If Measure 86 passes in November, Oregon would be first state to create a perpetual investment trust fund for higher education
Tuition at Oregon's public colleges and universities is among the nation's highest, and financial support from the state is nearly the lowest out of 50 states and the District of Columbia.
State Treasurer Ted Wheeler is leading the charge to make Oregon the first state to create a perpetual investment trust fund for higher education, an endowment similar to those at Harvard, Columbia and Stanford, Wheeler told a Friday morning gathering of education, workforce and business leaders at Rogue Credit Union.
Fewer lower income are entering and completing higher education studies, Wheeler said. For those who finish degree work, debt often accompanies diplomas.
"Student debt is going through the roof," he said. "That is an issue for all of us, because the economic data coming out of the Federal Reserve now is indisputable. Student debt is slowing our economy, it's particularly impacting the housing sector. A key part of home building is first-time buyers."
Millennials make up the majority of first-time home buyers, but they are financially unable to follow in their parents' and grandparents' footsteps.
"This is the first generation of AWOL home buyers," Wheeler said. "They are AWOL because they are saddled with student debt. They are paying off their loans to the federal government and elsewhere, and they are not purchasing cars, not purchasing homes, they are not purchasing all the things you fill your homes with, because they can't afford to buy a home. That's having reverberations throughout the economy."
Measure 86 would make it easier for the state to fund student aid as well as vocational and technical training at the community college level.
Bonds historically have been used for construction, but Wheeler suggested the state needs to invest in things with lasting economic value.
"An endowment seems different from building a building," he said. "I started to realize my frame was wrong. An endowment that is permanent, growing with time it takes advantage of compound earning. That endowment will grow into perpetuity; it is as solid and permanent as a building. The more I thought about it, the more I realized it's more solid and permanent because it's not a depreciating asset, it's an appreciating asset."
He said endowment creation wouldn't undercut state university and community college capital projects.
"We have a very conservative debt limitation," Wheeler said. "No more than 5 percent of the state's general fund can go to servicing general obligation debt. We don't even use all the capacity we have.
I don't see the ferocious competition between capital dollars and bonding that might go to seeding this endowment."
He said such funding would allow community college students to pursue technical and vocational training.
The Treasurer said state could use a small portion of its bonding capacity to seed the endowment -- along with general fund appropriations in its early stages.
"If we do these things," he said. "Over the long term, 20 years from now, 30 years from now, we would have a unique competitive advantage around workforce development -- a permanent source of workforce development not dependent on the Legislature in any way."
Presently, Wheeler said, only one in five students who apply and qualify for financial aid in Oregon get the help.
"There is no guarantee they get it the next year, or the year after that," he said, because the state's income tax revenue is inconsistent and forecasts for future funding don't necessarily reflect future revenue.
"It's a good thing to lift families and wages in this state," he said. "Economic prosperity ultimately is going to determine whether or not your academic institutions are going to survive.
Reach reporter Greg Stiles at 541-776-4463 or email firstname.lastname@example.org.