A two-year, $9.3 billion fund for state support of public schools is halfway through the Oregon Legislature.
The Senate passed the budget on a 23-6 vote Tuesday, May 25, and moved it to the House. It is more than the $9.1 billion that Gov. Kate Brown originally proposed in her budget Dec. 1, but still less than the $9.6 billion sought by the Oregon School Boards Association, which represents 197 school districts. However, a projected excess in corporate income tax collections will boost the fund.
It's slightly up from the $9 billion in the current two-year budget cycle that ends June 30.
Sen. Lew Frederick, D-Portland, said other spending proposals will emerge from the Legislature's joint budget subcommittee on education, which he is a co-leader of.
"This is the first of several major budget bills to come before you," Frederick, the budget's floor manager, said. "There are more bills to come that add to the stability of education in Oregon.
"It means local school boards will have a sense of what money is available for next September."
The school-aid amount is one of the largest items in the state budget, exceeded only by the budgets for the Department of Human Services and the Oregon Health Authority, both of which get federal funds.
Brown has nudged lawmakers to change funding to reduce disparities affecting the education of racial and ethnic minorities, although lawmakers have resisted attempts to change a 30-year-old formula for distribution of aid to districts.
She and Democratic legislative leaders issued this statement on May 14, after they agreed on a $9.3 billion total:
"Our state, school districts and community leaders have a critical opportunity to work together to address the impacts of the pandemic and further elevate students' social, emotional, and mental health, particularly for students from communities of color who have been disproportionately impacted.
"The investments we make in public schools today will ensure students have the support they need next year to learn, grow, and achieve."
Frederick, during a news conference by lawmakers of color on May 20, said more money will be forthcoming for other education programs to deal with those disparities.
Most of the school-aid budget comes from the tax-supported general fund at $8.16 billion and Oregon Lottery proceeds at $570 million, plus $36 million from marijuana taxes and $676.9 million transferred from the Student Success fund. (The latter comes from Oregon's new corporate activity tax that took effect in 2020; most of that money is earmarked for specific school improvement programs.)
The $9.3 billion is coupled with $4.6 billion that comes from local property taxes. The ratio of state aid to local taxes is almost the reverse of what it was before Oregon voters approved a series of statewide property tax limits in the 1990s.
Brown's original budget proposed to draw $200 million from the state education reserve. But that was before more recent economic and revenue forecasts projected more money coming into state coffers in the next two years.
In response to questions from Senate Republican Leader Fred Girod of Lyons, Sen. Elizabeth Steiner Hayward — a Democrat from Beaverton who is a co-leader of the Legislature's joint budget committee — said the exact mix of funding for the school-aid budget has not yet been set. She said, however, there is no discussion of drawing down an anticipated excess of $1.4 billion in tax collections, also known as the kicker. The exact amount of how much individual taxpayers will get as credits next year against their 2021 state tax bills will be determined in the September economic and revenue forecast.
The latest report on May 19 projects that the state school fund will get $664 million from excess collections of corporate income taxes over the amount projected back in mid-2019. Oregon voters decided in 2012 that excess corporate income taxes go into the state school fund.
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