K-12 fix: reform PERS and fund K-12 first

by Dan Lucas

School districts across Oregon are facing additional, painful cuts. Rising PERS costs are obviously a problem, but many of these cuts would not have to be made if the governor and the state legislature made the K-12 state school fund a higher priority.


PERS does need reform, including the reforms recommended in Governor Kulongoski’s 2010 Reset Cabinet report. That report noted that, if it wasn’t reformed, PERS could ADD more than $1 billion to the general fund costs for state and school employees. The total state general and lottery fund budget is $14-15 billion, and so adding $1 billion just for increased PERS costs is a major problem. Governor Kitzhaber lacked the political courage to implement the PERS reforms recommended by his predecessor when Governor Kitzhaber negotiated the public employee union contracts last summer. The public employee unions he was negotiating with had contributed $750,000 to his campaign.


Oregon schools get a little under half of their overall budgets from the K-12 state school fund. The remainder comes from property taxes, local levies and federal funding.

The K-12 state school fund in 2007-2009 was $6.2 billion. In 2009-2011 it was cut to $5.8 billion, and that’s where it remains in the current budget, even though the state’s general and lottery fund budget is now higher than it was in 2007-2009. Why hasn’t the K-12 budget been restored to the 2007-2009 level?

Conversely, the Department of Human Services (DHS) and Oregon Health Authority (OHA) general and lottery fund budgets have grown from $3.1 billion in 2007-2009 to $3.8 billion in the current 2011-2013 budget. That growth hasn’t been for unemployment – that’s handled by another state agency; and it hasn’t been for food stamps – that money comes from federal funds. In just one budget cycle, DHS grew by 1,300 employees – the size of the entire Department of State Police.

Governor Kulongoski warned of this in his 2010 Reset Cabinet report: “If we remain on the path we’re on, there will be further shifts in budget priorities toward human services and away from education”. Rep. Dennis Richardson (House Budget Co-Chair) recently echoed a similar sentiment: “the high cost of Oregon’s social programs is likely to cause further flat-lining of state support for K-12 education”.


Passing the K-12 budget early in the legislative session was a good step, but more needs to be done. The K-12 budget needs to be made part of a “core fund” that is funded first at the previous level, along with prisons, state police and a limited set of key human services for the most vulnerable. Then, other agencies that depend on the General/Lottery funds would make their cases to the legislature for the remaining funds. This is the only way to stabilize school funding. Oregon already has two rainy day funds and they’re just being used to backfill funds that should have gone to K-12 but are being used to grow other agencies instead.