State Funding

With the passage of two property tax limitation ballot measures by voters in the 1990s the state general fund became the major source of funding for Oregon’s K-14 public education system.

Before the property tax limitations were approved by voters most of the funds needed to operate the K-14 system came from local property taxes. In the 1980s the state’s general fund share of funding the K-14 system went from 40 percent in 1979 to 26 percent in 1990. During this period K-14 boards relied on local voters to approve increases in their local property taxes to pay for increases in program costs.

Then in 1990 Oregon voters approved a property tax limitation that shifted the major responsibility for funding K-14 programs from local property taxes to the state’s general fund. The limitation (known as Ballot Measure 5) amended Article XI, Section 11, of the Oregon Constitution. It required the State Legislature to replace property taxes schools, education service districts and community colleges lost from the measure’s passage with revenue from the state’s general fund. In the mid 1990s additional changes were made to the state’s property tax system through the initiative process (Ballot Measures 47 in 1996 and Ballot Measure 50 in 1997) which further limited the amount of revenue provided to the K-14 system through local property taxes and increased the amount of state general fund revenue needed to keep the K-14 system operating. The percentage of state revenue paid to replace lost property taxes is shown in the following State Share of K-12 School Support chart.

State Share of K-12 School Support

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As property taxes were reduced as the schools’ major source of revenue, the state’s obligation grew. With the increased demand to fund K-14 public education from the state’s general fund, funding for other programs that received money from the general fund were impacted. See the following State General Funding and Lottery Budget chart.

State General Fund and Lottery Budget

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The property tax limitation initiatives approved by voters in the 1990s effectively eliminated the opportunity for local citizens to tax themselves to fund their schools, except for bond measures for capital construction projects. In 1999 the Oregon Legislature did open the door to school districts to seek voter approval for local option levies that do provide revenue for operating expenses. (See Local Option.)

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K-12 Funding ($ in Millions) 2001-03 Actual 2003-05 Estimated 2005-07 Governor Revenue: 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 State School Fund Local Formula Revenue* Total $ 2,538 1,040 $ 3,578 $ 2,145 1,105 $ 3,250 $ 2,591 1,120 $ 3,711 $ 2,325 1,200 $ 3,525 $ 2,454 1,236 $ 3,690 $ 2,546 1,295 $ 3,841 % Change Over Prior Year 7.3 (9.2) 14.2 (5.0) 4.7 4.1 % Change Over Prior Biennium 4.3 5.6 4.1 Note: 2001-02 State School Fund amount includes $108 million School Improvement Fund allocation. Source: Department of Administrative Services/Budget and Management Division. *Local Formula Revenue includes local property taxes and other local revenue offset by the SSF distribution formula (state timber revenue, federal forest and Common School Fund receipts).

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