The June Oregon Economic and Revenue Forecast (released in May, despite the name) is often a demarcation in any session, indicating the point at which we move from policy discussion to more serious talk about the budget. It also offers clarity on how many policy bills that come with a price tag will likely be moving through the Joint Ways and Means Committee.
Unfortunately, with the forecast that was presented Wednesday, May 14, we appear on track to see relatively few new investments in the 2025-27 biennium.
The state is predicted to have roughly $2 billion more in General Fund revenue in 2025-27 than it had in 2023-25, but much of that is eaten up by inflation and roll-up costs. In March, the Ways and Means co-chair’s budget framework estimated they would have $987 million to invest as new money in 2025-27. We are hearing the assessment following the forecast is that has dropped by $500 million, leaving just $487 million to invest statewide across things like mental health, housing and, yes, education.
Additionally troubling for schools is that we also saw a reduction in other funds that go to schools. The corporate kicker tax refund is dedicated to schools and consistently helps the Legislature reach the amount needed for current service level funding of the State School Fund. It’s down $78 million from the last forecast.
We also learned in April that the state is anticipating $41 million less in local revenues that go to schools. With these decreases in available resources, our early math indicates the Legislature needs to put at least $120 million of that $487 million toward the State School Fund just to maintain a current service level of $11.4 billion.
We also learned this week that the corporate activities tax, which funds the Student Success Act accounts and critical programs like High School Success (aka Measure 98) and free school meal expansion, is trending lower than previously expected. With $195 million in reserves for these programs, we believe the Legislature can keep them whole, though.
But we also know that legislators may be reluctant to rely too heavily on reserves this early in the biennium.
One key point from the revenue forecast presentation was that the volatility of the market and the unknown impacts of federal tariffs are making it incredibly difficult for economists to confidently predict the future. There is already chatter in the Capitol about how soon they might be called back for a special session to address future budget issues, in part because we won’t have a finalized federal budget before the Legislature concludes its work in June.
What we do know for certain is this: Our work just got much harder. The needs of students haven’t changed, nor has the gap in funding for special education. We will continue to share with legislators that any possible money available for investment in K-12 should go toward special education. But we also know that just holding the line at $11.4 billion will take effort.
– Adrienne Anderson
OSBA Government Relations Counsel
