Sen. Janeen Sollman, Joint Ways and Means Education Subcommittee co-chair, passionately pushed back against negative education narratives during a hearing Wednesday. Sollman, a former school board member and proud parent of teachers, said Oregon schools are full of success stories but they needed to be looking to invest where students have the most need. (Photo by Jake Arnold, OSBA)
Education funding for 2025-27 came into focus Wednesday, May 28, with the approval of an $11.36 billion State School Fund. The picture will sharpen with the Oregon Department of Education funding bill, which includes the Student Success Act money.
The State School Fund provides the bulk of K-12 public education funding, and $11.36 billion is about what school officials say is necessary for most school districts to continue their same level of service over the next two years. Education advocates are turning their attention to the ODE bill to continue programs and fine-tune investments.
The Joint Ways and Means Education Subcommittee sent Senate Bill 5516 with the State School Fund allocations to the full Ways and Means Committee, where it is already scheduled for a hearing Friday, May 30.
Wednesday’s vote likely locks the State School Fund. Changes at this point in the process are rare. The “Christmas tree bill” that allocates any leftover funding when all the budgeting is done offers an opportunity for additional funding, but there is unlikely to be much this year.
The Oregon Economic and Revenue Forecast released May 14 put a damper on education advocates’ expectations. The state’s slowing revenue growth projections dropped by nearly $800 million from just three months ago, leaving legislators less than an estimated $500 million for investments in transportation, housing, public safety, firefighting and education among other things.
Schools’ general funds come from a mixture of about two-thirds state money and one-third local revenue. The state school funding formula throws all the money into one big pot and then allocates it based on enrollment with some adjustments for student characteristics, such as needing special education services.
School districts that have more local revenue receive less state funds so that the amount schools receive per student is roughly equal. This spring the Legislative Revenue Office showed local revenues projections were down $41 million, reducing the total funding available for all school and education service districts.
Education advocates had hoped the Legislature might backfill that amount, but it wasn’t in Wednesday’s bill.
The ODE funding bill, Senate Bill 5515, could receive a hearing as soon as next week. Significant targeted school funding for early learning, special education, historically underserved students, teacher training and nutrition among other things flows through ODE, mainly from the Student Success Act.
The Student Success Act is funded by the corporate activity tax, which dropped $44 million in the most recent revenue forecast to $3.1 billion for 2025-27. Some of that money, though, pays for tax cuts that were part of the 2019 act, leaving about $2.1 billion for distribution – nearly $200 million shy of the governor’s recommended budget.
Since the act’s inception, education advocates have fought attempts to reduce the supporting CAT or to redirect the money elsewhere.
A bill heard Wednesday in the Senate Finance and Revenue committee offers a prime example. Senate Bill 125 would exempt from the CAT specified health care services worth more than $20 billion annually, pitting providers and patients against students. The bill would reduce CAT collections by up to $70 million a biennium, according to education advocates’ estimates.
Testimony from health care providers Wednesday focused on care costs, saying a break in the CAT would be crucial to maintaining services to rural and low-income patients.
Education representatives agreed Oregonians need more health care options and support but said that money should not come at students’ expense. They said any CAT exemptions should be revenue neutral, suggesting a small rate increase for the largest and most profitable companies could pay for the exemption.
“This bill does attack education funding because it does not also increase taxes on those with the actual funds,” said Angela Bonilla, Portland Association of Teachers president.
Student Success Act funds are divided among three accounts:
- At least 20% must go to the Early Learning Account, which funds things including Early Intervention/Early Childhood Special Education and preschool supports.
- Up to 30% can go to the Statewide Education Initiatives Account, which includes a variety of programs for historically underserved students and a share of the funding for the High School Success grants known as Measure 98 funding.
- At least 50% must go to the Student Investment Account, which is distributed based on enrollment for school district plans to improve student outcomes and well-being.
Education advocates are watching the split carefully. They hope to see $1.137 billion in the Student Investment Account and a total High School Success Fund of $340.8 million to maintain current services, according to Stacy Michaelson, OSBA Government Relations and Communications director.
“We appreciate the Legislature’s commitment to maintaining the State School Fund at a level that is adequate for most districts in these difficult budget times,” Michaelson said. “Many of our students are facing difficult times too, and we hope the Legislature can find the resources that help lift up the students facing the most challenges.”
Two other bills Wednesday in the subcommittee hearing spoke to school funding’s intricacies.
House Bill 2140 reflects a change in the State School Fund approach that has shaped this year’s education conversation.
In July, Gov. Tina Kotek announced a change to the methods for estimating the cost for schools to continue their current services in the next biennium. Education advocates, including OSBA, sat down with the governor’s office to develop a formula that more accurately reflects schools’ true costs. The result raised the current service level calculation by $515 million.
Under the old CSL calculation, the starting point for this year’s State School Fund would have been $10.8 billion, a devasting level for school budgets. With the agreed target of $11.4 billion at the start of the session, education advocates were able to spend more time on policy issues and targeted investments.
HB 2140, which would put the new calculation methods into statute, passed the committee unanimously.
The amended Senate Bill 141, Kotek’s education accountability bill, stirred up more of a discussion as subcommittee members wrestled with the link between school funding and student test results. Kotek has tied her support for more appropriate school funding to a requirement that struggling schools show they are performing better or face the state stepping in.
The bill passed and will have a work session in the full Ways and Means on Friday, May 30.
Rep. Ricki Ruiz, subcommittee co-chair, wrapped the hearing by discussing the difficult budget choices legislators have had to make since the disappointing revenue report. He said school leaders and families showed legislators the urgency for at least current service level funding.
“This is obviously not a perfect path,” he said, “but this is a path that sustains us as a state that is investing in education.”
– Jake Arnold, OSBA
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