Gov. Kate Brown says she is committed to maintaining the $9 billion that state lawmakers budgeted for the operation of Oregon’s public schools in the current two-year cycle.
Her pledge will be easier to keep if Oregon and other states get more federal aid from Congress in a follow-up pandemic plan, which is caught in political maneuvering between the Democratic-led U.S. House and the Republican majority in the U.S. Senate.
But it will be harder, if not impossible, to keep if there is no more federal aid and lawmakers have to balance the state budget based solely on spending cuts to offset the projected shortfall of $2.7 billion in state tax collections.
“I am not willing to see school districts laying off teachers just as schools are preparing to reopen,” Brown told reporters Saturday after the Legislature concluded a recent special session.
“As we look toward budget adjustments, I remain committed to maintaining a $9 billion state school fund budget for our schools.”
The state school fund, at $9 billion, accounts for about 35% of spending from the tax-supported general fund and lottery proceeds. Education, health and human services, and public safety make up 92% of that spending.
Brown said she will hold off until mid to late July on an official call for a second special session, focused on the budget. Both houses of Congress are scheduled to break for their summer recess at the end of July or early August, and Brown said she hopes there will be action by then.
Agencies already have submitted proposed spending cuts amounting to 17% of their general-fund support. Though Brown has not endorsed all of those cuts, she has said that some of those savings would be coupled with money from the state’s education reserve — if needed — to try to maintain the $9 billion state school fund. Much of that money already has been spent by Oregon’s 190 districts, because the state budget is on a two-year cycle.
Lawmakers cannot drain the education reserve, known as the Education Stability Fund and supported by Oregon Lottery proceeds, in a single budget cycle.
Some districts already are preparing for cuts with teacher furloughs and other savings. Brown’s pledge applies only to the current two-year budget cycle. State economists project a further shortfall of $4.4 billion in the next budget cycle starting in mid-2021. The lawmakers elected Nov. 3, plus the 14 senators whose terms end in 2023, will face that task when the 2021 session convenes Jan. 11.
Brown also spoke about two other education-related issues during a conference call with reporters.
Brown has stood firm — despite efforts by business groups — against a short-term suspension of Oregon’s new commercial activity tax, proceeds from which are earmarked for school improvement programs that districts have developed under the Student Success Act. The Legislature passed both in 2019.
“After decades of working to bring businesses, educators and parents to make a significant investment in our educational system, we were able to do that,” Brown said.
“Given how our kids have suffered across the state in terms of losing weeks out of the school year, I think it’s critically important that we move forward on this investment in our children’s education — and that we not rip the rug from underneath them.”
The tax had been projected to generate up to $1 billion annually for the fund, which is separate from school operations. The tax started on Jan. 1, so schools will not get a full two years’ worth of collections in the current two-year budget.
State economists said on May 20 that commercial activity tax collections are likely to be 25% less than originally projected for the current two-year cycle, and 21% less in 2021-23. They also said that because it is a new tax, there’s no past data to rely on.
Brown did propose, and the Department of Revenue adopted rules, that businesses subject to the new tax should not be penalized for late reports if they made a good-faith effort to comply with the law. Businesses owing the smallest amounts also have until spring 2021 to pay their 2020 amounts.
Lawmakers approved special-session bills that made largely technical changes in the commercial activity tax and transfers of proceeds to school districts. The tax changes had been scheduled for a final vote in the 2020 regular session, but acrimony between majority Democrats and minority Republicans ended that session a few days before the March 8 deadline.
Brown also said that schools would get guidance from the Oregon Occupational Safety and Health Division, known as OR-OSHA, about practices to keep students, teachers and others safe when schools reopen this fall — and how they can avert liability questions that could lead to pandemic-related lawsuits.
While a legislative attempt to curb liability for schools, businesses and other organizations went too far, in Brown’s view, she said there are legitimate concerns.
A proposed amendment to a larger special-session bill would have required lawsuit filers to show “gross negligence” on the part of organizations that engage in “reckless, wanton or intentional misconduct.”
The amendment failed. Even though House members on the special-session committee voted 4-3 in favor of it — Democratic Rep. Janelle Bynum of Clackamas, a small-business owner, joined House Republicans — senators voted 4-3 along party lines against it.
“First, people who are injured under certain circumstances should be able to seek redress and hold those who created the injury accountable. Second, businesses across the state need a level of certainty,” Brown said.
“My team is working with people at the Department of Consumer and Business Services (OR-OSHA parent agency) to make certain they have the stability and the certainty they need to continue to operate.”
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