Last year, Oregon public schools celebrated the historic investment of $10.2 billion to the State School Fund.
It did not take long, however, for this victory to lose some of its shine. Following the Portland Educator Association strike in November, which resulted in 11 lost instructional days, and a spring of school budget cuts across Oregon, many are wondering how the state can guarantee more school funding in 2025.
On Wednesday, July 17, Gov. Tina Kotek proposed three steps to boost the current service level for education funding by $515 million above current estimates for the state school fund in the 2025-27 biennium.
On Wednesday morning, the Oregon Legislature Joint Task Force On Statewide Educator Salary Schedules was joined by Pooja Bhatt, the education initiatives director at the Governor’s Office, Oregon Department of Education Director Charlene Williams and members of the governor’s team, ODE and the chief finance office to discuss the governor’s proposal.
“Across 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,” Gov. Kotek said in a press release. “In response to the way these issues are impacting Oregon students, educators and administrators, I committed to reviewing and updating the methods of how the State funds public schools.”
Ahead of the 2025 legislative session, budget analysts will announce the expected state school fund based on forecasted tax revenue. The governor’s proposals preemptively increase the current service level estimates for the 2025-27 biennium, hoping to signal higher school funding in advance.
The State School Fund is the primary source of revenue for Oregon school districts’ operating budgets and pays for teacher and staff salaries, instructional resources and facility maintenance. The current service level calculation (CSL) is the formula used to determine the amount of money needed by Oregon’s public schools over the next two years.
Every two years, the state legislature votes on the statewide appropriation for schools. Funding for each school district is formulated based on weighted student enrollment and balanced with local property tax revenues. Some school districts subsidize their local expenditures by raising further funding through local option levies.
The three steps proposed by the governor’s office are:
Change the 50/50 funding distribution split over the two years of the biennium to a 49/51 split, so that more funding is distributed to school districts during the second year of the biennium. The preliminary estimate for this change is a $217 million increase in funding because the current service level calculation is based on the second year, so, by increasing that distribution slightly, the total CSL calculation increases as well. The change also allows school districts to budget for rising costs in the second year of a state school fund distribution.
Compensation represents around 85% of the total use of the state school fund. The second proposed step changes the state’s method for calculating projected compensation costs for teachers, administrators and classified staff. The state’s current method of estimating the cost of compensating educators, while accurate, will be updated from using 20 years of historical data to only 10 years of data. The governor’s team said this leads to an even more accurate projection and will result in the largest funding increase of the three proposals, estimated to be $240 million.
The state school fund includes a combination of local revenue and state revenue, with the state representing roughly two-thirds of the total. The state doesn’t include changes in local tax revenue during the second year of the biennium in the CSL calculation. According to the governor’s proposal, “this limits the state’s ability to accurately account for the level of resources available for our schools.” Directing state agencies to account for every year of annual projected local tax revenue is estimated to increase the SSF CSL by $55 million.
“Thank you to the Governor’s team for being here and really synthesizing so much of the information and so many of the conversations,” said Rep. Courtney Neron, D-Wilsonville, and chair of the House Education Committee during the meeting. “One of the things I’m celebrating is that, when we receive (the) Governor’s recommended budget in the legislature, there will be a real saving of time. The conversations, many of them will have already happened; that will get us closer to a CSL calculation that accurately reflects the current service level.”
The Joint Task Force will continue to discuss the cost-of-living challenges and salary constraints within the current service level for Oregon’s 30,000 educators. A major challenge the Task Force hopes to address is financial struggles for new teachers, who are navigating the rising costs of housing.According to its findings, new teachers could not afford rent for a two-bedroom apartment in a third of Oregon counties.
Gov. Kotek is expected to announce her recommended budget for the 2025 session next January.
“This is a great achievement, but it’s really just setting us up for a lot of hard work, half a billion dollars is not chopped liver, it will be hard to find that,” said Sen. Michael Dembrow, D-Portland, after the governor’s team’s presentation.
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