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Here's what the new tax bill will mean for local schools

Editor's note: This story has been corrected from an earlier version. The first story confused two House spending bills for schools.

The Oregon Senate approved the Student Success Act just hours before Brad Earl walked into a Medford School District budget committee meeting of the year Monday evening.

“We were responding to pretty fresh information,” said the chief financial officer for the largest school district in Jackson County.

Districts will be able to apply for grant funding from the anticipated $2 billion raised by a new tax on some businesses approved in the Student Success Act.

The Oregon House passed the bill May 1 and Gov. Kate Brown has said she will sign it.

The new tax won’t kick in until 2020. For now, districts such as Medford and Ashland are still figuring out the potential impact of the funding they plan to apply for.

In Ashland School District, the projects will be guided by Superintendent Kelly Raymond’s strategic goals, said Alana Valencia, the district’s chief financial officer.

“We heard loudly from the elementary schools they needed more support,” she said. “This bill in particular is going to impact our elementary schools.”

Raymond’s goal to improve student achievement, including raising the graduation rates to 93 percent by 2023, includes an early-learning focus from pre-kindergarten through third grade.

Third-grade reading is considered a key early indicator of long-term student achievement.

The district could apply for grants through the Student Success Act. The law would allocate money to projects falling into three specific areas: early childhood, school improvement or statewide investments.

Local districts also will see additional funding for Measure 98, the voter-approved 2016 ballot measure supporting career and technical education, dropout prevention and college and career readiness.

In the 2017-2019 biennium, the Legislature funded only 57% of the amount voters approved. The Student Success Act will boost funding to the voter-approved $300 million.

Earl said that means Medford’s funding will rise to $3 million. He couldn’t yet say what the additional money might go toward.

“We’ve demonstrated positive results in all three areas and we’ll look to expand our plan to improve it even more,” he said.

In the first two years, Medford bolstered its Pathways program with new CTE options from metalworking to plumbing, and added counseling staff as part of its dropout prevention efforts.

Valencia said that among other programs, Ashland put its Measure 98 funding toward advanced placement courses, which falls under college and career readiness.

While administrators said they are encouraged by the boost in cash to their districts, they also pointed to remaining loose ends: namely, rising healthcare and pension costs.

That’s why they are also looking at another piece of legislation that’s closely tied to the new funding bill: House Bill 5016, which sets the State School Fund at $9 billion. According to the Oregon School Boards Association, the bill includes $200 million from the Student Success Act and is a boost from an estimate of $8.77 billion to fund services at current levels.

The bolstered State School Fund would provide an additional $1.3 million to the Medford School District, Earl said.

The district's budget committee recommended that the extra revenue be put straight into pension fund reserves, "assuming this all gets wrapped up in a neat package by the Legislature," Earl said.

The district had planned in its April 29 proposed budget to transfer about $1.4 million out of its PERS reserve to cover general fund expenditures.

“We were planning on using the majority of that reserve to keep us from having to make reductions, frankly,” Earl said.

Rising pension and benefit costs are rapidly outpacing revenue sources in growth, hitting school districts across the state hard.

Valencia said that Ashland’s funding increase in the coming biennium from the State School Fund, if passed, will be anywhere between $100,000 to $130,000.

“It’s definitely appreciated and we’re really excited,” she said.

But Ashland’s plans for the increased money aren’t much more readily apparent in the classroom than Medford’s — Valencia said it will go to pad the general fund contingency.

A School Board policy requires that at least 8% of budgeted expenditures are allocated toward contingency, she said.

The increase will put the district about $200,000 over the minimum requirement, at $2.8 million in the next two years.

Earl and Valencia both said that even as the two funding bills provide new educational opportunities and cover their bases for the next two years, PERS will only hit their districts harder in the future.

Earl said that legislators can’t ignore that reality forever.

“Revenue is important to us, but if that revenue goes to offset big pension increases, the net result is still not beneficial for us,” he said. “So we’re keeping a close eye on the other side of it, too.”

Reach Mail Tribune reporter Kaylee Tornay at ktornay@rosebudmedia.com or 541-776-4497. Follow her on Twitter @ka_tornay.

Jamie Lusch / Mail Tribune Hayden Powell, 15, works on a doghouse during construction class at South Medford High School on Tuesday.