, state economists said tax collections continue to exceed expectations and a recession in the near term looks unlikely although it is still hanging out there.
Now that legislators know how much the state has to spend, budget discussions get real. The State School Fund is the biggest single spending item on the Legislature’s plate.
Gov. Tina Kotek’s proposed budget based on the December forecast proposed a $9.9 billion State School Fund. Oregon school business officials say districts need at least $10.3 billion for most to avoid cuts to programs and staff.
“With this forecast in hand we can now move forward to ensure that Oregon’s students receive the school funding they deserve in coming years,” said Jim Green, OSBA’s executive director. “Students are relying on our legislative leaders to make sure that budgets keep pace with rising costs.”
The State School Fund debate is not held in a vacuum. A range of policy bills addressing Oregon’s many pressing issues are competing for the state’s resources. At the same time, expensive education policy bills for issues such as early learning and workforce retention could increase the need for a larger State School Fund.
Although a recession remains possible, Oregon’s budget reserves are in unprecedented good health. Oregon will have $2 billion in reserves at the end of this biennium and could hit the statutory max by the end of 2026.
For schools, there was also good news with the Student Success Act. Collections for the corporate activities tax, which supports the act, are expected to increase slightly to $2.6 billion.
The continued run-up in Oregon’s tax collections also means a bigger kicker tax refund. The personal kicker is projected to be $3.9 billion, and the corporate kicker, which goes to education, is expected to be $1.5 billion.
The Legislature will get one more forecast in May before budgets and spending bills have to be completed.
