With Oregon鈥檚 public schools starting down a fiscal cliff this school year as the historic federal investment from the last few years expires, Gov. Tina Kotek is proposing changes.
She鈥檇 like to help schools keep up with rising costs in the years ahead by updating the way schools are funded. She estimates that those changes would bring a $515 million boost to the State School Fund during the 2025-27 school years.
The state鈥檚 197 school districts have spent nearly all of their portions of the $1.6 billion in federal COVID relief money awarded to the state since 2020. The money expires in September and with it, some of the services, programs and staff that it has paid for.
鈥淎cross the country, school districts are facing budget shortages caused by the expiration of federal pandemic relief dollars, declining enrollment, increasing costs due to inflation and many other factors,鈥� Kotek said in a news release Wednesday announcing the changes.
They come amid growing calls for funding help from districts. After teachers in the state鈥檚 largest district, Portland Public Schools, went on strike for more than a month last fall 鈥� in part because of low pay and poor working conditions 鈥� Kotek vowed she would review school funding and compensation issues in Oregon.
Leaders in other big districts also issued warnings about their dire budget predicaments following the strike, and in May, several superintendents released a video calling school funding in the state a 鈥渃risis鈥� as they explained their decisions to cut hundreds of jobs to keep schools solvent.
They implored the Legislature to increase education spending.
鈥淭his is a terrible and devastating, heartbreaking moment for us,鈥� Salem-Keizer Public Schools鈥� Superintendent Andrea Casta帽eda said in the video, 鈥渁nd it is not one we鈥檙e using to levy blame. It鈥檚 one that we鈥檙e using to ask for help.鈥�
Officials from various education groups in Oregon expressed relief and gratitude over Kotek鈥檚 announcement.
Morgan Allen, deputy executive director of the Coalition of Oregon School Administrators, said it was 鈥渉ugely positive.鈥� Emielle Nischik, interim executive director of the Oregon School Boards Association, called it a good start.
鈥淭he essential work we do for students has to be tied to adequate and reliable funding,鈥� Nischik said in an email. 鈥淭his doesn鈥檛 fix our funding challenge, but it will facilitate a more honest State School Fund debate in the Legislature.鈥�
Years of underfunding
During the long legislative session in 2023, lawmakers passed a $10.2 billion school funding package, the allocated in Oregon. Of that, more than $8.8 billion went to the State School Fund, which pays for the bulk of district budgets.
But school leaders afterwards said that was still not enough following years of underfunding and rising costs due to inflation. Legislators have historically the amount recommended by the state鈥檚 Education Quality Commission, which is tasked with ensuring Oregon operates 鈥渁 system of highly-effective schools鈥� and presents a proposed budget to the governor and the Legislature every two-years.
Oregon school funding has further been stymied by two voter-approved ballot measures passed in the 1990s that have capped the state鈥檚 ability to tax property to fund schools. School funding from property taxes dropped by two-thirds in the following years, with the Legislature drawing a greater share of funding from the state鈥檚 general fund, which is needed for myriad services in the state.
Sen. Michael Dembrow, D-Portland, chair of the Senate Education Committee and the Statewide Educator Salary Task Force formed by the Legislature in 2023, said improvements to the State School Fund are desperately needed. But he said he鈥檚 concerned about where the additional money will come from with no new tax increases or revenue streams proposed alongside them.
鈥淚t鈥檚 an open question as to what else in the budget might have to be cut in order to bring in this extra half a billion dollars,鈥� he said. 鈥淧ersonally, I worry that it could come from higher education, which is already very much underfunded.鈥�
Proposed changes
The first change Kotek proposes to the State School Fund is to give schools 49% of their allocated budget in the first year of the two-year budget cycle, and then the remaining 51% in the second year, rather than splitting them evenly each year. She said this would help boost funding in subsequent two-year budgets since they are based on the amount allocated for the second year of the previous education budget. This would also help schools cover expenses that might be higher by the second year of a two-year budget. This change would give districts at least $217 million more in their 2025-27 budgets, Kotek鈥檚 advisers estimate.
The second proposed change would involve data the state uses to project future compensation. By narrowing the data the state uses for its projections 鈥� using the last 10 years of salary data instead of 20 鈥� about $500 million would be added to the money available to schools to hire teachers and classified and administrative staff in the 2025-27 budget.
Lastly, Kotek proposes that the Legislature incorporate annual changes in local property tax revenues. Historically, the Legislature has only taken into account revenue from the first year of a biennial budget when considering what to allocate in the next budget. This limits the state鈥檚 ability to send schools more money if property tax revenues rise during a year that鈥檚 not counted.
By accounting for local revenue changes every year, state officials could bring in an additional $55 million to the State School Fund for the 2025-27 school year, Kotek鈥檚 office estimated.
鈥淭he governor said she was committed to this, and she is showing that she is,鈥� Dembrow said of the latest changes. 鈥淟ooking at how this gets funded in her budget, which will come out in December, will be really interesting to see, because obviously that鈥檚 where the proof in the pudding will be.鈥�
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