Navigating Oregon Education Budgets: A Detailed Look at Funding and Performance
Oregon's education system is a complex interplay of funding, enrollment, staffing, and student achievement. Over the past two decades, the state has significantly increased its investment in K-12 public education. However, this increased spending has not translated into improved student outcomes. This article delves into the intricacies of Oregon's Department of Education budget, examining enrollment trends, expenditure allocations, workforce expansion, and student achievement data to provide a comprehensive overview of the challenges and opportunities facing the state's education system.
The State School Fund: A Balancing Act
School budgeting in Oregon is a delicate balance of data-driven decisions, informed estimates, unforeseen circumstances, and compliance with state and federal mandates. The State School Fund, a primary source of funding for school districts, is a complex formula that combines local revenue, such as property taxes, and state revenue, divided by adjusted enrollment numbers.
The Oregon Department of Education (ODE) continuously recalculates school districts' State School Fund allotment throughout the biennium, making it challenging for business officials to accurately predict their funding. Even if they accurately estimate the State School Fund, unforeseen expenses, such as labor negotiations, utility prices, staff changes, or facility problems, can significantly impact their budgets.
Districts can face significant financial difficulties if business officials make inaccurate estimates, which can be compounded over time if left uncorrected. Corbett School District, for example, discovered a $3 million deficit, approximately 20% of its budget, after hiring an in-house financial officer. To avoid such pitfalls, districts like Corbett are adopting conservative budgeting approaches, basing their initial budgets on lower State School Fund expectations. However, this conservatism can lead to cuts in essential areas, such as staffing.
Federal Funding: An Uncertain Landscape
Federal funding plays a crucial role in Oregon's public education system, accounting for approximately 11% of the total funding. However, the uncertainty surrounding federal funding can create additional challenges for school districts. Even a temporary pause in federal funding can have a crippling effect on district budgets. Corbett School District has proactively removed federal funds from its projected budget to mitigate this risk.
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School districts receive monthly payments from ODE, which can fluctuate based on changes in reported enrollment. This constant flux requires business officials to closely monitor enrollment figures and adjust their budgets accordingly.
Enrollment Trends: Declining Numbers, Rising Costs
Oregon's K-12 public school system experienced steady enrollment growth, peaking at 581,700 students in the 2018-19 school year. However, the COVID-19 pandemic led to a significant decline in enrollment, with more than 20,000 students leaving the public school system in 2020-21. While some reports suggest that enrollment began stabilizing in 2022-23, statewide data indicates that total public school enrollment continues to decline. This decline may be attributed to school consolidations or closures, rather than students returning to the system.
Despite declining enrollment, Oregon's teacher workforce has grown, increasing from 26,750 teachers in 2013-14 to approximately 31,600 in 2023-24. This increase has resulted in a decline in the student-teacher ratio, from 21.2 students per teacher in 2013-14 to 17.3 in 2023-24. While smaller class sizes can benefit students, the combination of falling enrollment and rising staffing levels presents funding challenges, particularly as average teacher salaries have also increased.
Funding Model and Challenges
Oregon's K-12 public education system is funded through a combination of state income taxes, the Oregon Lottery, local property taxes, and federal funds. Prior to 1990, local property taxes were the primary source of school funding. However, the passage of Measure 5 in 1990 placed strict limits on property tax rates, leading to a shift toward a state-controlled funding model. While this model aims to equalize funding across districts, some districts, particularly those that previously relied on higher local tax revenue, have faced funding gaps.
In 2019, Oregon lawmakers approved the Corporate Activity Tax (CAT) through the Student Success Act. This tax is a gross receipts tax on businesses with more than $1 million in annual revenue, with the funds distributed to the General Fund and targeted education programs. However, CAT dollars are not integrated into the State School Fund, leading to confusion about its impact on broader school funding challenges.
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Retirement Costs: A Growing Burden
Rising employee retirement benefits within the Public Employees Retirement System pose a significant fiscal challenge for Oregon's schools. These increasing retirement costs compete for resources that would otherwise go toward classroom instruction, teacher salaries, and student support services.
Expenditure Trends: Shifting Priorities
Oregon's per-pupil spending reached $17,988 in 2022-23. While direct classroom expenditures have grown, other categories, such as classroom support and central support, have expanded at a faster rate. Over the past decade, Oregon's K-12 workforce has expanded significantly, with the share of administrators outpacing the growth in the number of teachers. Additionally, administrators have experienced the most significant salary increases.
Student Achievement: A Disconnect
Despite significant increases in education funding, Oregon's student performance, particularly in reading and math, has not improved accordingly. Data from the National Assessment of Educational Progress (NAEP) reveals a persistent decline in student performance, highlighting a disconnect between investment and outcomes.
Oregon's consistent underperformance relative to national averages underscores the need for targeted, data-driven interventions. Strategic, evidence-based investments are necessary to improve instructional quality, support students effectively, and close achievement gaps.
Accountability Measures and Future Directions
In response to concerns about student achievement, Governor Tina Kotek and state lawmakers introduced new accountability measures through House Bill 2009 and Senate Bill 141. These initiatives aim to track student performance more rigorously and improve fiscal responsibility in schools. The legislation includes the addition of two new student success metrics: K-12 regular attendance and 8th-grade math proficiency.
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Oregon's education system is at a critical juncture. Policymakers must reassess how education dollars are allocated to ensure that funding prioritizes direct classroom instruction, teacher effectiveness, and proven strategies that drive academic success. The expansion of school staff, particularly administrators and support personnel, has outpaced the growth in the number of teachers, and salaries for administrators have risen at a faster rate than salaries for educators.
To drive meaningful improvements in student outcomes, policymakers must emphasize accountability and strategic investment. Simply increasing funding is not enough. Oregon must implement targeted interventions to help students recover from pandemic-era learning losses and ensure that all students have the opportunity to succeed.
ODE's Role in Budget Oversight and Support
The Oregon Department of Education plays a crucial role in overseeing school district budgets and providing support to ensure fiscal responsibility. ODE will open the 2025-26 CIP-Budget Narrative applications in August 2025, requiring districts to submit pre-requisite assurances documentation to obligate funds starting July 1, 2025. Federal regulations stipulate that federal formula grant funds cannot be obligated until the later of July 1 or the date the applicant submits its application in substantially approvable form.
ODE also provides guidance and resources to help school districts navigate the complexities of school budgeting. With so much going on, it is important for small districts to know they can reach out to the Oregon Association of School Business Officials for help. School officials building budgets now based on hope for an $11.4 billion State School Fund have to keep one eye on the Legislature for unfunded mandates. "Every time you change one of those factors, you change the numbers," Olsen said. Even when the session ends, it's still not a closed book. Districts receive monthly payments from ODE, but those payments can change as districts' reported enrollment to ODE changes right up to the end of the biennium. "There's not a lot to cut," said Olsen.
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