While many Oregon school districts are struggling to pare back their budgets, the Legislature learned Oregon’s economy is still growing. If the growth continues, it would buttress education advocates’ case for increased public funding in 2025.
Oregon’s Office of Economic Analysis presented Wednesday the June Economic and Revenue Forecast to the Legislature. The quarterly report revised revenue expectations up but raised ongoing concerns about inflation.
“It’s pretty stable,” said Oregon State Economist Mark McMullen, but the inflation’s stubborn persistence in the face of national monetary policy is “a little scary.”
The immediate news was good, though. Net lottery and general fund resources increased $532 million from the March forecast, according to the Legislative Revenue Office. Oregon is on pace to finish the 2023-25 biennium with General Fund revenue 2.5% above the close of session forecast, according to the report. That would be enough to trigger a $582 million personal kicker and a $588 million corporate kicker dedicated to K-12 education, although economists caution a lot can still change.
The general fund and lottery revenue forecast for 2025-27 ticked down, dropping $810 million from the previous forecast, according to the LRO. The state’s net revenue for 2025-27 is still expected to increase 30%, though, according to the economic report. With other budgetary lines factored in, the state is expected to have a little more than $900 million in additional General Fund and Lottery resources for 2025-27 than at the close of 2023-25. Looking farther out, the report raised its revenue expectations through 2033.
With the understanding that Oregon is standing on firm financial ground, education advocates are pushing for adequate school investment in the 2025 Legislature. School districts around the state are reducing budgets this year and predicting more budget shortfalls next year if the State School Fund doesn’t reflect the true rising costs of current programs and staffing.
Efren Zamudio, OSBA Legislative Services specialist, warned school districts will be “cutting to the bone” if the Legislature doesn’t step up.
“If we want to support students’ success, we shouldn’t be taking away caring adults and critical academic supports with budget cuts,” Zamudio said. “Unfortunately, those are the decisions some of our school board members are forced to make with the funding allocated by the Legislature.”
The forecast highlighted another economic issue plaguing schools: falling birth rate. Oregon enrollment fell nearly a percentage point in 2023-24 to 547,424, and the report predicted the school-age population would continue to fall 1.2% annually. Districts where local enrollment is falling faster than the state average are struggling with significant drops in state funding, forcing layoffs and classroom upheaval.
The forecast has some good news for school districts. The corporate activities tax that supports the Student Success Act grants remains stable, with a small increase to $2.8 billion for this biennium.
McMullen said inflation is still a concern but it appears to be leading to a slow-down and not a recession. If the nation and Oregon does slip into a downturn, though, Oregon is as ready as it can be. The latest forecast showed Oregon reserves would end the biennium with $1.9 billion in the Rainy Day Fund and $1 billion in the Education Stability Fund. That totals about 11% of current revenues.
– Jake Arnold, OSBA
[email protected]
