NEWS UPDATE FROM STATE REPRESENTATIVE DAVID GOMBERG: Getting Wonky About Schools

By Representative David Gomberg, House District 10

Dear Neighbors and Friends,

Early last Monday I drove up to Portland to join the Oregon Business Plan Leadership Summit. The theme was “Thinking Big to Achieve Shared Prosperity.”

The Summit asked business, nonprofit, and political leaders where they should get involved in the year ahead. “Strengthen K-12 Education Performance and Accountability” was the clear favorite from among 10 choices, supported by roughly 53% of the more than 700 responses. Other priorities included tax reform, housing, addiction, and mental health. At the bottom of the list, and disappointing to me, was earthquake preparation and resilience.

The summit also received recommendations from the Portland Central City Task Force to revitalize the State’s struggling largest city. The proposal included more police and social workers, a public drug use ban, business tax breaks, less plywood, and picking up trash.

That education was top-of-mind for this largely Portland crowd was no surprise. A three-week teachers strike brought learning to a halt, as school officials insisted they did not have the money to meet educators’ demands. Lawmakers were frustrated in early November when Portland school officials blamed limited state funding for the District’s labor woes. We’d just passed a record-setting state school fund of $10.2 billion for 2023-25 that included much of what school districts had demanded.

How much is enough? The 1991 Legislature created the Quality Education Commission to answer that question. For 2023-25, the desired amount would be $11.889 billion. The state has not met those suggested spending levels, despite imposing a new business tax – the Corporate Activity Tax – to help fund schools through the Student Success Act passed in 2019.

The budget complaints in Portland and other parts of the state have now prompted Governor Tina Kotek to pledge more action. Kotek announced late last month that she would look at a possible overhaul of the State’s K-12 budgeting system.

So what is our current process for funding public schools? A recent OPB article provides a good overview.

Public schools have long been jointly paid for by state taxes — think income taxes — and by local governments that collect property taxes. But in the 1990s, a series of anti-tax ballot measures fundamentally changed the school funding equation.

Measure 5, passed by voters in 1990, created a new limit on what proportion of local property taxes could be spent on schools. And Measure 50, passed seven years later, further limited how quickly local property taxes could increase. The upshot is that the state Legislature became the primary source of funding for schools statewide.

Prior to Measure 5, local governments paid for around 70% of their school budgets, and the state picked up the rest. These days, the state covers around two-thirds of K-12 funding, doling money out to districts largely based on how many students they enroll. That means that schools compete with all of the state’s other budget priorities — things like health care, social services, courts, and housing — for a piece of the budgetary pie.

Said another way, schools account for a huge chunk of spending from the State’s general fund — around 28% in the latest budget. But the State has never spent what its own modeling says is the appropriate amount. Since we cannot spend more than we receive in taxes, increasing school funding means reducing spending in other areas.

In 2019, the Legislature passed the Student Success Act, which created a new tax on business sales in order to raise around $1 billion a year for primary schools. It’s actually generating closer to $1.5 billion a year.

And then there is the Corporate Kicker.

The Corporate Kicker, like the Personal Kicker, occurs when corporate income tax revenues come in higher than 2% above what the economists projected two years earlier. But unlike the Personal Kicker, which the Oregon Constitution requires be returned to taxpayers as a percentage of what they owe, the Corporate Kicker goes to help fund K-12 education. As a result of much higher-than-expected corporate profits, the 2023-25 budget will partly be funded with a record $1.8 billion in Corporate Kicker dollars.

How school districts spend their money is as important as how much they spend. Schools across the state require many more counselors, mental health therapists, social workers, attendance experts, and other specialists, as well as substance-abuse treatment programs, instead of leaving those duties to teachers. We’re hearing of disturbances in classrooms. We’re hearing about students not coming to school. We are hearing about the challenges that are left over from the pandemic and how it has impacted our young people.

Most of the spending in Oregon school districts is allocated to classroom expenses. About 95 percent of spending is concentrated on school buildings and services to students. The remaining five percent is spent on central support services, such as district office administration.

Clearly, we are talking a lot of commitment and a lot of money. But there are different opinions of how much money is enough.

As the Legislature prepares to pass a budget in odd years, budget staffers come up with a dollar figure they say will pay for “current service levels,” or CSLs — basically, the amount needed in order to avoid cuts in Oregon schools.

But school districts and teachers unions also create their own projection of the amount of state funding needed to maintain the same level of education. The two figures are almost always very far apart. This year, for instance, the Governor included $9.9 billion for K-12 schools in her recommended budget, a number the Governor said represented a healthy jump from the state-calculated current service level amount of $9.5 billion. The Oregon School Boards Association protested, arguing $10.3 billion would be necessary to avoid cuts. The legislature ended up passing a budget of $10.2.

As the Portland strike unfolded, there were suggestions that the legislature step in with additional funding.

As a rural legislator, I worry about sending more money from Lincoln, Benton, and Lane County up to Portland when we have our own needs and challenges. Too often I hear of local districts losing good teachers to better pay in the big cities.

Governor Kotek has said it’s time to consider whether Oregon needs a minimum statewide teacher salary. It is complicated when you have 197 school districts that compensate differently. The average teacher in the Portland school district earns in the mid-$80,000s. The starting salary is closer to $50,000.

Pay tops the list of reasons that schools struggle to recruit and retain qualified teachers. Teachers earn, on average, about 20 percent less than similarly educated professionals. And, when adjusted for inflation, teachers actually make about $3,500 less annually than they did a decade ago. Salary concerns can directly affect teacher recruitment and retention, especially for less experienced educators on the low end of a district’s salary schedule.

Of the 197 school districts in Oregon, the majority are small districts, with less than 1,000 students. However, the majority of students in Oregon attend large school districts, comprised of 7,000 or more students.

Oregon’s 197 school districts are also quite diverse, which is reflected in the 2022-23 statewide report card released Thursday:

The majority of districts have fewer than 1,000 students. The largest district, Portland, has about 43,000.
Students come from homes where 333 different languages are spoken.
41% of students are individuals of color, a percentage that is growing.
21,478 students are considered houseless, with the largest number in the Beaverton, Salem-Keizer, and Portland school districts but the highest percentage is in districts like our own.

A related part of the short-term problem is the more than $1 billion in federal funding that went out to schools to help them navigate the COVID pandemic as part of the American Rescue Plan Act. That money — known as ESSER funding — is no longer available.We now operate on a governance system that honors and respects local control. The state sends money and locally elected school boards decide how and where to spend it.Said another way, with the exception of some local option levies and bonds for capital projects, every local school district budget is set by the state. In effect, the 90 members of the Legislature function as a super school board, telling local districts what they have to spend while remaining at arms’ length from the consequences of underfunding or underperformance in our schools.Oregon’s school-age population will continue declining, as state economists reported recently. Enrollment dropped by 29,350 students from 2018-19 to 2022-23. But the changes are not so dramatic that we can soon start planning for fewer classrooms or teachers.Fewer students today potentially means fewer workers tomorrow. As an older Oregonian, I’ll be relying on those graduates for everything from lawn care, to hair care, to health care. I want them to be well educated, motivated, well prepared for their own future, and very grateful.Watch for this discussion to evolve as the quality and effectiveness of our schools remain a leading concern for Oregonians.Again, much of this information came from OPB and an excellent Capitol Chatter column.