Oregon Gov. Tina Kotek on Wednesday released a proposal to increase the State School Fund’s current service level estimate for the 2025-27 biennium by $515 million.
The State School Fund provides the majority of funding for K-12 public schools. The current service level is the state’s estimate of the amount needed to continue existing programs.
Leaders of Oregon’s largest school districts, including Salem-Keizer Public Schools Superintendent Andrea Castañeda, have called on Kotek and state leaders to increase funding for public education, saying their systems are in crisis.
Districts across Oregon have had to lay off employees and are facing larger class sizes and fewer services.
Castañeda did not have time to comment Wednesday evening on the proposal district spokesman Aaron Harada said.
The total State School Fund amount needs to be approved by the Oregon Legislature during its 2025 session. Changes would not impact the upcoming school year.
“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,” Kotek said in a news release. “We are working to be a stronger, more accurate and predictable funder of K-12 public education across Oregon.”
How Kotek plans to boost the State School Fund
Kotek is directing agencies to take three steps to increase the current service level estimate.
First, she is changing the two-year budget distribution split.
For the last decade, Oregon has budgeted State School Fund distributions to districts on a 50/50 split over a two-year period, meaning districts received 50% of the funds in year one and 50% in year two.
The proposal changes the distribution to a 49/51 split. That increases the current service level calculation for the next biennium because the level is built off the funding available in the second year, which increases when districts receive 51% in the second year, compared to 50%.
The change is estimated to increase the current service level by $217 million for the 2025-27 biennium.
Second, she is changing the way compensation cost increases are calculated.
The state currently looks back at 20 years of data to estimate compensation costs, a method that has historically been within two percentage points of being accurate.
Kotek is making a one-time change to close the gap between projected and actual compensation costs over the last 10 years, increasing the current service level. The change would not roll forward into future budget cycles.
The change is estimated to increase the current service level by $240 million for the 2025-27 biennium.
Third, she wants to change local property tax revenue estimates.
The State School Fund is a combination of state revenue and local property tax revenue.
Historically, the state has not accounted for fluctuations in local property tax revenue in the second year of the biennium, limiting its ability to accurately estimate resources available for schools.
Kotek has directed agencies to account for projected local revenue annually.
The change is estimated to increase the current service level by $55 million for the 2025-27 biennium.
Tracy Loew covers education at the Statesman Journal. Send comments, questions and tips: tloew@statesmanjournal.com or 503-399-6779. Follow her on Twitter at @Tracy_Loew
