Oregon’s commitment to providing a free public education for all its children started in the 1830s when Oregon pioneer John Ball opened the first school for “half-blood” children of fur trappers who frequented Fort Vancouver.

That commitment to a free public education, with local control and permanent funding, was written into territorial law by the Rev. George Atkinson in 1849 and became a part of the Oregon Constitution in 1859. Oregonians at that time not only provided for “a uniform, and general system of Common schools” (Article VIII, Section 3), they also established a mechanism to pay for those schools -- the Common School Fund.

The Common (Irreducible) School Fund (Article VIII, Section 2) provided for the distribution of income to school districts from the sale of land given to the state by the federal government. According to the 1868 Report of the Board of Commissioners for the sale of school lands and the management of the fund:

“If the state school lands are all sold, and the funds carefully managed, in a few years it (the Common School Fund) will fully support a free public school system.”

1890s -- Land fraud guts school fund

Unfortunately for Oregon’s children, a land-fraud scam in the 1890s squandered away the school grant lands, reducing the “Irreducible” School Fund to the degree that it has never covered more than a minimum amount of school costs.

This left local school boards with the responsibility of raising the money needed for school operations through local property taxes with minimal help from the state. In 1920, Oregon’s 2,543 school districts got a boost in state support when voters approved an annual tax of two mills (two tenths of a cent) on all taxable property in the state for the support and maintenance of public elementary schools. Property taxes became the primary source for both local and state school support.

By 1940, the state income tax, approved by voters in 1929, had replaced property taxes as the primary source of state revenue. It also provided potentially more revenue to increase state funding for schools.

1945 -- School Support Fund approved

In 1945, when post World War II development and population growth strained local property tax support to its limits, the newly formed Oregon School Boards Association was instrumental in securing additional state support for education. OSBA, the Oregon Education Association and Oregon Congress of Parents & Teachers helped develop a program for state school support that was placed on the November 1946 general election ballot by initiative petition and approved by voters. This Basic School Support Fund measure was designed to provide:

• A stable source of revenue for public education.
• New and additional money for an adequate financial floor for education throughout the state.
• Adequate equalization of educational opportunities throughout the state.

Continued population growth and other increasing demands for state services kept legislators from providing the 50 percent support for schools the initiative intended. In the 1950s and 60s, schools once again faced the difficult task of asking local taxpayers to increase property taxes to keep pace with school construction costs and escalating school operating costs resulting from rapidly growing baby boom school populations and inflation.

1973 -- Governor McCall’s plan fails

In 1973, one of Oregon’s most popular governors, Tom McCall, proposed a way to solve both the school funding problem and property tax escalation. He wanted to increase state school support to 90 percent, freeze property taxes, make property tax relief delivered through state funding of schools permanent and pay for it by increasing the state income tax by 30 percent. He thought his popularity would carry the proposal to victory and made passage of “The McCall Plan” his personal campaign. The plan’s narrow defeat in November that year was devastating to the man who believed its passage would have made “our corner of the world a better place in which to live.”

Defeat of “The McCall Plan” was followed in the next decade by virtually no percentage increases in state school support and legislative repeal of its commitment to property tax relief, leaving property taxpayers angry and unwilling to increase local property taxes for schools. In the 1980s, tax limitation initiatives began to appear on November general election ballots and 13 school districts closed for lack of funds. Double-digit inflation and increased wages and benefits negotiated under Oregon’s new collective bargaining law increased school costs exponentially and property taxpayers were refusing to pay the bill.

1987 -- “Safety net” approved, funding responsibility shifts to state

In 1987, Oregon voters approved a “safety net” constitutional amendment to keep schools from closing. The “safety net” allowed school districts to levy property taxes without voter approval for operating purposes up to the amount levied for operations in the prior year. Ninety-eight school districts fell into the safety net one or more years during the three years the “safety net” was in effect.

In 1990 and 1996 Oregon voters approved property tax limitations to stop property taxes from increasing, effectively shifting responsibility for school funding to the state.

• The 1990 property tax rate limitation limited the combined total schools, education service districts and community colleges can collect from an individual property to $5 per $1,000 of a property’s market value, and the combined total cities, counties and all other special districts can collect to $10 per $1,000 of a property’s market value.
• The 1996-97 property tax assessment limitation measures rolled back property tax assessments to 1995-96 levels and limited future assessed value growth to 3 percent per year.

With tax issues at center stage, the issue of school quality and accountability was in the wings, demanding its own spotlight. In 1983 Oregon responded to the federal “A Nation at Risk” report on the poor condition of public education with a state Board of Education-adopted Action Plan for Excellence and moved to take its place nationally as a leader in school improvement.

1991 -- Oregon’s Educational Act for the 21st Century

In 1991, the Legislature enacted Oregon’s Educational Act for the 21st Century, calling for major changes in school programs aimed at making Oregon students the best educated in the nation by 2000 and a workforce equal to any in the world by 2010. Although target dates were changed by subsequent legislatures, the goals remain and Oregon schools have made great strides in reaching the law’s benchmarks.

Our current predicament

In 2001, 2002 and 2003, funding moved back into the spotlight. Personal and corporate income taxes that grew rapidly in response to a very strong economy dropped precipitously as the economy declined and unemployment in Oregon reached the highest level in the nation. The combination of recession and over-reliance on income taxes pushed Oregon into a budget crisis that leaves state coffers in a $1.8 billion hole that the 2003 Legislature must address.

Under-funded federal mandates for special education and the federal “No Child Left Behind” Act, along with the threat of further reductions in state funding find schools cutting regular classroom programs and shortening school years to balance their budgets.

(See a complete outline in “History of School Funding in Oregon.”)