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Increased school funding passes Legislature, problems remain

SALEM — A record-$8.2 billion package to fund Oregon's K-12 public school system — up 11 percent from the current biennium — cleared the Legislature Tuesday in a 31-28 vote by the Oregon House and now heads to Gov. Kate Brown.

It provides schools with the majority of their funds, almost 70 percent, for the 2017-19 cycle. For most of the state's 200 or so districts, it's enough money to keep current services going. But others say they needed at least another $200 million to avoid scaling back programs and up to 1,500 staff positions.

The Beaverton School District, the state's third-largest in metro Portland, planned ahead assuming a slightly smaller state budget, $8.1 billion, which created a $15 million shortfall.

"Of that $15 million, $14 million is directly related to our increase in PERS," said Don Grotting, Beaverton's superintendent, referring to the Public Employees Retirement System. "We definitely don't want to come out and way overestimate nor do we want to underestimate ... It just seems like we do the same dance and it's the same partner every year and it gets extremely frustrating."

School districts used to have more autonomy and predictability when the bulk of funding came from property taxes within their own boundaries.

Things changed in the 1990s. Voter-approved ballot measures capped the growth of property taxes and shifted the bulk of K-12 funding to the state, which now distributes revenues based on a weighted formula every two years.

In some ways, it helped avoid situations in places like Washington state, where wealth and population density often create disparities in available resources between school districts. But it also helped create situations in which costs outpace revenue regardless how well the economy performs.

Most costs are tied to payroll and go up automatically every year, often faster than taxpayer revenues' 4 percent average growth, to cover collectively-bargained cost of living adjustments, salary increases, health and retirement benefits for existing employees. That's on top of obligations to the state's $22 billion unfunded pension liability, which could grow by another $6 billion across all government agencies over the next several years.

For many districts, the way to absorb those costs is to cut back on payroll. Beaverton plans to eliminate roughly 75 positions mostly through attrition and retirements.

"We've invested a lot in technology for schools so we're not reducing the devices," Grotting says, "but what we are reducing is the instructional coaches that come in and help the teachers in implementing and using the technology."

K-12 funding from the state is roughly 30 percent higher than it was a decade ago while student and teacher populations have been relatively flat during that time. High school graduation rates, classroom sizes and school-year lengths now rank among the nation's worst, while the National Education Association estimates Oregon's per-student spending has jumped from No. 26 to No. 18 in the past two years and teacher compensation and benefits climbed above national averages.

Republican Rep. Julie Parrish, who sits on an education subcommittee in Salem, says part of the problem stems from union contracts negotiated individually with each district, who "then come back to the Legislature and say 'we don't have enough money.'"

Hanna Vaandering, president of the state's teachers union, the Oregon Education Association, says current employees shouldn't be punished for bad decisions by previous generations and that generous benefit packages attract and maintain quality workforces.

"When you're being responsible for those students' learning, you don't have to hold me accountable," Vaandering said. "So this whole thing about 'greedy teachers who want this and that' ... no. It's about educators who care about public education."

Some educators say the K-12 budget needs another $2 billion next biennium to be fully-funded according to the state's so-called Quality Education Model, which is overseen by Vaandering and other educators on a committee.

OEA, which reports in its IRS tax forms collecting roughly $20 million in annual member dues, hopes to accomplish that by asking voters to raise taxes on businesses in 2018 through a more moderate version of last November's failed Measure 97.

"The reality is most of the funds would've gone to what the (Measure 97) advocates identified," said Sen. Richard Devlin, a Salem Democrat who helps write the state's budget. "The other side of that reality is ... I can't tell someone that no dollars are going to go to PERS."

Some of Devlin's fellow Democrats tried reviving the Measure 97 concept this year and tied pension reforms to its passage. Republicans balked, so Democrats tabled both efforts.

Before Tuesday's final vote, House lawmakers from both parties expressed mixed feelings about the $8.2 billion funding level.

"Last week, I made the motion to delay voting on this budget with the hope that our Hail Mary pass would work - that we could find a path to pass both cost containment and long-term revenue reform this session," said Democratic Rep. Barbara Smith Warner, who carried the education bill to the House floor. "My hope is that today is the wake-up call we need."

Four Democrats — Reps. Julie Fahey, Diego Hernandez, Mark Meek, Tawna Sanchez — opposed the K-12 package along with the entire House Republican caucus.

"Until we get serious about addressing these unsustainable costs," said House Republican Minority Leader Mike McLane, "we will never be able to make the kind of targeted investments that will produce positive outcomes for our kids."