As Oregon legislators contemplated allocating a record $9.3 billion to Oregon’s state school fund, school leaders were hoping for more.

Portland Public Schools Superintendent Guadalupe Guerrero tweeted May 21 that the state’s positive revenue forecast should mean funding schools at “current service level” of $9.6 billion.

“SSA, SIA, & federal covid relief monies are intended for equity-focused student supports, not to make up general fund shortfalls,” Guerrero tweeted, referencing the Student Success Act, the Student Investment Account, and federal funds — other sources of school funding, with targeted purposes. The Student Success Act is funded by the state’s corporate activity tax, and the Student Investment Account is one of three main accounts under the SSA.

A few days later, at its May 25 school board meeting, Portland Public Schools board members passed the “Resolution To Urge Legislators to Adequately Fund K-12 Public Schools,” also asking for the $9.6 billion.

After lawmakers passed the $9.3 billion K-12 budget in early June, school officials continue to advocate for an additional $300 million. As it stands now, the state school fund would leave many districts with a deficit next school year.

In Portland, the district’s resolution said the current state schools fund budget would create an $11.1 million operating deficit, the equivalent of three days of school or 106 licensed teachers.

In nearby Beaverton, the gap is similar.

“The difference between the $9.6 billion that we think we need, versus the $9.3 that’s currently allocated, it’s about $12 million, a hundred teachers, or seven school days,” said Beaverton associate superintendent for business services Mike Schofield.

“It’s pretty significant in terms of what that shortfall means to us.”

Money from multiple sources, but with restrictions

Over the last two years, Oregon schools have received more new funding than they have in years. New, on-going state revenue from the Student Success Act and one-time-use COVID-19 federal funds under the Elementary and Secondary School Emergency Relief, or ESSER, fund give districts millions to bring on extra staff or make long-overdue changes to school buildings. But despite the new funds, some districts may still face cuts.

Schofield has worked in school finance for 30 years. He calls the past year “unprecedented,” both in terms of the challenges of providing school services during a pandemic, and in terms of the barrage of federal funds.

In Beaverton, the district will use its reserves to make up the difference in state funding. But Schofield said that’s not sustainable.

“At least for the first year, we’ll use our financial reserves to get us through,” he said.

Oregon legislators say the $9.3 billion is more than enough to fund schools, a 3.3% increase over the current K-12 schools budget.

“It assumes adjustments for educator compensation, changes in Public Employee Retirement System contributions, growth in health care costs, number of students, characteristics of students (e.g. special education, remote schools), and changes in local revenue,” according to budget reports from both the House and Senate.

In supporting the bill during the June 3 House vote, representatives with ties to education supported the bill while highlighting its historic nature.

“These are record investments to our schools, and as a school board member who has dealt with lack of funding and seeing the negative effects of this pandemic, I can personally attest with my gratitude to our committee members and legislators who successfully increased this from the original [Governor’s proposed] appropriation of $9.1 billion” said Rep. Ricki Ruiz D-Gresham, who also serves on the Reynolds school board.

While saying he supported $9.6 billion, Ruiz also said he was not willing to trade off increased education funding at the expense of other pieces of the budget, including health care and housing.

Also ahead of the House vote, Rep. Paul Evans D-Monmouth, a faculty member at Chemeketa Community College, supported the $9.3 billion allocation, while suggesting a billion more dollars in the next funding cycle.

“It is, at least so far, the best and biggest budget we’ve had that is a sustainable budget in a model that can be promised and kept into the future since I’ve been here,” Evans said.

Over the session, Gov. Kate Brown has moved from an initial $9.1 billion recommendation to agreeing with the current allocation, but not before criticizing lawmakers over where extra money for the state school funds were coming from, and saying they weren’t prioritizing equity in their school funding decisions.

A day after the legislature passed the K-12 budget, a coalition of K-12 groups including several school districts, unions, the Oregon School Boards Association, and the Coalition for Oregon School Administrators sent a letter to Oregon leadership, also centering equity in their argument for $9.6 billion.

“We believe the K-12 budget should be funded at a level that preserves programs and supports while ensuring targeted investments provide equitable outcomes for students most impacted by COVID,” according to the letter, which was first publicized by the Oregon School Boards Association, one of the signees.

The letter included information focused on just 33 of Oregon’s 197 school districts, that, according to the letter, serve almost 80% of the state’s BIPOC students. (BIPOC refers to Black, Indigenous and other people of color.)

“When we fail to fund the State School Fund at $9.6 billion, it disproportionately impacts the districts and schools where most BIPOC students attend,” according to the letter, which said those 33 districts will have a combined deficit of $134 million.

Public school districts in Oregon rely heavily on money from the state school fund, which is distributed mostly based on student enrollment. Schofield said 88% of the Beaverton district’s general budget comes from that state fund, which goes towards the district’s “core operations.”

“When you think about what the state school fund actually provides funding for, it’s our teachers in the classroom, it’s our bus driver, counselors, support services, all those folks,” Schofield said.

The Student Investment Account, part of the Student Success Act, provides another source of funding to the district through business taxes, though the funding is targeted and meant to support underserved students. Because of the economic downturn caused by the pandemic, the first year of SIA funds was depleted.

Before the pandemic, more than $472 million was expected to flow into the Student Investment Account. Due to the economic impacts of the pandemic, the actual number was $150 million for the 2020-2021 school year. Over the next two years, however, the SIA is expected to provide almost $400 million to districts annually.

Then there’s the federal money, three different allotments of money, ESSER I and ESSER II signed under President Trump, with ESSER III, or the American Rescue Plan, signed under President Biden.

Stretching that ‘one-time money’ ahead of looming costs

So far, Schofield said the Beaverton district has spent approximately $10.1 million in federal stimulus money on personal protective equipment and technology, among other things. That leaves about $67 million left from ESSER II and ESSER III.

Districts have two years to spend these funds, and Beaverton plans to spend conservatively.

“We are very sensitive to the fact that this is one-time money,” Schofield said.

The district is considering increased staffing, as well as heating-and-cooling system and air quality improvements. But Schofield said district leaders are also returning to the feedback from community engagement sessions two years ago, when the district was deciding how to spend its Student Investment Account funds.

Schofield said the district is also looking at what else students might need. He said those conversations will continue, even after the school board passes the budget at the end of the month.

As district officials plan how to spend their one-time federal dollars, they could be facing other rising costs, both in the short- and long-term.

Districts are awaiting updated “Ready Schools, Safe Learners” guidance heading into the fall, and that may mean new rules to follow, enforce and pay for. Schofield said he’s also concerned about the potential of increased costs into the state’s Public Employee Retirement System, PERS.

Finally, for many districts, there is declining enrollment to consider. School districts that lose students, lose the state funding that comes with them. This past school year, Oregon had a 3.73% drop in student enrollment, almost 22,000 students.

In Beaverton, the state’s membership report shows a decline in enrollment by 1700 students. Schofield said the district projects enrollment to rebound a bit in the fall, but lower enrollment could mean a reduction in funding.

“We lost enrollment, we think we’ll bounce back and gain some of it, but we don’t think we’ll be all the way back to the 2019-2020 level of enrollment as we start the next year,” Schofield said.