Schools Hope for State, Federal Help (OR)
June 15, 2010
Although Oregon’s 198 school districts have been told exactly how much state aid they stand to lose as a result of a pending $243 million cut, most haven’t decided yet on specific cuts for the next school year.
Many of them — such as Salem-Keizer, the second-largest in terms of student enrollment — are awaiting word on whether state or federal money will offset part or all of the projected $243 million loss. It’s the largest single chunk of an across-the-board spending reduction that Gov. Ted Kulongoski has ordered to eliminate a projected$577 million shortfall in tax collections for the state general fund.
Salem-Keizer’s share of that school-aid cut is about $16 million.
Although lawmakers haven’t come up with an alternative to the governor’s cuts, "I do not see how our schools withstand an added $240 million in cuts in the course of the next year," said House Speaker Dave Hunt, D-Gladstone, after the May 25 forecast.
Unless extra state or federal aid materializes, the spending cuts will be similar to what districts already have done for the school year that is ending, only deeper.
Although the reductions this past year were not as dramatic as they were during the economic downturn of 2001-03, districts have cut teachers and other staffing, increased class sizes and shortened the school year, resulting in less classroom time for students and fewer hours for teachers and other staffers.
"The cuts we have just received will be on top of these other cuts," said Kent Hunsaker, the executive director of the Confederation of Oregon School Administrators. "When you’re talking about a cut this large, all of the above are likely to be happening."
Hunsaker said that in the 2009-10 school year, an average of 6 percent of school jobs were lost statewide — teachers,6.2 percent; administrators, 5.8 percent; and other staffers 5.6 percent.
Class size went up by about two students. The increases averaged 8.2 percent in elementary schools, 7.4 percent in middle schools and 10.2 percent in high schools.
The school year was shortened on average by one day — although some districts lopped off a few days at the end of this year in anticipation of a leaner budget in the next school years — and employees were paid on average for two fewer days.
All the figures were taken from a survey conducted last fall by Hunsaker’s group, the Oregon Association of School Business Officials, and the Oregon Association of School Executives.
About 40 districts responded to a more recent survey by Hunsaker’s group.
"A lot of them are going through some process in their communities," he said.
Awkward timing
The timing is awkward because school boards have to adopt budgets by July 1, the start of their next cycle — and the second year of the state budget’s two-year cycle. In per-student terms, the loss of state aid is about $350 per student.
The Salem-Keizer board adopted the district budget last week and opted not to act immediately. Superintendents in some other Mid-Valley districts did not return phone calls to explain their decisions.
In addition to staff reductions, Hunsaker said, districts can try to reduce salary and benefit costs in negotiations with teachers and other school workers — or cut more days from the school year.
"I think we are going to see a variety of those things happening," he said.
Salem-Keizer is planning to tap some of its reserves to balance the budget, and other districts may follow suit.
"The hesitancy of districts with reserves about using them is that they recognize that the state’s next budget cycle in 2011-13 looks really bad," Hunsaker said. He referred to a Legislative Fiscal Office projection of a $2.5 billion gap between tax collections and estimated costs.
"For them to use all their reserves now to take care of this year would put them in a difficult position for the next two years. So most are trying to save something to deal with the future. Yet we have districts out there that report they have no reserves."
The state budget picks up about 70 percent of school operating costs as a result of a 1990 statewide limit that voters approved on property taxes for schools and other local governments. Before 1990, the state share was about 30 percent.
Districts received notice of the impending cuts in state aid in a May 26 report from the Department of Education, which pays them from the state school fund. The fund includes lottery proceeds, which are not subject to the general-fund reductions ordered by the governor.
A conflict?
The state school fund accounts for about 40 percent of the state’s combined general fund and lottery fund budget.
Excluding the projected $243 million cut, the $6 billion set aside by lawmakers in the current two-year budget cycle is about the same as in the 2007-09 cycle, which also was cut in the final few months as tax collections plunged.
In mat erial distributed by the Confederation of Oregon School Administrators, which included Oregon’s aid from the 2009 federal economic-recovery act, it portrays a 22.3 percent increase in human-services spending, while spending for schools dropped slightly. The increase includes $1 billion in federal funds that the law earmarks for Medicaid, which goes into the Oregon Health Plan for low-income people.
Human services’ share of the general-fund cut is about $158 million.
"We recognize that when you cut the human services budget, you also lose the federal money that goes along with it," Hunsaker said. "So it’s difficult to reduce it because there is a larger effect on it than on any other group."
In human services, a cut of $1 in state funds triggers a cut of as much as $2 in federal grants. In the case of Medicaid, Oregon puts up 30 percent — much of it in the form of earmarked cigarette and hospital taxes — to the federal government’s 70 percent for the current cycle.
"If you make cuts in those programs, you are losing new money that is coming into the state’s economy," said Chuck Sheketoff, executive director of the Oregon Center for Public Policy, based in Silverton. "A cut that loses the equivalent of one person in some general-fund programs would equal three in human services."
Aid prospects
Pending bills in Congress would give Oregon $200 million more in Medicaid, $230 million more in aid to schools, and $40 million more for community colleges and state universities.
But the U.S. House, amid rising concern about federal budget deficits, removed $24 billion in Medicaid that states such as Oregon are counting on. The U.S. Senate may restore the money to a pending extension of unemployment benefits and tax breaks. Both chambers will have to reach agreement.
The status of $23 billion in federal aid to education also is uncertain, although President Obama has put his support behind it.
"There is a lot of hesitancy to add to the national debt, and rightfully so," Hunsaker said.
Lawmakers could tap some remaining reserves for school aid, although the amount falls far short of making up the projected cut of $243 million.
Hunsaker said one tentative proposal offered$50 million to schools.
"We said our people will probably think lawmakers would take it back if there is another bad revenue forecast," he said. "If we used it to reduce our cuts now, we could be asked to undo them later, when there is even less time left in the year to make cuts."