Eugene/Springfield Districts Respond to Kotek’s School Funding Proposal

Gov. Tina Kotek on Wednesday unveiled a proposal to increase the State School Fund’s current service level estimate by $515 million for the 2025-2027 biennial period.

The State School Fund provides the majority of funding for public K-12 schools. In 2023, the state has budgeted $10.2 billion for Oregon 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 Eugene School District 4J, have called on Kotek and state leaders to increase funding for public education, saying their education systems are in crisis.

School districts across Oregon have had to lay off employees and are struggling with larger class sizes.

The estimated increase could change before the Oregon Legislature approves the state school fund during the 2025 session. It will not affect the coming school year.

“School districts across the country are facing budget shortfalls due to expiring federal pandemic relief dollars, declining enrollment, rising costs due to inflation, and many other factors,” Kotek said in a press release. “We are working to become a stronger, more accurate, and more predictable funder of public K-12 education across Oregon.”

How Kotek plans to strengthen the State Fund for Schools

Kotek is directing agencies to take three steps to increase the current estimated service level.

First, it changes the distribution of the budget over two years.

For the past decade, Oregon has budgeted the distribution of the State School Fund to school districts on a 50/50 split over a two-year period. That means districts receive 50 percent of the funds in the first year and 50 percent in the second year.

The proposal changes the split to a 49/51 split. That increases the current service level calculation for the next biennial period, because the level is built from the funding available in the second year, which increases when districts receive 51% in the second year, compared to 50%.

The change is expected to increase current service levels by $217 million for the 2025-2027 biennial period.

Second, it changes the way the increase in compensation costs is calculated.

The state currently looks back at 20 years of data to estimate compensation costs. Historically, the accuracy of this method has been limited to two percentage points.

Kotek is making a one-time change to close the gap between projected and actual compensation costs over the past 10 years, thereby increasing current service levels. The change would not be implemented in future budget cycles.

The change is expected to increase current service levels by $240 million for the 2025-2027 biennial period.

Third, she wants to change the estimates for local property tax revenues.

The State School Fund is a combination of state revenues and local property tax revenues.

Historically, the state has not taken into account fluctuations in local property tax revenues in the second year of the biennial period, limiting its ability to accurately estimate the resources available to schools.

Kotek has instructed the agencies to report annually on expected local revenues.

The change is expected to increase current service levels by $55 million for the 2025-2027 biennial period.

Eugene School District 4J: “A More Realistic Approach”

Eugene School District 4J Interim Superintendent Colt Gill said the district would receive an additional $14.1 million over the biennial period if the proposal advances through the Legislature. Those funds would go directly to the district’s general fund.

Gill said schools’ funding needs have increased in three key ways since the COVID-19 pandemic:

cost of goods and services, such as materials, electricity and gas for HVAC systems, and gas for school buses.
student support services, as students required additional interventions to address learning loss and mental and behavioral health needs. Many schools added after-school services and hired more counselors and psychiatrists.
The cost of living for school staff is rising, so schools must raise salaries to retain teachers. 4J is in the early stages of contract negotiations with the Eugene Education Association teachers union.

“It’s a more realistic approach to keeping up with inflation and making sure we can keep up with the rising costs of goods and services,” Gill told the Register-Guard.

Gill said he and others in the district are excited about the proposal. He said the funding increase would allow 4J to maintain its programs and staff without having to cut back in other areas.

Without funding to supplement COVID-19 relief, Gill said the district would likely have to make some tough decisions in its next budget. Gill said 4J’s newest initiatives, such as summer programs and bringing a certified librarian to each of 4J’s elementary schools, could be the first to be cut, but that would require longer conversations with the school board and community members.

“Our hope really is that the Legislature follows through and accepts the calculation in the (2025) session, and really thinks that this is a basis for maintaining the current programs,” Gill said. “I hope, quite frankly, that they take it a step further and think about what additional funds they could invest to improve the programs … Over the last few years, we’ve been able to offer some pretty significant summer school programs for both enrichment to keep kids engaged and academic performance, to improve that, and those have all been paid for with these federal COVID relief dollars.

“We would love it if the legislature would consider this as a foundational investment.”

Gill said 4J is part of a coalition of Oregon’s 12 largest counties advocating for more substantial funding from the state. In particular, he said, Kotek’s second adjustment to the calculation will now look at 10-year data instead of 20-year data, which more accurately reflects funding needs.

“We’re a better steward of public dollars,” Gill said. “In a two-year time frame, it may be that the 10-year lookback based on more recent economic activity is actually less of an increase. So it’s just a more accurate way to do it than trying to balance out over 20 years, when you’re looking at multiple recessions or whatever over that time.”

Springfield Public Schools: Growing Need for Funding

Springfield Public Schools, which serves more than 9,000 students, said it was grateful for Kotek’s efforts.

“While Springfield Public Schools has used emergency funding during the pandemic for one-time investments, such as upgraded HVAC systems throughout the district, we see a growing need to update funding practices for schools in our state,” SPS said in an email.

SPS has not yet estimated the extent to which funding will increase, but has indicated that it “will continue to look for ways to increase student success as additional funds are allocated.”

Bethel School District: “Important step in the right direction”

Kraig Sproles, superintendent of the Bethel School District, appreciated Kotek’s willingness to solicit input from teachers and said the new calculation could have a positive effect.

He said the proposed adjustment would generate an additional $2.2 million annually for Bethel, which serves 5,000 students, over the 2025-2027 biennial period.

“This additional funding will allow us to continue to provide a well-rounded education for all of our students and provide the mental and behavioral support that has become essential,” Sproles said via email.

He added that the COVID-19 emergency funds helped Bethel maintain basic services during the pandemic and provide the additional staff needed to ensure our students and staff were safe during the pandemic. Sproles said Bethel spent the majority of those funds addressing interrupted learning during school closures by offering more tutoring, summer programs, family navigators, teacher training and more.

“To be clear, the proposed adjustment does not fully address Bethel’s projected budget deficit, but it is an important step in the right direction,” he said.

The governor’s plan is part of a larger effort to improve school funding

Pooja Bhatt, director of Kotek’s education initiative, presented the governor’s proposal Wednesday during a meeting of the Legislature’s Joint Task Force on Statewide Educator Salary Schedules.

That group has been exploring new ways to pay school workers, including possibly setting statewide salary minimums, and is scheduled to present a report to the Legislature by Sept. 15.

Staffing costs account for about 85 percent of district budgets, but the state has no control over local contracts or the data to estimate future local compensation decisions. And often the budget is set for two years before local contract negotiations are complete.

Bhatt told the committee she is also considering creating a minimum wage schedule to be used in calculating the current State School Fund service level. That is unlikely to happen in the next biennial period, she said.

“This is a great achievement, but it really just sets us up for more hard work,” said Sen. Michael Dembrow, D-Portland, co-chair of the committee. “Half a billion dollars is not chopped liver. It’s going to be hard to find. That’s on top of what was already expected (the current level of service).”

Tracy Loew writes about education in the Statesman Journal. Send comments, questions, and tips: [email protected] or 503-399-6779. Follow her on X @Tracy_Loew

Miranda Cyr covers education for The Register-Guard. You can contact her at [email protected] or find her on Twitter @mirandabcyr.