School business officials make case for $9.6 billion State School Fund
The Legislature’s budget framework is $500 million too low to maintain what Oregon schools do now, education advocates say.
Give the Legislature time to see what can be done, counters Sen. Betsy Johnson, one of the co-chairs of the budget-writing Joint Ways and Means Committee.
“We’re just getting started,” said Johnson, D-Scappoose. “That framework is our first introduction.”
Oregon’s formal budget introductions start Wednesday, April 14. The committee will road test its budget ideas through five public hearings where the public can tell legislators how they think Oregon should spend its money.
The framework includes $9.1 billion for the State School Fund. Education advocates are lining up to make the case that schools need $9.6 billion, the current service level calculated by the Oregon Association of School Business Officials.
OASBO builds its estimate from the expense reports from the 13 largest school districts, representing about half of Oregon’s students, and a half-dozen selected districts from various regions. The $9.6 billion estimate does not include added costs for pandemic responses.
At $9.1 billion, education advocates say, schools would be forced to cut school days or staff just as they are trying to help students recover from the past year’s disrupted learning. School leaders say the cuts would be felt deepest by historically underserved communities even as the Oregon Department of Education and Legislature are emphasizing more equity-focused decision making.
Scappoose School District Superintendent Tim Porter said the OASBO numbers accurately reflect his district’s estimates. Scappoose would be about $1.5 million short under the Legislature’s plan, equating to 15 teachers or about 17 days, Porter said.
The district north of Portland can’t actually cut that many days without an ODE waiver and would be hard pressed to cut that many staff with the additional needs stemming from COVID-19, Porter said.
Legislators have pointed out that schools are slated to receive more than $1.7 billion in one-time federal coronavirus emergency money.
Porter and other school leaders say federal money shouldn’t have anything to do with the State School Fund debate. The federal money will cover short-term expenses from pandemic demands, not the staff costs that make up 86% of schools’ budgets.
“To spend one-time funds to maintain positions that will be here more than one year doesn’t make sense,” Porter said. “At the end of that year, you come to a cliff.”
Like a lot of districts that are already running lean after years of tight budgets, Scappoose would have to get creative, possibly turning to High School Success or Student Investment Account funds meant for improving schools, especially for underrepresented students.
Voters passed Measure 98 in 2016, which became the High School Success Fund to improve graduation success, and the Legislature passed the Student Success Act in 2019, which contains the Student Investment Account for targeted help for students. Both funding sources were intended to be additional money on top of the State School Fund for new initiatives.
At $9.1 billion, the Hillsboro School District would be about $17.5 million short, about the same amount as its expected Student Investment Account grants, said Chief Financial Officer Michelle Morrison.
It defeats the whole point of the Student Success Act, she said.
Oregon’s total estimated revenue for 2021-23 is roughly $1.7 billion short of what it needs, according to the co-chairs’ framework.
Ways and Means Co-Chair Sen. Elizabeth Steiner Hayward, D-Beaverton, said the Legislature has emphasized student welfare even as it must consider projected budget shortfalls into 2023-25. She said she wants to see schools’ uses for the federal money and new state grants before working up the final budget.
The framework says some state agencies will have to cut at least 1% of budgets, but it describes a $9.1 billion State School Fund as holding schools “harmless.” A report from the Legislative Fiscal Office says the current service level is about $2.5 million less than last biennium’s $9 billion State School Fund.
“The $9.1 billion is an increase of $100 million over the current service level, although we are all going to fight about current service level,” Johnson said.
The report uses statewide averages and mandated calculations. School officials say the report’s methodology is flawed.
For starters, the government report’s calculations are based on a 50/50 split of last biennium’s State School Fund. In practice, ODE distributes the money in a 49/51 split to account for rising costs.
The LFO report’s lower starting point costs schools $211 million.
The LFO report also uses a 3.4% statute-mandated health care cost increase cap. School districts say actual negotiated health care costs will go up an average of 5%. The 3.4% cap on premiums also does not account for additional fees and taxes.
The LFO report says schools will need less money next biennium largely because the average Public Employees Retirement System rate will fall from 17.8% to 13.8%. School business officials counter that the statewide average rate is not reflective of schools’ actual rates. Some districts have lower total rates than the calculated drop, while others are looking at rates above 25%.
To business officials’ frustration, the state analysis also includes the rate-lowering benefits of side accounts but does not count the bond payments schools have to make to establish those accounts.
OASBO calculates schools will need to spend $220 million more on pension costs than in the LFO report.
Quality Education Commission Chair John Rexford said maybe the annual current service level argument is about the wrong number.
“The stress should be to receive enough money to give our students what they deserve,” he said.
The Quality Education Model, the commission’s biennial report, estimates Oregon needs a $10 billion State School Fund to offer a high-quality education to all students.
Speaking as a former superintendent, Rexford can put himself in the place of school leaders preparing for the next school year.
“I would love to worry about lofty goals and full funding, but I have to open schools next September,” he said. “My focus is making sure that the number for next year is such that we can deliver the same level of education that we provided in the last biennium.”
- Jake Arnold, OSBA
jarnold@osba.org