Equalization and special education impact K-12 funding

Press Release (November 18, 2002)

  • John Tapogna, ECONorthwest Economist (503-222-6060)
  • Chris Dudley, OSBA Executive Director (503-588-2800)
  • John Marshall, OSBA Legislative Services Director (503-588-2800)
  • Margaret Peterson, Communication Services Director (503-588-2800)

Why are Oregon schools pinched for funds while national statistics show the state’s school funding levels per student are above the national average?

In an attempt to answer this question the Oregon School Boards Association commissioned ECONorthwest to investigate the state’s K-12 funding situation since the 1990 passage of Oregon’s property tax limitation measure and the start of the K-12 school funding equalization process.

What did they find? Not surprisingly, the answers are complex. No 30-second sound bite answers emerged.

Two key factors impact the funding-level debate:

  • Implementation of equalization, which provides comparable levels of funding for all students. Under the equalization formula, now completely implemented, districts well-funded prior to equalization dealt with budgets that grew at a much slower pace than districts poorly funded prior to equalization.
  • Significant increases in special education funding. Since 1992 spending per student on special education in Oregon’s public schools increased 14.3 percent annually while spending on regular classroom instruction increased 3 percent annually.

As part of the study, ECONorthwest conducted in-depth interviews with 16 school districts from both sides of the equalization formula. They found that districts on both sides of the equalization equation took money away from regular programs in order to meet the needs of federal special education mandates.

“While total spending per student did keep pace with inflation, a significant amount of the increased dollars were funneled into special education,” says John Tapogna, ECONorthwest economist. “Funding special education did come at a price to a district’s regular programs.”

“In 1992 Oregon schools spent an average of $448 per student on special education,” says Chris Dudley, OSBA Executive Director. “By 2000, the system spent $1,301 per student.”

“The federal special education mandate is embarrassingly under-funded by Congress,” Dudley says. “This lack of federal money to support federal laws takes more and more money away from our schools’ regular instruction.”

The conclusion: national reports, although providing accurate per student spending numbers, fail to capture the complex changes Oregon schools faced during the 1990s. The national reports address overall spending but do not address the tradeoffs between spending for regular instruction and for special education instruction.

K-12 Support Trending Downward

“The report shows a worrisome downward trend in Oregon’s support for K-12 public education,” says Dudley.

From 1991 to 2001:

  • Oregon’s national ranking based on per student expenditures dropped from 15th to 20th.
  • K-12 spending as a share of Oregonians’ personal income fell from 4.6 percent to 4.2 percent while total personal income in the state increased at an average annual rate of 5.7 percent (12th highest) between 1990 and 2001 (from $52.2 billion to $97.8 billion).

“Schools cannot continue to maintain the quality education they now provide Oregon’s young people and deal with fewer dollars for regular academic programs,” Dudley says. “Oregonians never aspired to be average and certainly not in educating our children.”

Oregon Employee Benefits Second in Nation

Oregon school employees’ salary and benefits over the past 10 years, as a share of total spending, typically held constant. The report shows Oregon spends less per student on school employee salaries than the national average, but more on employee benefits. Oregon’s school employee salaries per student are roughly comparable to California’s and Washington’s but higher than Idaho’s.

Key differences in Oregon’s spending on K-12 education include an employee benefit package (retirement, medical insurance and other insurance coverages) that ranks second in the nation.

"The increasing costs to government employers of the Public Employee Retirement System is one area that must be contained," says Dudley. At its Nov. 17 meeting the OSBA Board of Directors authorized the association to encourage all school district, education service district and community college boards to challenge the upcoming PERS employer contribution rate orders scheduled for release in December.

Comprehensive Analysis of K-12 Education Finance in Oregon 

View resources related to:
  1. Funding ‑ State
  2. Special education