More Fuel for Oregon Revenue Debate

Oregon public schools received a substantial boost in revenue this year, but not enough to avoid teacher cutbacks and larger class sizes in the shadow of rising pension payments, which will add more fuel to the already raging debate over raising corporate taxes and changing the Public Employees Retirement System.

Oregon public schools received a substantial boost in revenue this year, but not enough to avoid teacher cutbacks and larger class sizes in the shadow of rising pension payments, which will add more fuel to the already raging debate over raising corporate taxes and changing the Public Employees Retirement System.

Oregon public schools are receiving more state funding, but a significant chunk of the increase is going to pay for teacher pensions, not teachers in classrooms. The situation will add fuel to both sides of the debate over the need for additional tax revenue.

School advocates will say it is proof more revenue is needed to cover the costs of public education. Business leaders will say it underscores the need to make changes in the Public Employees Retirement System.

The Oregonians’ Gordon Friedman filed a story indicating Oregon’s public schools will receive $400 million more than in previous years. But the bump is not enough, school officials contend, to avoid teacher layoffs, larger class sizes and program cutbacks.

Friedman provides specific examples:

  • Portland Public Schools will receive a $29 million funding boost, but $18 million of that increase will go for pensions and higher salaries. The district will employ 55 fewer teachers in its 77 schools this fall.
  • Salem-Keizer School District will get $31 million more, but its pension costs will rise by $10 million, resulting in 67 teaching positions being axed.
  • Beaverton School District will see a $21 million increase, but its pension cost will balloon by $14 million. Its budget-balancing challenge is aggravated by the opening of a new high schools. The District has elected to trim library staff, professional development and classroom supplies.

School officials expect more of the same in the next school year, even though the legislatively approved $8.2 billion K-12 budget a represents an 11 percent increase over the previous biennium. Legislative fiscal analysts predicted the $8.2 billion budget, which included an estimate of pension costs rising by 45 percent, should have been adequate. School officials disagreed and said $8.4 billion was needed to maintain the status quo in their local district budgets.

Specific numbers aside, the specter of a larger budget for K-12 schools and continuing teacher and programmatic cutbacks is the stuff that will further animate the debate over corporate taxation and PERS spending reductions. You get the flavor of the debate by how school advocates refer to corporate tax reform and business groups demand PERS reform.

There isn’t going to be any respite from having that debate continue before the Oregon legislature convenes for a short session early next year. There are two huge drivers of the conversation:

  • The Oregon Education Association is pushing an initiative to raise corporate taxation – a so-called Measure 97 light. The teacher union was forced to withdraw its initial ballot measure because of a constitutional question, but it has pledged to refile a corrected version. If it qualifies for the ballot, Oregon voters would decide its fate in the November 2018 general election.
  • Rep. Julie Parrish, R-West Linn, is pursuing a referral of the legislatively approved Medicaid funding package, which she calls a sales tax on health care. Because of controversial legislation approved in the 2017 session, voters would decide on whether to toss the tax package in a special election next January, just before lawmakers return to Salem.

The OEA-backed initiative will cause combatants to return to their political trenches and prepare for another expensive campaign. The prospect of a Medicaid tax referral has already splintered the business community, especially in the health care sector.

There have been calls for a legislative special session this fall to work out a compromise. Some school officials say the school funding issue is serious enough to act now, not wait until 2019. Newly declared GOP gubernatorial candidate Knute Buehler urged a special session to ”improve” the state’s Medicaid program, most likely in the form of ensuring that ineligible enrollees are removed.

The stakes are obviously high. If voters strike down the Medicaid tax package, lawmakers will once again face a massive budget hole. The net effect would be to turn the K-12 school budget-corporate tax debate into a three-way slugfest.

Hope isn’t high for a grand bargain to resolve this festering issue. The operating assumption of the moment is that a work group needs to be formed, statewide listening sessions held and compromises considered on corporate tax changes – a model that worked to produce a major transportation funding package that won legislative approval and won’t face a referral, as previous measures have. This process wouldn’t fully unfold until the 2019 legislative session – and after the 2018 general election and potentially a vote on the OEA tax initiative.

Without leaderships and a clear focus on an alternative, Oregonians can expect a lot of shoving and pushing – and apparently more teacher layoffs.