School funding estimate is ‘woefully inadequate,’ OSBA leader says
Tuesday, December 6, 2022
A tentative state budget released Tuesday would increase the State School Fund by 2.3% in the next biennium, to $9.5 billion.
“That is woefully inadequate,” said OSBA Executive Director Jim Green. “That is not anywhere near what we are experiencing in our schools with inflation.”
Green said that not only would $9.5 billion not even cover schools’ increased costs, it also did not take into account the staffing shortages and learning loss schools are still dealing with from the pandemic.
The State School Fund, which was $9.3 billion this biennium, provides the majority of the funding for most Oregon school districts based on student enrollment. The budget estimates that $9.5 billion would be enough to maintain “current service levels,” the cost of doing the same things as now for the projected student population.
School officials say the state’s method for calculating current service level does not accurately reflect actual school expenses. The Oregon Association of School Business Officials is still working on its estimate, but it expects most schools to need a State School Fund of more than $10 billion to avoid cuts.
The tentative budget forecasts the state’s revenues will fall $200 million short of the $30.7 billion the state needs to maintain current service levels. The state must balance its budget, setting up potentially fierce fiscal battles in the 2023 Legislature.
The fiscal picture released Tuesday by the Department of Administrative Services and the Legislative Fiscal Office uses current revenue and spending projections. Typically, the governor releases a recommended budget in early December, but Governor-elect Tina Kotek does not take office until Jan. 9.
Education advocates and state officials have been discussing the 2023-25 State School Fund for months, but the tentative budget is the first official marker to begin negotiations. Kotek must deliver a recommended budget by Feb. 1. Her budget is not binding, but it will give education advocates a better idea where the state’s spending priorities are headed.
The Legislature actually decides the State School Fund. It has until the end of June, and a state economic report in February will help clarify the final numbers.
A 2.3% increase in school funding might seem ludicrous to anyone who has bought a tank of gas or a bag of groceries lately or tried to hire a new worker. The Federal Open Market Committee, the U.S. Federal Reserve’s monetary policy body, estimates inflation will hit 5.4% for 2022 and 2.8% for 2023.
Julie Neburka, LFO’s principal legislative analyst, said they used the state’s standard methodology. The estimate for increased school staff compensation is based on a historical average, and the health insurance increase is based on a statutory cap of 3.4%. For services and supplies, the document used a statewide inflationary rate of 4.2%, she said.
“The inflation included in the State School Fund calculation will not feel like the inflation that people are experiencing right now,” she said.
School leaders have objected to the state’s funding formula because it doesn’t reflect the effects of current bargained contracts. OASBO’s estimate in 2021 based on the actual budgets of school districts serving roughly half of Oregon’s students was $600 million higher than the state estimate.
Green said OSBA and other education advocates are hopeful Kotek and legislative leaders will recognize the funding needed to meet students’ real needs as they continue to recover from the COVID-19 school disruptions.
Green pointed to Oregon’s record reserve funds to shore up education even if the state enters a mild recession and expected revenues fall short of costs.
“If it’s raining, use the rainy-day funds,” Green said. “That’s what those dollars have been set aside for.”
The latest economic report forecast the Oregon Rainy Day Fund and the Education Stability Fund would have a combined $2 billion at the end of this biennium.
