Representative Dennis Richardson: Oregon’s Financial Status

Oregon Spending has grown 46% in two budgets. The "All Funds" revenues include funds from every source–general fund revenues, other taxes, fees, lottery revenue, debt, federal money, etc. In the past two budgets, Oregon’s total "All Funds" budgets have increased 46%, from $41 billion to $60 billion. (Click Here.)

2. $1.6 Billion of "One-Time Money" used to balance current budget. The "General Fund" revenues include personal and corporate income taxes, tobacco, insurance, estate taxes and some revenues from liquor, fines & fees. To balance Oregon’s current 2009-11 General Fund & Lottery Fund (GF/LF) $14.4 billion, the Legislature cobbled together $1.6 billion in "one-time money," that will not be available to help balance the upcoming 2011-13 budget. (To see the source of the $1.6 billion, Click Here.) 3. Expected revenues down $891 million; Governor orders 9% cuts from agency budgets. Since the close of last year’s Legislative Session, the official State Revenue Forecast has decreased every quarter and is currently $891 million less than at the close of session. (Click Here.) As a result, the Governor has ordered a 9% cut in state agency budgets in the final 12 months of the 2009-11 biennia. The cuts will total $577 million, and the consequences to education, public safety and health and human services will be profound. (To see which programs are being cut, Click Here.)

4. Oregon is an income tax dependent state, yet 10.5% unemployment remains the norm. Ninety-three percent of General Fund revenues come from Personal and Corporate Income Taxes. Yet, since 2008 Oregon’s official unemployment rate has averaged more than 10.5%. More than 200,000 Oregon workers are officially unemployed and tens of thousands of others are jobless and without benefits. Since 2007 Oregon’s private sector has lost 154,000 jobs. (Click Here.) It is illogical to believe income tax revenues will substantially increase when so many workers are out of work and so many businesses are out of business.

5. $2.7 Billion of "new revenue" required to maintain Current Service Level in 2011-13 Budget. Notwithstanding successive reductions in revenues in each of the four quarters since the close of session in June 2009 (Click Here.), the cost to maintain state government’s Current Service Level (CSL) continues to rise at an unsustainable rate. The anticipated increase in spending necessary to maintain our state’s CSL in the 2011-13 budget after various adjustments will require $2.7 billion more than the amount needed for 2009-11. In other words, $2.7 billion of additional revenue will be needed in 2011-13, assuming revenues increase to compensate for the $1.6 billion in one-time money used to balance the current 2009-11 budget. ( Click Here.) To keep in perspective the magnitude of this $2.7 billion of addition revenue needed for 2011-13, we should remember that as a result of decreasing income tax revenues, the forecast for our current budget has decreased $891 million since the 2009 session ended.

In short, Oregon’s revenues are dropping like a rock, while Oregon’s expenditures are skyrocketing — Oregon has an unsustainable level of spending.

To visualize the budget information above, consider the following graphs:

1. Oregon’s All Funds budget history. Note the accelerating upward curve.

2. Oregon’s General Fund budget history.

3. Oregon’s Growth Rate plummets as depicted in this "Even Year" biennial chart.

Why is Oregon in such dire financial straits? A primary reason is the unsustainable growth in government expenses, and especially in the expanded hiring of government employees. Most of the state employees I know are dedicated and hard-working. The problem is not with the state employees as individuals, it is with the increase in hiring and the costs to maintain such a large work-force. Consider the ramifications of the following statement. According to the recently released Final Report of the Governor’s Reset Cabinet, three of every four General Fund dollars is ultimately spent on payroll or benefits. (Click Here.)

With the private sector continuing to lose jobs, how can we pay for thousands of new state workers? As Oregon’s public sector hired additional 4300 government workers since November 2007, workers in the private sector have not fared so well.

As our state government expands its overhead, the number of jobless Oregonians who no longer pay income taxes continues to grow. Just since the March 2010 Forecast, nearly 15,000 more jobs have been lost. (Click Here.)

The Capitol and its surrounding buildings have been described as "one square mile surrounded by reality." The reality for most Oregon families and private sector businesses is this– times are hard and cutting back on expenses is a fact of life.

Such has not been the case in our State government. At a time when the State should have been prioritizing its spending it has expanded "non-essential" agencies and programs–sometimes at alarming rates.

In my opinion, the highest priorities for state spending should be to the following:

1. Ensure public safety;

2. Provide care for the health and well-being of Oregon’s most vulnerable citizens, who cannot care for themselves; and

3. Ensure that Oregon’s students receive a quality education.

In contrast, consider the growth of spending between 2005-07 and 2009-11 of the following state departments and agencies:

State Agency/Dept. 2005-07 2009-11 % Change
Dept. of Energy $102.8 m. $259.5 m. +152%
St. Dept. of Lands $19.7 m. $33.2 m. +68%
Dept. Environmental Quality $303.4 m. $401.3 m. +32%
Dept. Human Services (DHS) $10,000 m. $16,000 m. +60%  (+ $6 billion)
Ore. Dept. Of Trans. (ODOT) $2,881 m. $4,073 m.  +41%  (+ $1.2 billion)
PERS $6,805 m. $10,488 m. +54%  (+ $1 billion)
Governor’s Office $10.9 m. $17.2 m. +58%
(Source: Leg. Fiscal Office 2009-11 Budget Highlights Update. (Click Here.)

Where does the money go when there are such huge increases in budgets? Most of the increases in the budget for the Department of Human Services have gone to pay the increased demand for benefits. Nevertheless, since 3 out of 4 dollars are related to payroll expenses, they certainly are a primary factor in escalating costs.

Recently I was joined on an Oregon Public Broadcasting (OPB) program by a public union representative and union employee. Both passionately (and erroneously) stated that government workers earn substantially less than their private sector counter-parts. If such a disparity were true in the past, it certainly is not true today. There is a concerted effort to misinform the people by repeatedly saying public workers are paid less than private sector workers. On average, Oregon State government workers earn more per year than their private sector counter-parts. (To read the facts on state vs. private sector pay disparities, Click Here.) The growing disparity between public and private compensation is most obvious in the areas of retirement and health benefits–100% of Oregon’s state workers’ benefits are paid for by Oregon taxpayers.

As discussed in a previous newsletter, State workers after 30 years are retiring at 58 with life-long retirement annuities that pay 80% of the employee’s highest salary and would cost more than a million dollars if purchased from a private annuity company. Such expensive retirement benefits are paid entirely by the State. When such State workers add their Social Security benefits at age 65 to their PERS retirement annuities, they often are receiving more money when retired than they earned while employed. The cost to state taxpayers to fund the Public Employees Retirement System (PERS) will increase in 2011-13 by 60% in PERS-related expenses and consume between $400 – $500 million from high priority State services. (Click Here.)

While PERS benefits are a substantial drain on state revenues, Oregon state workers also enjoy similarly generous health benefits. Oregon is the only state that pays 100% of the group insurance premiums for both the employee’s and his or her family’s benefits. Presently, the monthly costs for those health benefits are $1,100 for medical, $80 for dental and $1 for life insurance–that’s a total of $1,181 per month and it is all paid by the state. (Click Here.)

I have received estimates of the number of State employees ranging from 37,000 to 54,000. Irrespective of the actual number, if State employees who are covered by health benefits were required to begin paying 1/4 of their monthly group insurance costs ($1181 x 1/4 = $295.25), the savings to the State would be substantial. The total savings from having state workers pay a quarter of the cost for their group insurance benefits could free up between $262 million and $350 million for high priority State services in the next biennium.

It is time for State workers to pay their "fair share" of their retirement and health benefits — and this also pertains to members of the Legislature and the Judiciary.

In conclusion, the Governor’s Reset Cabinet states in its report that $1.6 billion of one-time money was used to balance the 2009-11 State Budget and that it will cost an additional $2.2 billion to $2.7 billion to maintain current service levels in the 2011-13 State General Funds Budget. The Reset Cabinet bases their calculations on the assumption that an economic recovery is under way and there will be sufficient "new revenue" in 2011-13 to make up for the $1.6 billion of one-time money consumed to balance our current budget. From the evidence, information and links above, I am much less optimistic.

In an average economy Oregon creates approximately 25,000 new jobs per year. Since November 2007 Oregon has lost 154,000 jobs, which includes the loss of 15,000 jobs in the past three months. Oregon’s economy today is not "average," and even if it were, it would take more than six years merely to regain the jobs lost since 2007. In addition to the jobs lost, Oregon’s expected tax revenues have decreased $891 million since the June 2009 "Close Of Session" Forecast.

Based on all of the above, I believe there is little chance the Governor’s Reset Cabinet’s expectation will be realized for enough "new revenue" to off-set the loss of the $1.6 billion in one-time funds expended in the current biennium.

Assume, for the sake of argument, that Oregon’s revenue were to gain enough "new money" to make up for the $891 million in lost revenues since the close of session. The Legislature, in order to maintain Oregon State government’s current service level, will still be facing both a $1.6 billion hole (to make up for the one-time money used to balance the current budget), as well as $2.256 billion in additional expenses set forth in the Cabinet’s "Components of the 2011-13 Expenditures" box on page 26 of their final report. (Click Here.)

Added together the $1.6 billion hole and the $2.256 billion additional expenses total more than $3.8 billion needed to balance the 2011-13 budget. Since Oregon has a population of 3.8 million, per capita, in addition to all existing Oregon financial obligations, $1,000 for every man, woman and child in Oregon will be needed to balance the proposed 2011-13 budget.

When considering the dire situation in which Oregon finds itself, many have said, "At least we are not as bad-off as California." Oregon and the nation are laughing at California–the state with the basket-case economy.

But, wait a minute. How does Oregon’s situation contrast with that of California? Both California and Oregon have greatly increased their number of state employees and related government expenditures. Both states have increased their social programs, their regulations and taxation of businesses and individuals; and, both states now have unemployment rates significantly higher than the national averages.

California has a top-end budget hole of $25 billion. California also has a population of 38 million. Thus, with a simple calculation, California’s budget appears to have a per capita deficit of $658 per person. Oregon’s budget appears to have a per capita deficit of $1,000 per person.

Who’s laughing now? Not me.

Sincerely,
Dennis Richardson
State Representative

P.S. Oregon is divided into 60 House Districts and 30 Senate Districts. Every Oregonian has both a State Representative and a State Senator. If you want your voice heard on Oregon’s spending practices, contact your elected officials. If you would like to add your voice to my blog, please click here.

Post to Twitter Post to Facebook Post to LinkedIn Post to Reddit

Posted by at 06:00 | Posted in Measure 37 | 49 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Marla

    I need state government. I am out of work and need all the help I can get. Please do not cut anything.
    Thanks.

    • an onymouse

      You’re out of work, Jerry? Times are tough, huh guy.

  • Ron Marquez

    …..”In my opinion, the highest priorities for state spending should be to the following:

    1. Ensure public safety;

    2. Provide care for the health and well-being of Oregon’s most vulnerable citizens, who cannot care for themselves; and

    3. Ensure that Oregon’s students receive a quality education.”…..

    Couldn’t agree more.

    The definition of “most vunerable citizens, who cannot care for themselves” would be contentious to say the least. If I correctly read Richardosn’s intent, many currently receiving various forms of assistance would likely be excluded.

    “Quality education” should embrace parental choice of how their children are educated. Charter schools and home schooling should be on an equal footing with public schools.

  • Bob Clark

    Wow, this is a very lucid report of the state’s finances. One area Oregon should be cutting, or deferring, is expenditure on lightrail and street car projects. These projects are money losers, as they raise Tri Met’s maintenance budget at a time when it is bleeding red ink. Cutting, or deferring, the Milwaukee light rail project would save the state nearly $250 million. Another area to cut would be the Department of Energy. There’s not much need for ODOE when electricity demand is down sharply with this prolonged recession, and besides, most of its programs go towards rather expensive energy solutions.

    I think it only fair state employees should pay a significant portion of their health care premiums and retirement benefits. Everybody else gets tagged for such contributions. In addition, the full retirement age for state employees should be raised to something more akin to social security, like 62 to 66 years of age. Actually, state employees used to get paid less than their private sector counterparts because they had more job security. The latter is still the case so state employees should get paid 5 to 10 percent less than their private sector counterparts so as to achieve parity.

    I am with Dudley. The state needs more taxpayers, and the way this is done is to encourage business retention and expansion through deregulation and streamling government. Hitting business with new taxes and lawsuits from the attorney general is not so encouraging.

    Washington state also has significant budget deficit so the idea this problem can be fixed by changing tax structure is largely without empirical support. Besides, voters don’t trust politicians offering a reduction in income tax rates in exchange for a sales tax. This is the old bait and switch. Once they got the sales tax, the next minor emergency will have the legislature moving the income tax rate back up.

  • skippy

    The guest editorial in today’s Oregonian written by John R Wooden wrote about playing fast and loose with the numbers.

    He wrote “Chris Dudley, the Republican candidate for Oregon governor, recently wrote in a commentary in the Oregonian: Between 1999 and 2009 state funding grew by a whopping 83%.

    Wooden points out why the number is misleading.

    “State funding has grown from taking on additional responsibilities that were once the province of local government. The proper metric is not the difference between state spending in 1999 and 2009; it is the combined state and local spending over those years. Oregon’s population is larger in 2009 than it was in 1999. Expenditure comparisons should be made on a per capita basis, which Dudley neglected to do. Any calculation of spending over time has to be measured in constant (that is, inflation adjusted dollars to have meaning.”

    Wooden continues to explain why Dudley’s numbers are wrong.

    “Much of the increase is attributable to demoghraphic factors that are beyond the control of any government. Oregon’s population is older than it was in 1999, and older populations require more state and local medical expenditures than younger populations. Health care costs have risen faster than other sectors of the economy and state and local governments have minimal influence over that fact. When government does attempt to control costs through health care reform, most conservatives, Dudley supporters oppose it.”

    More from Wooden who states the actual growth over the last 10 years is 15.8%, “Some of the 15.8% increase in state spending over the last 10 years is due to voter-approved inititives such as longer jail sentences which forced government to increase spending.”

    Charts and graphs Richardson says in his newsletter state funding grew 46% Did he adjust for population growth, the aging of Oregonians, adjust for inflation, adjust for voter inititives, adjust for health care’s skyrocketing prices or did he just add everything together and call it a day? The answer is yes.

  • a retired professor

    Richardson is dishonest, or at least ignorant, in disregarding that state employees already do “contribute” 6% to their retirement, except that the state makes the payment in their stead, per a contractural agreement from the 1970s in which this deal was made in lieu of a 6% salary increase.

    I know this very well because when I was negotiating my move to the University of Oregon, it was emphasized that I should add that 6% to my salary to get my “real” salary for comparison with what I was being offered elsewhere. (The total was still very low; for some reason, I picked Oregon; that is history).

    If he really expects state employees to pay 25% of their insurance expenses, surely the state is going to have to give something in return. Or does he think the unions are just going to give that up out of the kindness of their hearts?

    • Steve Plunk

      That’s simple double talk. If the state makes the payment in their stead then employees are not making their own contributions. Contractual or not if the state is paying it the state is paying it. Richardson is far from ignorant when it comes to state finances.

      It’s time public employees and retirees woke up and smelled the coffee. We are an unsustainable path that requires concessions from them. If not then they alone will bear the responsibility for cuts to education, public safety, the elderly, and the most at risk.

    • eagle eye

      You make the point very lucidly, prof, and you are (basically) right about the history. We’ve been through all of this way back in the ’90’s with Sizemore’s initiative, which basically tried to cheat the public workers out of the 6%. It barely passed, but was invalidated by the courts. The Republicans like Richardson may think — actually, I suspect he is just using it to bait the workers and excite his voters, knowing full well that legally he has no leg to stand on — they may think they can forget the deal that was made, but the unions are not going to forget, nor the trial lawyers waiting to pounce if the state tries to pull a fast one.

      Here’s another thing: there’s a good deal of speculation that the kicker will kick soon, because inevitably, if there’s ever a recovery, tax revenues will rise faster than predicted by the state economist (which is the whole absurd mechanism of the kicker). The state will still be flat on its back financially, though, with low tax revenues. Try “asking” the unions to make concessions while the kicker goes into effect! I suspect they’ll be a lot more vociferous than you with your little excursion into vulgarity.

    • Davis

      This is where the conversation got really stupid. First, the prof, in what can only generously be described as a fit of confusion, accuses Rep. Richardson of dishonesty while trying to convince us that public employees covered by the state contract of 1970 (?) contribute anything to our retirement. Assuming he knows that to be false, that he tries to pass it off as true means he is lying. His experience, or at least his re-telling of that experience, proves exactly the opposite of what he was saying. For the university recruiters to point out that he should consider the 6% pick-up to be part of his compensation means, to anyone who can understand plain English, that he is not paying for it. So that while the “up front” salary that he reported on his W-2 would not be as high as what other colleges would be able to offer him, he should consider that there was NOTHING reducing that salary in the form of insurance or retirement contributions as there would be with any other salary package.

      Second, that the 6% pick-up is contractual means absolutely nothing when it comes to the next round of negotiations. The present economic reality means that the State has to consider any and all means of reducing expenditures. The pick-up is as valid a target as anything else. There is nothing to prevent the State from offering to eliminate the 6% pick-up from their compensation package. Naturally, the unions will balk at that offer. But what is their alternative? Unless the economy quickly does an about-face, threatening a strike does not look smart. As many would find out, crossing a picket line is only the tiniest bit scary the first couple of times; after that it’s kind of amusing to watch the idiots hyperventilate.

      Third, eagle eye’s silly assertion that the kicker plays into this was the killer. It was all I could do to keep myself erect in my chair when I read it. As anyone able to think knows, the kicker has absolutely NO impact on the state’s budgeted expenditures. Legislators craft their budget which defines their spending priorities based on the revenue forecasts. That is as it should be. The kicker simply prevents the accumulation of an off-budget slush fund that the State could raid for any (or no) reason. Again, the union must not be allowed to call the shots. Just because the State underestimates the amount of revenue does not mean that it is flush with money or that state employees deserve any more compensation. There is no causal relationship here.

  • a retired professor

    Double talk my ass. The 6% is part of the picture that is completely dishonest to leave out. As I said, they certainly made it clear to me that it was part of my pay. If the state doesn’t like the deal it made, perhaps they should propose adding 6% immediately to salaries and then having that go immediately into a worker PERS contribution. But of course, there would be little or no point to doing that. (The deal in the 70’s was made because it was advantageous to both parties, is my understanding.)

    I agree that Richardson is probably not ignorant on this; he’s simply being dishonest, like so much of the Oregon Right.

    Look, you were bellyaching as much as anyone about the small tax increases in M66/67. So don’t expect the public employees to take 6% pay cuts (in effect) by “picking up” their own pension contributions, plus another $250/mo. in health insurance. It ain’t gonna happen.

    • valley p

      Retired professor is right. The state employees agreed to no salary increase back in the day and the state opted to pay the retirement share. They did so to save short term money at the expense of long term finances. We just arrived at the long term apparently, so the short sightedness of that choice is now clear. And I agree Richardson is being dishonest. If not he needs to do his homework.

      We are in a time where a lot of negative trends are converging. We listened to the free trade people and shipped many formerly high paying jobs overseas. We created a lot of low paying jobs to replace these. We over invested in real estate and high finance and busted the economy. We failed to invest in education to give ourselves a technological edge. We failed to invest in alternative energy and have fallen behind that curve. Blaming state unions for all this is a bit much, but there is not much question that if the ship continues to take on water they will have to help bail or help plug the leaks.

      And Chris Dudley is clueless. I almost hope he gets elected just to watch his face the day after. At least Kitzhaber knows what he is getting into. I’m amazed he wants the job.

      • Steve Plunk

        I continue to disagree with the professor and his potty mouth. This tired argument of the poor state employees foregoing pay raises in the past has no traction anymore. Not since the government employees long ago passed the average citizens wages and benefits. That money used to keep them in high style comes from an increasingly strapped private sector.

        Those high paying jobs shipped overseas because of increasing regulations and union demands. What about those timber jobs that the environmental movement destroyed only to have them replaced with minimum wage jobs? We have not only invested in education but over invested. Twenty years ago officials pleaded for expansion of Rogue Community College in order to create an educated workforce and attract business. Guess what? Nobody came and an associates degree doesn’t pay the bills. Alternative energy was kicked to the curb as dams were torn down, nuclear energy vilified, and subsidies abused by those good at writing requests while poor at engineering.

        The state government of Oregon and it’s dysfunctional workforce bankrupted the state and should accept the fact. The public employee unions continue to pollute the minds of the workers and undermine progress. Dudley can’t fix it alone so I expect little progress but at least he might slow the decline.

        • Anonymous

          Oh, did the bg bad truck driver get offended by the pwofessuh’s bad widdle word when you called him a “double talker”? Oh you poor widdle baby!

          • Steve Plunk

            Actually I’m not offended as I can curse with the best of them but I do know when it’s appropriate and when it’s not. I’m also a big boy posting with my own name and not hiding behind “Anonymous”. I bet that instills courage. When you’re serious about public debate let me know, until then you can continue to think posts like yours are humorous while they are not.

          • Anonymous #2

            “Double talk my ass.”

            Is that what this is about? Are you kidding? Using the word “ass” in a sentence, in context, is inappropriate? Get a grip, buddy. By the way, I would never hire the services of Plunk Transportation based on your comments on this website. If you think using your real name on a wingnut internet blog somehow elevates your integrity, you’re wrong, but best of luck to you.

          • Steve Plunk

            Get a grip? You wouldn’t hire me? Wingnut blog? I wonder why you visit if it’s a wingnut blog? And yeah, my integrity is elevated by using my real name and standing behind my words. It’s also elevated by standing up to those who try and use childish humor instead of facts and reason. I wonder what my comments here have to do with my ability to conduct business? Or is it liberals only want to do business with other liberals?

            Next time don’t pick a fight when you know you will lose.

          • Anonymous

            >Get a grip?

            Yes

            >You wouldn’t hire me?

            No

            >Wingnut blog?

            Yes

            >I wonder why you visit if it’s a wingnut blog?

            To observe wingnuts in the wild (and because the liberal righteousness at BlueOregon is nauseating).

            >And yeah, my integrity is elevated by using my real name and standing behind my words.

            No, it’s not. No one (other than you) expects people to identify themselves in forums such as this one. I, for instance, am not a public figure, and am not compelled to put my name to any of these discussions. You are free to do so, of course, but identifying yourself as Steve Plunk does not add weight to your comments. Admittedly, it is useful in that regular readers are familiar with your point of view, and know where you’re coming from, but using a name like “UO student” accomplishes that equally well. I think you might take this stuff a little too seriously… unless you’re planning a surprise run for governor?

            >It’s also elevated by standing up to those who try and use childish humor instead of facts and reason.

            No, it’s not. You’re integrity would be better served by simply ignoring the childish comments.

            >I wonder what my comments here have to do with my ability to conduct business?

            Your comments here have nothing to do with your ability to conduct business. In fact, I’d bet that you are a very competent businessman, but your comments do tell me a lot about what kind of person you are, and you are not the kind of person I would choose to do business with. (No worries though, Steve, I have no need to haul any lumber for the foreseeable future.)

            >Or is it liberals only want to do business with other liberals?

            I do not share your intense hatred of all things government, but I am not what most would call a liberal.

            >Next time don’t pick a fight when you know you will lose.

            An apparently subjective assessment of the situation.

          • Davis

            Actually, commenting anonymously has nothing to do with attaching one’s name to one’s comment. The very first commenter to this string, “Marla”, is as anonymous as you while the next commenter, “an onymouse”, is named. The difference between the two is that the latter provided an e-mail address that anyone here could then trace to an actual person.

            Yes, attaching a comment to a real person, whether agreeable or not — note even “skippy” is a real person — is much better than not standing with your comment.

        • eagle eye

          I don’t know the situation at Rogue CC but maybe they should take a page from Lane CC or one of the other community colleges that is filled to the rafters.

          It’s interesting that you think Oregon has “overinvested” in education. Perhaps an uneducated workforce will pave the way for prosperity in the future. Oregon is actually in the position of having a younger generation that will be less educated, credential-wise, than the older generations. The state then should start to see a payoff.

          You make an argument that’s increasingly common on the right. Of course, the people who make this argument almost always have college degrees, very often graduate degrees. And of course, their own children go to college — often Ivy League or the like — but seldom truck driving or plumbing school, or even community college (those last three not being incompatible, but I think my point is clear).

          • Steve Plunk

            Eagle,

            There comes a point where the diminishing returns on any project demand a fair accounting and determination of if it’s worthwhile. With education we have been oversold on the benefits while being undersold on the costs. That doesn’t mean I’m anti education or a school hater it merely means I’m tired of the public being misled. You have to admit there are a lot of associate degrees out there without jobs to match. We were sold on community colleges decades ago as the key to economic prosperity and they have not delivered as promised. Let’s call it like it is and then determine how to fix it. Filling the classrooms of a CC is not necessarily a measure of success for the community it’s just a measure for the college.

            I don’t see your point concerning the arguments from the right. I see conservatives facing reality while I see liberals still grasping on to best intentions. For all the billions invested in community colleges have we ever looked at the real return or real rate of return? Hasn’t the community college system become an entity looking out for itself rather than looking out for the citizens? How much of the tuition collected by a community college is money borrowed by the student and likely to be a good investment for the student? These are legitimate questions that are presently ignored by the education establishment.

            So where should we draw the line on what is over investment in education? In order to do that we must first have the conversation we are having now. Would you agree?

          • eagle eye

            Oh, I think people have looked at the CC returns and generally like what they see. Actually, on the right the CC’s, along with the wretched for-profit trade schools, are the darlings; only in a backwater like Oregon, and then only in certain, uh, regions — including, I have to admit, parts of Lane County, mainly the places that pay the least taxes and have the least income — would they be seen as an extravagance. You may think filling the CC is “just a measure [of success] for the college”, but tell that to all the people that couldn’t find spots at Lane CC recently.

            Do the CC’s look out for themselves? I suppose like all individuals and institutions, to some extent they do. Are they unusual in that regard? I would say they’re far less self-centered than, say, business or banking. Do the students borrow money for it? I guess if society isn’t willing to pay, somebody has to. If it’s not worth it, don’t go. Consider carefully whether it’s worth it — advice I would give about any investment.

            Are there associate degree holders without jobs? I’m sure there are. There are probably even unemployed MD’s. But by and large, the higher degree you have, the better your odds and the more you make. These, of coure, are averages, for in virtually any mass of individuals, you’ll find a spread; it’s the bell curve and all that.

            I’m not surprised that you don’t see my point about the arguments from the right. But the hypocrisy is so transparent to outsiders that it’s hilarious.

          • Rob DeHarpport

            Steve you are right on target. The bottom line is we are broke. You can’t increase taxes on a guy who has lost his job, you can’t increase revenue when many are “under-employed,” and you certainly can increase state funding on the backs of those that have lost their jobs and unemployment.
            The state should also not expect these same taxpayers to continue fully funding state employees Pensions and Health Insurance. Many of those who find themselves either jobless, under-employeed or who have ran out of their unemployment also likely experienced cuts in their health insurance and pension contributiuons from their employers long before they had hours reduced, days cut and ultimately lost their jobs.
            As they say; you can’t squeeze blood from a turnip. The Oregon taxpayer is the turnip.
            Or maybe we should all recite this old line….. there are no guarantees in life except death & taxes.

            Common sense says this is worth repeating once more. The well is dry, the world is unfair, get used to it just like millions have had to do in the private sector. To those looking for sympathy you won’t find it in the private sector, I suggest looking in the Webster Dictionary… you will find it somewhere between Shitake and Syphilis. We need to quit bickering and dividing, roll up our sleeves and get busy addressing reality.
            The following quotes are from Lyn Tilton a self made billionaire that “gets it.”
            “In recent times, every great empire has been built upon a manufacturing economy. The fall of these great empires has been the failure to remember this one fundamental fact.”
            “Our country’s most valuable asset is human capital, and the most potent force of nature is people standing shoulder-to-shoulder, moving in one direction.”
            “The key components of a successful turnaround are rationalization and innovation.”
            “Truth is cold and hard but it is also the first step on the path to hope and salvation.”
            “Healing the economy, assuaging anger and rebuilding America will begin with both truth and self-reflection.”
            “We must all strive to be better people and to demonstrate those qualities that create light in a world gone dark.”
            “If we do not employ people in this country, it will ultimately end badly for all of us.”
            “Until job loss turns to job creation, we have little chance for a true economic recovery. Absent job creation, little else matters.”

            “Main Street Americans have been battered by the perfect storm of falling employment, plummeting home prices and inability to access credit. And the storm has left so many homeless, jobless and hopeless.”

            “We have become a culture of expectation rather than appreciation.”
            What many didn’t know (who didn’t spend a lot of time over the Independence Day Weekend watching the news) is that he held the line, and signed the smallest budget in a half decade, closed an $11 Billion deficit WITHOUT increasing taxes, reducing spending by nine percent, and generally adhered to the principles of limited government (at least, the first baby step in that direction) and personal property rights. Major cuts in spending included cuts to the sacred cows of leftist ‘progressive’ activists, including public indoctrination…er…education, mass transit, and municipalities (intra-state wealth redistribution). Every department in state government was cut. The Governor vetoed the Democrat tax increase. June 28th was the date of passage, and it’s great news for New Jersey and for America!
            I feel better…. now let’s face reality.

          • Rob DeHarpport

            The last paragraph was regarding Governor Chris Christy (NJ). He faced reality and New Jersey made the neccesary cuts. Representative Richardson has presented the facts in a very concise manner. We either face the reality or curl up & cry.
            “Truth is cold and hard but it is also the first step on the path to hope and salvation.”
            “Healing the economy, assuaging anger and rebuilding America will begin with both truth and self-reflection.”
            Quote once again from; Lyn Tilton

          • valley p

            Steve, every study that i have seen backs up what eagle eye says, plus all the projections for future employment growth point to higher levels of training and education. A 2 year CC degree is about equal to what a high school degree would get someone 30 years ago, a ticket to the middle class. The largest area of job growth is health care, and there are tons of opportunities there that require a 2 year degree. Much of what is left of manufacturing also takes a lot of technical skill because it is so automated. You say we should be having a debate on this, but the debate should be unnecessary because the facts are in. if we want people to have a chance to get a head there is no better investment than community colleges and universities.

          • a UO student

            Here sits I in the UO library, wondering does anyone have any actual DATA on how Oregon stacks up compared to other states in higher education spending? For universities and community colleges broken out separately? eagle?

          • Rob DeHarpport

            At this point in the game we should be asking basic survival questions, ALL states are in the same boat. Please name one that is not facing the excact same mess. While your in the library might I suggest checking out the book “Free to Choose” by Milton Freidman.

            Freidman convincingly argues that free-market forces work better than government controls for achieving real equality and security, protecting consumers and workers, providing …

            In other words, like Dennis Richardson is pointing out, In simple terms Government is the problem.

          • Mark Sanjean

            There are three states with balanced budgets, so not all of them are in the same mess, as you incorrectly state.

          • Rob DeHarpport

            Mark,
            Yes, three states with balanced budgets. I’m curious as to what states you speak of. A balanced budget is required in most states that I know of. But what of Unfunded Acturarial Liabilities??
            Eagle Eye, Thanks for the spelling correction, I found a couple of others in my posting as well.
            Also I do not dispute the value of education at all. Steve Plunk seemed to be disputing the value of Community colleges, cost/benefit. The cost does factor into the bottom line, is the benefit actually worth the cost is what he is asking. A valid question.
            There is really no sense in debating the situation, it’s awful. The discussion should be focused on the facts and how to prioritize. There really is no way to avoid the pain, accepting this fact will put us on a path to real solutions.
            As for Dennis Richardson being dishonest and ignorant as the Professor stated, I find nothing that Professor said that honestly disputes the facts that Dennis laid out. What the Professor fails to mention is the huge wage increases granted to state employees soon after the 6% guarantee. I understand that anyone would be defensive of their pension and wages, I am. But we will all soon learn that there really are no guarantees in life, even my Teamster Pension can evaporate. I accept that fact, we all need to swallow a real big dose of reality. The Government Pension Guarantee fund is hugely unfunded. What shall we do? Borrow ? Or print more money? What would that lead to? These facts can be found with a wee bit o’ research. “Facts are stubborn things.”
            Ronald Reagan

          • eagle eye

            The professor is perfectly capable of taking care of himself, but I do have to say in response to your

            “As for Dennis Richardson being dishonest and ignorant as the Professor stated, I find nothing that Professor said that honestly disputes the facts that Dennis laid out. What the Professor fails to mention is the huge wage increases granted to state employees soon after the 6% guarantee.”

            that the professor is perfectly correct in pointing out the circumstances of the state “picking up” the old 6% employee contribution. (He also nicely illustrated it with his own salary negotiation history with the state.) It is simply disingenuous, if not outright dishonest, to ignore this when stating to gullible voters, most of whom are probably too young to know any of this. that the public employees contribute nothing to their pensions. The state can’t make a deal with one hand and then arbitrarily undo it with the other. It can try, but then it’s likely to get sued in court and lose. Oh, that’s what already happened about 15 years ago.

            Introducing “huge wage increases” into it is a real distraction, if we’re talking about the professor’s actual reaction to what Richardson actually said.

            If public employee salary levels in Oregon are this issue, by all means let’s have the legislators (and others) bring them up.

            I suspect — I’m quite certain, because I have seen the numbers — that public college faculty salaries (+ benefits) would come out on the way low end (except the community college teachers, which is a different story). Plus, probably, the other upper-level professional salaries in Oregon. You might well get a much different picture looking at the lower-end occupations. (That’s Oregon!)

          • Rob DeHarpport

            Eagle Eye,
            The basis of the discussion is Oregon’s Financial Status. Introducing the “huge wage increases” that soon folowed the PERS 6% guarantee is surely a factor in the discussion. Do you agree? You are correct that it has been to the Oregon Supreme Court, and upheld. Fine. Uphold it all you want, it still does not change the fact that Oregon is broke. So, do you suggest we borrow or tax?
            There are going to be painful choices to be made. Borrowing & taxing even more makes no sense at all. Serious cuts are needed, the employees can keep the PERS guarantee and the Health insurance. Wages are always negotiable, are they not? Perhaps it’s time to throw it all on the table and see where the Unions are willing to bargain. Or of course they could choose to strike. Surely there a some very capable and qualified folks among those 154,000 unemployeed Oregonians, many would be willing to cross a picket line in a heart-beat just for the paycheck sans the benefits. I know of many who would. I also have many friends who are state, county or city employees. Where is the rational thinking? The facts have been presented over & over. The time for corrective action is past due. Unsustainable is an understatement. Look again at the charts, graphs and stats. Dennis did not pull them out of thin air.
            That is the reality of the situation. Once again; “We have become a culture of expectation rather than appreciation.”
            It’s not a happy story for anyone.

          • eagle eye

            The “huge wage increases” actually came in the wake of huge increases in the cost of living, back in the late 70s. Without that context, “huge wage increases” means absolutely nothing. In any case, it’s a distraction from the dishonest — disingenuous and misleading, if you prefer — that public workers contribute nothing to their pensions.

            What do I suggest?

            Don’t begin with politicians making dishonest claims while purporting to “analyze” the Oregon budget situation.

            Don’t claim that a 1 or 2% tax increase on top earners will wreck the state, then expect state workers to take 10 or 20% pay cuts.

            DO offer to repeal the kicker and put it into a reserve fund, then maybe you’ll get a better response from the unions.

          • Rob DeHarpport

            We have been miss-quoting the PERS guarantee. It is actually 8% with a 2% annual COLA. That’s a 10% guaranteed return on investment. Not bad when you have no skin in the game as an employee, Of course we all know the investments don’t always return that 8%. That’s when the good ol’ Oregon taxpayer makes up the difference. What a great bunch of folks! Currently the Oregon PERS has a Unfunded Actuaril Liability (UAL) of roughly $14 Billion. That is nearly 2X the current biennial general fund. Many school districts, municipalities, fire districts etc. will be paying close 27-29% of wages to PERS. That is why wages AND benefits are very relevant to this discussion.
            Warren Buffett has stated the Public Employee Pensions are the next big bubble. Buffett also says the 100 year average return on the NYSE is 5.3%. Does anyone see this as a problem???
            Ask youself this; is 5.3% greater than 10%???? This is the unfunded monster in Oregon and America. Various estimates of $1-3 TRILLION UNFUNDED U.A.L. total in our country.
            Even former California Assemblyman & SF Mayor Willie Brown recently stated;
            “I don’t come to this issue, frankly, with clean hands,” Brown was quoted as saying by the Sacramento Bee. “I did a lot of stuff when I served as a member of the Legislature.”

            Brown’s been walking a path to contrition for a few months now. In a Chronicle column on Jan. 3, Brown wrote:

            “The deal used to be that civil servants were paid less than private-sector workers in exchange for an understanding that they had job security for life. But we politicians, pushed by our friends in labor, gradually expanded pay and benefits to private-sector levels while keeping the job protections and layering on incredibly generous retirement packages that pay ex-workers almost as much as current workers.”

            And, last week, Brown told those assembled at Schwarzenegger’s pension reform event that he’d come to appreciate the problem of bloated government pensions while serving as a local government representative on the board of the California Public Employees’ Retirement System

            Of course, by bringing up his term as a CalPers director, Brown points toward a whole new issue that might benefit from contrition from the ex-mayor and Assembly leader. In 1999, SF Weekly ran an article titled “W.L. Brown, a public-private partnership” about how CalPers invested pension money into investments the mayor stood to benefit from.

            Shall we soon witness the bizarre spectacle of Brown calling a press conference to announce that it’s time for politicians to keep their hands out of the public cookie jar?

            Oregon $1000.00 per capita deficit—-California $658.00 per capita deficit. Same problems here as in California, what more do we need to see or talk about? We need to get very serious very quickly to tackle a very dire situation.

          • eagle eye

            Perhaps, since you think Milton Friedman (that’s how his name is spelled) is so great, maybe Dennis Richardson should propose privatizing the state universities?

          • eagle eye

            Ya wants a bunch of stats? OK, I’ll dig something up. Bottom line: I am pretty sure you’ll find that Oregon CC’s have been very well funded, at least until recently; the 4-yr colleges and major universities are funded close to the bottom. We’ll see what I come up with.

  • eagle eye

    to UO student post 6.1.1.2.1.4: you wants data, you gottem!

    OK, there was some recent news about the “Delta Project” on trends in higher education expenditures. Go to

    http://www.deltacostproject.org/

    and then click on “Full Report.”

    Then go to the data, you’re best off with three of the graphs on pages 50, 51, and 33, that’s Figures A3, A4, and 13.

    You’ll find:

    p. 51 Oregon CC expenditures per student (full-time equivalent) at least as of Academic Year 2008 were 4th in the country at roughly $14,300 with most of that coming from public subsidy.

    p. 33 Oregon expenditures per student at public research universities (UO, OSU, and PSU, sort of) are near the bottom, right above Mississippi. The public subsidy is near the bottom, too. It’s FAR less than at the CC’s.

    Most amazing, the expenditure per student at around $11,800 is much less than at the CC’s, by $2500, if I’ve done the arithmetic right. Even though upper division programs generally cost much more than lower division. (I don’t know if the figures include graduate students; if they do, the comparison becomes even worse. The numbers undoubtedly exclude athletics, dorms, research grants, extension etc. which are funded by other sources; the comparison is supposed to be of student-related academic program expenditures.)

    p. 50 Oregon expenditures per student at the “master’s universities” i.e. WOU, SOU etc. are also near the bottom and lower than at the CC’s.

    So there you have it: Oregon CC’s funded near the top, at a level much higher than the 4-year colleges, which are near the bottom, down with states like Mississippi, New Mexico, etc. And in Oregon, the 4-year college students pay a much heftier share of the costs than do the CC students, and students in almost every other state.

    It’s even more extreme than I had ever imagined. I hope all those CC students appreciate what they’re getting.

    • Steve Plunk

      I appreciate your research Eagle but I don’t see expenditures as a measure of success. We know that K-12 education has increased spending yet the true measures of success are absent. I would say the way to measure success with CCs is the impact they have had on the local economies. After all that is how they were sold to the taxpayers, as boosts to the economy. If the claims are proven false then we may need to rethink what will stimulate economic growth and put our money in those places.

      • eagle eye

        It’s really hard to compare higher education to K-12, but I would claim that you aren’t going to have first-rate colleges when you fund them down there with Mississippi etc. Certainly, Oregon public colleges and universities aren’t attracting the caliber of students of, say, the University of California or the University of Virginia, or the better Big 10 campuses. The best students generally leave the state, and it’s not hard to see why. Oregon may be getting what it wants, but it’s hard not to see this as a misfortune.

        Oregon State was talking a few years back about having a “top tier engineering program” but it is actually stuck maybe around #85 in the country. There is no way it’s going to be up there with MIT or Berkeley or even Purdue the way Oregon allows it to be funded.

        What I dug up actually may support what you were saying — though I don’t know anything about the budget of Rogue CC specifically. But on the whole, it appears that at least as of 2008 — there have been state budget cuts specifically targeted at the CCs, perhaps with this in mind — the CC’s appear to be kind of extravagantly funded in Oregon, especially compared to the colleges. I would say there is a gross mismatch, and some reprioritizing is in order.

        As for the impact on the economy, again I don’t know about Rogue CC. That part of the state appears to be very economically depressed (except for outliers like Ashland). I don’t know what can pull them out of the rut there. It is very probably unrealistic to expect CC education alone to do the trick.

        I can tell you that in Lane County, Lane CC is widely seen as a great economic asset (and asset of other kinds, too), even if it’s kind of an expensive one. Of course, there are exceptions, especially in the rural areas (where it’s kind of hard for LCC to reach, and where there might not be much of an economy anyway). On the whole, though, LCC is greatly valued. As I said, there’s not lack of people who are trying to get in to programs that are often over capacity.

        • valley p

          I’m not questioning your research, but I have to wonder why the pay is so low for teachers at community colleges if what you have encountered is true. As I understand it, most are paid below what we pay high school teachers.

          • eagle eye

            My guess is, the unionized tenure-track faculty at community colleges get paid well, maybe very well in Oregon, with the usual benefits. The “adjuncts” — temporary, usually part-time people hired to fill in on courses — get paid peanuts, like most adjuncts in higher education. If they’re less than half-time, they probably don’t the usual benefits.

            In Lane County, there was a guy running for LCC board who wanted to have many more of the adjuncts, to service outlying “branch” campuses, and fewer of the full-timers. So that if some people in Florence, say, want to take a physics course, they hire whoever they can find there. At the expense, of course, of the central program in Eugene. This guy got beat pretty badly in the election.

          • rural resident

            eagle … The full-time, unionized/tenure track people aren’t always paid that well. I was twice offered full-time positions at one of the more rural community colleges. I hated to turn the offers down, because I would have had some really neat opportunities to create new programs. However, the first time, I would have taken a pay cut of $17,000 a year–down to under $30K. The second time, the cut would have been nearly $20,000 a year.

            I agree with you that we need to have more full-time people, and use fewer adjunct staff. The adjuncts may (but do not necessarily) have some current knowledge of industry practices that would be useful to students. However, they don’t have the time or inclination to perform the course and program development tasks necessary to keep programs at the cutting edge. The also aren’t participants in professional organizations, nor are they likely to do the gritty research into both the technical and pedagogical aspects of the job that the full-timers are used to doing.

            When you have a large percentage of part-time, partly committed staff, the students pay the price in lower quality instruction.

          • valley p

            I come at it from the adjunct perspective, though more at the university than CC level. (I also could not afford to take a full time academic position at today’s salaries). You make good points about the advantages of full time faculty versus adjunct part time. However there are also disadvantages, particularly in professional fields where knowledge of current practice and having field contacts can augment what full time teachers, but non practitioners provide. A dynamic balance is best for the students. Its hard to achieve this though due to academic turf issues.

            I’ll also add that some part time teachers who are practitioners also manage to do original research and publish.

            Megan McCardle has an interesting blog on the Atlantic suggesting academic tenureship ought to be done away with. Its worth reading, though I disagree with her. The US has the best research universities in the world for a reason, and one of those reasons is the career stability tenureship provides.

          • eagle eye

            As I say, I really don’t know the situation of individual CC’s in Oregon but I dug up this on Lane CC full time “instructors”:

            http://www.citytowninfo.com/school-profiles/lane-community-college

            the average salary appears to be $60K or a bit higher and of course there are the benefits on top of that. That is a union-negotiated package. My guess would be — only a guess — that this is somewhat higher than national norms. It also would beat the average Oregon K-12 teacher.

            In other CCs the pay may be much different, I don’t know. CC funding in Oregon is so dependent on property taxes. In the rural areas it might be considerably lower than in the metro areas or Lane County, which has supported Lane pretty well over the years.

            I can believe one might have to take a pay cut to teach in a CC especially in a technical field. It all depends on your current salary of course. A cut to $30K sounds kind of extreme. Of course, I don’t know the department or when this was, or where.

          • a retired professor

            A question for you: you say the pay cut would have been on the order of $20K. But what about the benefits that we hear so much hatred directed toward here. How did they factor into the equation and the decision? Including the 6% pickup, the medical benefits. Of course, it depends on which tier of PERS you would have been eligible for.

            My pretty good guess, from a lot of experience in higher education at various schools, is that — apart from the 6% pickup, which definitely should be factored into “salary” — the benefits in Oregon for a new hire are worth maybe an extra $2-$3K per year, compared to comparable higher education institutions i.e. state universities. Compared to good jobs in the industrial world, you might have to add in a wee bit more for pensions — in the Tier III world — but of course the salaries are far lower. In other words, the benefits are not such a big deal.

    • a UO student

      Very interesting source and research! It is very astonishing, as you say. It also might help to explain some things I’ve noticed comparing UO and Lane.

  • cna training

    Great information! I’ve been looking for something like this for a while now. Thanks!

Stay Tuned...

Stay up to date with the latest political news and commentary from Oregon Catalyst through daily email updates:

Prefer another subscription option? Subscribe to our RSS Feed, become a fan on Facebook, or follow us on Twitter.

Twitter Facebook

No Thanks (close this box)