Kotek proposes adding $515 million to school funding calculations

Published: July 18, 2024

The Portland teachers strike starkly demonstrated that Oregon's 30-year-old means of funding schools was shortchanging students. On Wednesday, Gov. Tina Kotek offered a half-billion-dollar step in the right direction that has long been sought by OSBA and other education advocates.

Before the political gears of the school funding process revved up this year, the governor's team brought together representatives from Oregon's important education stakeholders, including OSBA. With their input, the governor is changing the calculation method for how much money schools need to maintain their services, staff and programs, known as current service level.

Kotek's plan will offer a more accurate estimate of schools' cost growths, increasing the CSL amount for 2025-27 by $515 million, according to the governor's office.

Emielle Nischik, OSBA's interim executive director, said she appreciates Kotek's listening to advocates early in the process so the funding discussion can launch from a better place before the legislative session.

"The essential work we do for students has to be tied to adequate and reliable funding," Nischik said. "This doesn't fix our funding challenge, but it will facilitate a more honest State School Fund debate in the Legislature."

Pooja Bhatt, Kotek's education initiative director, presented the plan at Wednesday's Statewide Educator Salary Schedules Joint Task Force hearing. The task force, which includes OSBA consultant and former Legislative Services Director Lori Sattenspiel, has been meeting since the fall to explore school districts' staff costs, about 85% of their budgets.

In the wake of the Portland Public Schools teachers strike last fall, Kotek called for a review of the school funding methodology. Kotek says Oregon can't look at salaries without looking at how schools get the money to pay the salaries.

The Legislature allotted a record $10.2 billion State School Fund in 2023, but it still wasn't enough to meet unions' inflation-driven salary demands and districts' growing costs. Similar scenarios played out this spring, with districts such as Salem-Keizer announcing significant layoffs to counterbalance salary increases.

For years, OSBA and other education advocates have used Oregon Association of School Business Officials data to demonstrate that a flawed CSL calculation has set the starting point for State School Fund calculations artificially low, compounding underfunding of schools year after year.

The state uses the current service level as a beginning point for the governor's recommended budget each biennium. In recent years it has been hundreds of millions of dollars less than what school business officials say is necessary to avoid budget cuts.

The Legislature set a $10.2 billion State School Fund for 2023-25, and many districts this year have planned staff cuts, program reductions and raids on savings just to stay afloat.

Kotek's plan addresses education advocates' biggest methodology differences, including how the allocation for each of the two budget years in the biennium is divided. By planning for slightly less the first year and more the second, calculations for the 2025-27 biennium would rise by $217 million, Kotek's office estimates.

Sattenspiel said having a seat at the governor's table made this kind of breakthrough possible.

"This is a significant step that we have been asking for," Sattenspiel said. "We appreciate the governor's long-running work with education advocates to get at the heart of Oregon's schools' challenges. This is a step toward meeting our schools' true needs."

Education advocates also have taken issue with using 20 years of historical data to estimate staff cost increases, saying they don't accurately reflect actual staffing costs over the years. The governor's plan proposes a one-time shift to using 10 years of data, giving a more accurate view of rising costs and expected to increase the 2025-27 CSL by approximately $240 million.

The governor's office is changing how local tax revenue fluctuations are calculated within the formula, resulting in an estimated $55 million more for schools.

The plan is part of Kotek's commitment to address Oregon's school funding needs in the 2025 legislative session, with more accountability and transparency.

Efren Zamudio, OSBA Legislative Services specialist, said resetting the CSL is a significant step from the governor. By settling baseline cost issues before the legislative session, Zamudio said, education advocates and legislators can focus on what schools need to drive student success, such as sustainable summer and afterschool programming, early literacy initiatives, and addressing chronic absenteeism.

Sen. Michael Dembrow, a task force co-chair and longtime education advocate, praised the CSL plan but pointed out it would be competing in the Legislature against other funding demands.

"This is a great achievement, but it's really just setting us up for more hard work," he said during the task force hearing. "Half a billion dollars is not chopped liver, and it's going to be hard to find that."

But Rep. Courtney Neron, task force co-chair and Interim House Education Committee chair, is optimistic.

"We've been to the moon," she said later in the hearing. "We can get full funding for education."

- Jake Arnold, OSBA
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