Important Budget Update from Superintendent Scott
May 7, 2020
Dear Hillsboro School District Staff and Families,
Many of you may be wondering about the state of the District’s budget as a result of the coronavirus pandemic. Indeed, there is a strong possibility that Oregon will experience a $1-$3 billion shortfall in its collection of personal income, property, and business taxes - a dollar amount that represents approximately 5-15 percent of the state’s budget. More will be known when the next quarterly revenue report is released on Wednesday, May 20. At that time, there will most likely be a special session of the State Legislature called to determine how to absorb and mitigate the shortfall.
Governor Kate Brown has already asked state-funded agencies to prepare budgets that represent 8.5 percent reductions to previously allocated funds, which is the extent of her budgetary authority. The Legislature can determine whether to lower or increase that amount, or to make it variable between agencies.
Separate but related to that is the question around Student Success Act (SSA) collections. The Governor has already allowed for delayed payments without penalty to some smaller business that would be subject to the tax, and it is unclear what the ultimate fate of the tax will be this year. We were anticipating just over $16 million in Student Investment Account (SIA) funds - SIA represents 50 percent of the SSA collections - to support the lowering of class sizes, mental health support, extended learning opportunities, and enriched education in HSD. We were also anticipating full funding of Measure 98, which was to be supported by the portion of SSA funds designated Statewide Education Initiatives (SEI). At this moment, all SIA and SEI funds are in question.
There are some funding sources that could specifically support education. Two separate funding streams from the federal CARES Act will come to Oregon: one is estimated at $121 million and is intended to flow through to school districts. Because HSD represents approximately 3.5 percent of all students in the State of Oregon, we could reasonably assume to receive approximately $4.2 million. The other is estimated at $32.6 million and is intended to help state-funded agencies recoup the costs they’ve incurred as a direct result of the coronavirus pandemic. We have been tracking these costs and hope to receive the maximum amount of reimbursement to which we are entitled (as much as $1.1 million).
Other sources of support are the Education Stability Fund and the state’s reserves. Whether or not and to what extent those funds are accessed will be a decision of the legislature.
These economic factors will mainly impact us in the 2020-21 school year. If education is expected to make reductions on the order of 8.5 percent, for example, that would feel like a 17 percent reduction in funds for the 2020-21 school year. The reason for that is because our budget is allocated on a biennial basis and we have almost completed the first year of the current biennium - all reductions will have to be absorbed in that second year. For HSD, a reduction of 8.5 percent to the State School Fund means we would have to reduce $23 million from our budget.
Simply for the purpose of giving that number relevance, not that we would manage reductions this way, a $23 million reduction is the equivalent of 190 teachers or 27 school days.
All of this is meant to provide context for the cost-saving measures we are planning for the remainder of this school year. Anything we can do between now and the fall to save money will save staff members, school days, and programs.
Two of these cost-saving measures are pretty straightforward: we are implementing a spending freeze effective immediately; and we are implementing a hiring freeze - with the exception of hard-to-fill-positions - effective immediately.
The third cost-saving measure is fairly unique. As you may have heard, Portland Public Schools (PPS) has announced they will be implementing one furlough day for all eligible employees beginning this week and lasting through July 31, 2020. They will be accessing a state program called Work Share and money available through the federal CARES Act to make this a workable solution for their district and their employees. The Work Share program is in place in 26 states and has been available for several decades. It was initially implemented as an employee protection program for the manufacturing industry by allowing employers to furlough employees for one to two days per week rather than lay them off. The employer was able to save money as they weathered cyclical demand, and the employee retained their job and was able to collect unemployment at the same time.
PPS did the groundwork research with the State’s Unemployment Office and with their legal advisors to see if this program would work for an educational entity and the answer was “yes.” Many other districts in the Metro area and around the state were watching this process with interest because it not only represented a way to save significant money in a short period of time, but is also a way to hold employees harmless.
The program works this way:
- The employer files for its entire employee base* and continues to do so each week, moving people in and out of the program as necessary based on their eligibility. (*Some employees are not eligible for this program because they have not worked for the district for at least six months, are on a leave of absence, or are retiring.)
- The employee fills out a one-time two-page document indicating their preference for a check or direct deposit, tax withholding, etc.
- The employee’s work week is reduced by 20 percent. If they normally work 40 hours per week, they will now work 32; if they normally work 20 hours per week, they will now work 16.
- The employee will receive their regular pay from the district for 80 percent of their week, and will receive the Work Share unemployment pay for 20 percent of their week. They will also receive $600 per week from the federal CARES Act program currently in place through July 31, 2020.
- The impact of the 20 percent reduction in District pay will not be evident until the June paycheck, at which time the Work Share unemployment benefits should have already begun.
- The employee’s health benefits remain the same.
There are other nuances to the program, but these are the highlights. Hillsboro School District has submitted its application to the State Unemployment Office for participation in this program, and we are hopeful we can implement it for all employee groups by next week.* (*Pending conversations with our non-represented employees, and approval of our unions and the Board.) The furlough day will likely be Fridays, but the more important piece is that each employee reduces their work hours - those hours do not necessarily have to be tied to a particular day. By selecting Fridays as the furlough day, students will have a predictable schedule each week of instruction for four days and a catch-up/research/project day on the fifth day; however, if another day must be selected based on an employee’s/employee group’s work responsibilities, they will work that out with their supervisor.
If we are able to implement furlough days for all employees, we will save approximately $850,000 per week. If we are able to start with all employees by May 15, we will save approximately $4.2 million by July 31, 2020.
Any money we are able to save in this fiscal year will lessen the impact of reductions we will have to make in the 2020-21 school year - protecting more jobs, more school days, and more vital programs for students.
Additional information, including FAQs, will be forthcoming on the HSD Work Share Program webpage.
While the situation is far from ideal, I am hopeful about the measures we can take to be good stewards of our resources now and in the coming year. Thank you very much for your partnership in this effort.
First State Revenue Forecast for 2019-21 Biennium Released
September 6, 2019 - Legislators received positive news as they closed out the books on the 2017-19 biennium. The September Economic and Revenue Forecast, released on Wednesday, Aug. 28, showed another surge in tax collections that will generate the largest personal kicker in Oregon’s history. Based on final projections for the 2017-19 biennium, Oregon’s kicker law will require the return of almost $1.57 billion to taxpayers in 2020 when they file their 2019 taxes. While it will be the largest personal kicker ever in terms of total dollar amount, it will be only the third largest as a percentage of tax liability.
State economists noted that although we’ve experienced the longest period of economic growth and expansion in Oregon’s history over the past several years, there are indications of potential economic slowdown and “warning signs” of a recessionary period. That said, economists also reported to legislators that “…most (economic) indicators are still positive…” and recognized the fact that the majority of economists nationally (66%) are not predicting a recession in the near term.
For school communities that have lived through boom and bust economic times and had significant budget uncertainty in the past, there is some good news. The state’s reserve accounts (Education Stability Fund, Rainy Day Fund, and Cash Reserves) are currently projected to reach $2.58 billion during the 2019-21 biennium (12.2% of the General Fund Budget). The forecast also shows that projected General Fund and Lottery resources have grown $324 million for the 2019-21 biennium since July 1. With the addition of the new revenue stream from the Student Success Act in 2020-21, the state will be in a position to help stabilize K-12 budgets in the event of a significant economic downturn.
Student Success Act Referral Effort Dropped
July 18, 2019 - Late Tuesday, July 16, the Oregonian reported that Oregon Manufacturers and Commerce - the group that had filed a referendum with the state indicating it would seek to block implementation of the taxation portion of HB 3427, the Student Success Act (SSA) - announced it would not be pursuing the referral after all.
The group cited legislative constraints as the reason for dropping the effort, including the passage of SB 116, which moved the date of a potential election to January 21, 2020, from November 3, 2020.
This does not preclude the possibility of other individuals or groups mounting a referral effort, though no other referrendum has yet been filed. Such an effort would require the gathering of nearly 75,000 signatures by Friday, September 27, 2019, to move forward.
It also does not preclude the possibility of Oregon Manufacturers and Commerce or another group taking up the referral effort once the tax is in place. But it now appears almost certain that the business tax will go into effect on January 1, 2020, which is great news for K-12 and other educational initiatives across Oregon.
Plans for the use of SSA funds, which are expected in the 2020-21 school year, are due from districts in November 2019. Plan development includes the involvement of parents, community members, and other stakeholder groups, so please watch for opportunities to participate and provide your feedback.
Budget and Student Success Act Update
June 19, 2019 - On Tuesday, June 4, 2019, Governor Brown signed HB 5016, which set the State School Fund (SSF) for the 2019-21 biennium at $9.0 billion. That funding level is $28 million higher than what we planned for and upon which we built our budget for the 2019-20 school year. Because our district accounts for approximately 3.5% of all students in the state, we will receive approximately $980,000 of those additional funds in the biennium. With 49% coming in 2019-20, that equates to just over $480,000. Rather than earmarking those dollars at this time, our plan is to use the funds to ensure high school Student Success Coaches remain whole, address class size hot spots, and meet other student support needs.
Just over two weeks before she finalized the SSF, Gov. Brown signed HB 3427, which established the Student Success Act (SSA). The SSA calls for a new gross receipts tax on businesses and a reduction of income taxes for the payers in all but the highest of the state’s four tax brackets. The new business tax less reduced income taxes is estimated to generate $2 billion per biennium* to be spent on K-12 and other statewide education initiatives (*$1.6 billion in the 2019-21 biennium due to the delayed implementation of the tax - for more details, please see the May 14 article “House Bill 3427 Heads to Governor’s Desk” below).
Because the SSA passed the House and Senate with a supermajority and was signed by the Governor, it will become law 91 days after the closing of the 2019 Legislative Session and will go into effect on January 1, 2020. Those seeking to repeal the SSA will have 90 days from the Session’s closing to collect at least 75,000 signatures to refer the tax to voters; the group Oregon Manufacturers and Commerce filed a referendum in late May indicating it intends to do just that.
If the required signatures are gathered, the vote would normally take place in November 2020; however, SB 116 seeks to pull that vote up to January of 2020. At the time of this writing, the bill was in a Senate sub-committee of the Joint Ways and Means Committee. The bill is expected to pass both chambers and receive the Governor’s signature.
There would be three main impacts if voters overturned the SSA:
- K-12 schools and other statewide educational initiatives like preschool and Measure 98 for career and college readiness would not receive additional funding for needed programming. The Hillsboro School District had to reduce $9.6 million from its 2019-20 budget and would have to sustain those reductions in 2020-21 and beyond if funding from the SSA did not materialize.
- The $9 billion SSF for 2019-21 counted on $200 million from SSA proceeds; so if that money was not available, schools would have even less money than they planned on for the biennium.
- Only the taxation portion of the SSA would be referred to voters, which would create a scenario where there is no new tax, but there is a reduction to personal income taxes for most payers. That would be a loss to the state on two fronts and could cause further detriment to the SSF.
Stay tuned to this webpage for updates as they are available.
House Bill 3427 Heads to Governor’s Desk
May 14, 2019 - On Monday, May 13, Oregon Senators voted to pass House Bill 3427 - the Student Success Act - by a supermajority of 18 yes, 11 no, 1 excused. That vote, combined with the supermajority passage of the act in the House of 37 yes, 21 no, 2 excused, means that once the Governor signs, which she is expected to do within the next few days, the bill will become law 91 days after the session adjourns.
The only thing that could potentially stop or slow that process would be a successful initiative petition that would refer part or all of the bill to a vote, which remains to be seen.
Assuming the Bill does become law, it is expected to raise approximately $1.6 billion in the 2019-21 biennium, and $2 billion in future biennia. Here is some additional information about how the money is expected to come in and be allocated in the 2019-21 biennium:
- The business tax is projected to raise $1.608 billion in 2019-21. The first collection would likely not take place until the first or second quarter of 2020 (January or April), and it is not anticipated that any disbursements to K-12 education would occur in the 2019-20 school year.
- The bill allows for a “pre-appropriation” of $200 million from the expected new revenue generated by HB3427 to the State School Fund (SSF) in order to get that allocation to the Governor’s recommended level of $8.972 billion (would be reflected in HB5016, the SSF appropriation bill) for the 2019-21 biennium..
- There will also be a loss of funds due to the personal income tax cuts that are part of the bill. Those are estimated to total $423 million in 2019-21.
- That leaves $951.5 million for distribution to the following accounts:
- Early Learning Account: $190.3 million
- Statewide Education Initiative Account: $285.5 million
- Student Investment Account: $475.8 million
Assuming the entire $475.8 million from the Student Investment Account is made available to K-12 education in the 2020-21 school year, HSD could theoretically see up to $16,653,000 in additional funds. If we reversed the 2019-20 school year reductions of $9.6 million, that would leave approximately $7 million for us to reinvest in our system to lower class size, enhance curricular and mental health offerings to students, and increase learning time.
All funds received through the Student Investment Account would be governed by an inclusive public strategic planning process that would include:
- A complete needs assessment;
- Input from district stakeholders (e.g. school employees, students from underserved groups, parents of those students);
- The use of data to enable the district to make equity-based decisions; and
- Analysis of potential academic impact for students, especially in underserved groups.
These plans must be 4-year plans that are submitted to and approved every 2 years by the Oregon Department of Education.
The other direct source of funding to HSD from the Student Success Act would be through the Statewide Education Initiative Account, which should fully fund Measure 98 - the High School Graduation and College and Career Readiness Act of 2016. Measure 98 has been funded at just over half of its intended $800 per high school student since its implementation in the 2017-19 biennium.
In short, the passage of HB3427 is very positive for the Hillsboro School District; however, its benefits will not be seen in the 2019-20 school year. The coming year will be a difficult one for HSD, but we remain, as always, committed to providing students with the best learning experiences possible to prepare them for success throughout their K-12 journey and beyond.
2019-2020 Budget Message from Superintendent Mike Scott
Hillsboro School District 2019-20 Budget Information and Update on HB3427
May 2, 2019 - Superintendent Scott shares important budget information for the 2019-20 school year in this video and slide presentation. Please take a few minutes to review these materials and familiarize yourself with the implications of Legislative action on our budget for next year.
On May 1, 2019, the House passed HB3427, which would establish the Fund for Student Success. That fund is intended to raise approximately $2 billion per biennium in support of K-12 education ($1 billion), Statewide Education Initiatives (including full funding of M98), and Early Learning. They needed 36 votes for a supermajority and they got it.
The bill is now in the Senate and will have its first reading today. If the bill ends up passing the Senate with a supermajority and the Governor signs, it will become law 91 days after the Legislature adjourns. If only a simple majority is achieved, even if the Governor signs it would have to go to the voters because of the tax implications.
Proposed Budget Reductions
April 22, 2019 - At a special session on Tuesday, Apr. 16, the Board and Budget Committee discussed options for managing a projected shortfall of $9.6 million in the 2019-20 school year. The shortfall estimate is based on the Governor’s recommended statewide K-12 allocation of $8.972 billion for the 2019-21 biennium.
Although the Legislature is discussing mechanisms for increasing the K-12 allocation and creating a School Improvement Fund, districts need to solidify budget assumptions in the spring to determine staffing and meet state-required budget adoption deadlines.
With 82 percent of the District’s general fund budget comprised of staffing costs,* the majority of recommendations unfortunately come down to reducing staff positions. (*Staff breakdown by type: licensed - 47%, classified - 48.4%, school-based administrator - 2%, central office administrator - 1.3%, supervisory/technical - 1.3%.)
Following is a summary of the reduction package presented by District administration that was favored by a majority of Board and Budget Committee members:
Retain current staffing ratios at grades K-2 (K = 26:1; Gr. 1-2 = 28:1), increase staffing ratio at grades 3-12 from 29:1 to 31:1
Loss of 31.5 licensed full-time equivalent positions (FTE)
Other licensed positions
Loss of 6.5 licensed FTE
Restructure Care Coordinator service delivery model
Reduction/movement of licensed staff
Loss of 37.5 classified FTE
Adjust classified staff calendars for certain positions due to job description consolidation
Estimated net savings
Loss of 3 administrator FTE
Discretionary budgets at schools and departments
5% reduction in discretionary budgets
Reclassification of 3 Facilities positions to Construction Excise Tax (CET) funding
Transition of funding obligation from general fund to CET
Suspend current funding
Superintendent Scott acknowledged that due to budget cuts that have been necessary in eight out of the last ten years totaling $64 million there are very few good options for making additional significant reductions.
The District believes staff position reductions can be managed through normal attrition and retirements, and that layoffs will not be necessary.
If additional funding is made available to K-12 before the start of the school year, the District will prioritize providing relief to classrooms. A probable scenario is that a revenue package will be referred to the November ballot for a vote. If the package passes, increased funding will likely not be distributed until the 2020-21 school year.
Stay tuned to this page for updated information as it becomes available.
Co-Chairs Release 2019-21 Budget Proposal
March 18, 2019 - On Thursday, Mar. 7, the Co-Chairs of the Joint Ways and Means Committee released their 2019-21 budget proposal, based on the March State Revenue Forecast, which calls for an $8,871.5 billion allocation to K-12 education. This is $590.5 million short of the $9.462 billion state-level allocation HSD would need to maintain current services over the biennium. At this funding level, HSD would experience a shortfall of $20.86 million over the next two years.
The Co-Chairs’ proposal also calls for a continuation of the partial funding of Measure 98 - the career-technical education (CTE), graduation attainment, and dropout prevention measure passed by voters in 2016 - districts received this biennium ($170 million). Full funding of M98 would be $303 million.
The shortfall in HSD would come on the heels of $64 million in net reductions to our current service level budget over the past eleven years. During this time, the District has increased class size, reduced staff in other areas, cut school days, reduced discretionary spending, depleted special reserve funds, and lowered our ending fund balance to 4 percent.
Hillsboro School District continues to push for stable and adequate funding of K-12 education, which the Co-Chairs’ allocation does not provide. We need a significant investment at the state level to fund education equitably across Oregon. The 197 school districts in the state should not have to individually rely on their local communities’ ability and desire to tax themselves over and above the amount that is already collected in support of public education to fill the gaps that are left by the State School Fund.
Please review the documents on our Budget Matters webpage for more information: 2019-21 Legislative Priorities, Legislative Advocacy Presentation, Advocacy Leave-Behind Sheet, and Budget Reference Materials. Then, using either the Legislative Contact List or the interactive Find My Legislator tool to select the appropriate people, take a few moments to reach out to your elected officials and urge them to support reinvestment in K-12 education.
The 2019-21 budget will not be final until it is adopted by the Legislature later this spring. We will keep you updated throughout the process.
Hillsboro School Board Passes Funding Resolutions
February 4, 2019 - At their regular session meeting on Tuesday, Jan. 22, 2019, the Hillsboro School Board unanimously passed a pair of resolutions aimed at increasing funding for Oregon public schools.
The first urges lawmakers to support student success and increase public school funding. By their passage of the resolution, Board members pledge to support and encourage efforts to increase state revenue.
The second specifically calls upon elected officials to fund public schools at the level outlined by the Quality Education Model (QEM). Citing the work done and conclusions made by the Joint Committee on Student Success, the resolution, in part, states: “…school board members need to help shoulder the responsibility for making the case to Oregon’s voters that the Legislature needs to prioritize investing to the level of the QEM to assure educational opportunities for every student in every district in our state.”
A potentially promising piece of legislation, Senate Bill 552, was filed as a placeholder prior to the start of the 2019 Legislative Session. This bill would require the state to fund the QEM.
The QEM calls for a K-12 allocation of $10.73 billion in the 2019-21 biennium. Governor Brown’s proposal for 2019-21 K-12 funding is $8.972 billion. Governor Brown has also proposed a $2 billion education reinvestment plan, just under half of which would be dedicated to lowering class sizes in grades K-3 and increasing the school year for all students.
So far, funding mechanisms have not yet been identified for either the Governor’s reinvestment plan or the QEM. However, several education-related entities and coalitions are calling upon the Legislature to make tough decisions around revenue reform this session.
Legislative Session Begins Tuesday
Friday, January 18, 2019
Elected officials will convene their Legislative Session on Tuesday, Jan. 22.
One of the most important outcomes of the session will be the passing of the state’s budget for 2019-21, which will include the allocation for K-12 education. The Governor has proposed $8.972 billion for K-12, but also has proposed a School Improvement Fund (Senate Bill 217) to reduce class sizes in grades K-3 and lengthen the school year, among other investments. At the $8.972 billion funding level, HSD would be approximately $11 million short for the biennium, so we are advocating for a state-level allocation of at least $9.3 billion to maintain current service level.
Other important bills to watch are:
- House Bill 2526 and HB 2580, which would make class size a mandatory subject of collective bargaining.
- Senate Bill 552, which would require the state to fund the Quality Education Model for K-12 schools.
- SB 351, which would fully fund the High School Graduation and College and Career Readiness Fund, also known as Measure 98.
- SB 149, which would allow retired employees to be re-employed while contributing to the PERS system to help reduce PERS’ unfunded actuarial liability.
- HB 2192, which would require schools to conduct mental health wellness checks once a year.
- HB 2676, which would increase the threshold for districts to receive money for special education students (the cap is currently 11% of student population).
We will keep you updated as the session progresses, and please use the resources listed on this page to gain additional information.
Governor's Budget Released
Monday, December 3, 2018
On Wednesday, Nov. 28, Governor Brown released her proposed budget for the 2019-21 biennium. In it, she outlines a series of sweeping changes in the operation of the state, including the implementation of her vision for education.
Historically, the amount of funding allocated to K-12 education in the Governor’s budget has represented a “floor” upon which the legislature builds during the session. This year’s budget is a bit different in that it calls for the legislature to enact revenue reform that would raise an additional $2 billion for education as a whole (early childhood, K-12, and higher education).
The current recommended allocation to K-12 without the revenue reform is $8.972 billion, which, if passed, would leave the Hillsboro School District approximately $11 million short for the biennium. To maintain current service level (CSL), which would mean doing the same things over the next two years that we are doing today, we would need a state-level K-12 allocation of $9.3 billion.
If the revenue reforms do come to fruition exactly as envisioned by Brown, slightly less than half of the new funds ($866.6 million) would be targeted at K-12 education initiatives:
- $793 million to the School Improvement Fund to provide funding for
- a “full” school year (typically assumed to be 180 days) and the reduction of
- class sizes at grades K-3;
- $45.6 million for early intervention/early childhood special
- $16 million in scholarships for the Educator Pathway program;
- $6 million to implement the Safe and Effective Schools task force
- recommendations; and
- $6 million for a Black Student Success and Alaska/Native American
- student plan.
These funds would be extremely helpful and would represent approximately $28 million in additional money for the Hillsboro School District: $11 million of that would be needed to address the shortfall we would experience at the $8.972 funding level, leaving approximately $17 million for strategies to increase student success, such as adding school days (HSD currently offers 174 days/year for elementary students and 175 days/year for secondary students; adding 5 school days to each calendar would cost approximately $8.3 million) and lowering class sizes (it costs approximately $171,500 per grade level to lower class size by 1).
In every biennium since 1999, Oregon’s Quality Education Commission has developed a Quality Education Model (QEM) to estimate the level of funding that would be required to operate a system of highly-effective K-12 schools in the state. According to the Commission’s most recent report, K-12 education would need an allocation of $10.77 billion to meet QEM. If that were an unrestricted allocation to the State School Fund, HSD would receive approximately $49 million in funds to invest in lowering class sizes; increasing instructional time; expanding interventions for struggling learners; adding programming for Talented and Gifted students; and enhancing support of career related learning, activities, arts, athletics and more.
We will continue to advocate for stable and adequate funding for K-12 education throughout the 2019 Legislative session and will keep you informed as things develop along the way.
Economic Forecast and Budget Outlook
Monday, November 19, 2018
In light of the November 14 State Economic Forecast, recently released PERS Employer Rates, and growth trends in Hillsboro, there is a projected shortfall of $20.5 million in the 2019-21 biennium at the current service level (CSL). Assumptions include an $8.7 billion appropriation to K-12, Hillsboro's enrollment representing 3.5% of Oregon's students, PERS rates remaining collared, no additional unfunded mandates, and no changes to the state’s current revenue generation model.
The report released by the Office of Economic Analysis indicates current growth remaining strong with solid gains in the near-term, and slowing to a more sustainable rate in the outlying years. From the 2017 Close of Session “COS” Forecast, the state general fund's net available resources have increased by $1.177 billion to $21,233.6 billion, closing the 2017-19 state budget gap and returning an anticipated surplus to taxpayers in the form of the "kicker."
In the 2019-21 biennium, there is uncertainty regarding the impact of federal policy changes as policy on tax cuts and spending turn from economic drivers to drags in 2020. Capacity constraints, an aging workforce, monetary policy changes and fading fiscal stimulus will all act to put a lid on growth in the coming years. However, the exact timing and steepness of this deceleration is difficult to predict, leading to a wide range of possible revenue outcomes for the 2019-21 budget period.
Three key milestones to District budget development and revenue projections are the Governor’s Budget Release (early December), the March Economic Forecast (February), and the Co-Chairs' budget (legislative session). Please continue to watch for updates as these come to pass.
HSD Funding Situation Heading in 2019-21
Wednesday, October 3, 2018
The last ten years have brought significant volatility to the U.S. and local economy, state-level revenue, K-12 funding, and to HSD's budget. Below is a table representing the major impacts to our District over that time span.
(*M66 & 67)
+3 days* (Gain Share)
+1 day* (*Add’l. Gain Share)
Net reduction in roll-up costs of $63.93 million - $13.72 million in the last three years alone. Net reduction of 18 days.
There is some indication that K-12 may receive $8.7 billion in the 2019-21 biennium, which represents a $500 million or 6% increase over the 2017-19 funding level. To meet roll-up costs, however, we would need an allocation of approximately $9.4 billion, which would represent a $1.2 billion or 14.6% increase.
HSD receives approximately 3.5% of all State School Fund dollars, so a $700 million shortfall over the biennium would equate to approximately $24.5 million, which would mean just over $12 million per year in necessary reductions.
Over the past year and a half, we have been involved in the Smarter School Spending process, which involves taking a critical look at all areas of our operation to find additional efficiencies, as well as making strategic investments in staffing and programs that we feel will have a measurable positive impact on student achievement.
We have exhausted our PERS Reserve Fund, have lowered our ending fund balance, and have taken a number of other steps to streamline our staffing and spending.
Stay tuned to this webpage for updates on our Legislative Priorities and on the 2019 Legislative Session as it gets under way in February 2019.
2018-19 Budget Proposal
Thursday, April 19, 2018
Relatively flat state revenue projections and this being the second year of the biennium meant there were no changes to the 2017-19 K-12 budget during the 2018 short session.
That, coupled with the fact that our student enrollment has fallen short of projections for the last two years and that student enrollment across the state has increased, thereby reducing the amount provided per-student, means that we will be in a reduction mode again for 2018-19.
We are estimating our shortfall to be $3,679,289, which already accounts for the utilization of the last $1 million in our PERS Reserve Fund and the further reduction of our Ending Fund Balance to 4% after the 2017-18 school year.
We propose managing the shortfall in two primary ways:
Leveraging other funds:
- Use Construction Excise Tax funds to pay principal and interest on our administration center - $530,000
- Pay for certain technology and equipment expenses out of bond funds - $700,000
Reduce roll-up cost estimates:
- Staffing, salaries, and benefits reductions - $2,449,289
The proposed budget will be presented to the Board and Budget Committee for their consideration on Tuesday, April 24, 2018.
Tuesday, July 11, 2017
Cost containment and revenue generation attempts ultimately failed in the 2017 legislative session, leaving the statewide 2017-19 K-12 budget at $8.2 billion.
The allocation is $50 million more than what HSD's budget was built upon; however, due to the 50/50 split of funds over the biennium (as opposed to the typical 49/51 split), the District will need the additional funds to help cover the shortfall in the 2018-19 school year.
Friday, June 09, 2017Author: Morgan Allen, Deputy Executive Director of Policy and Advocacy, Confederation of Oregon School Administrators (COSA)
With just over a month to go until the July 10 adjournment deadline, legislative discussions about revenue and cost-containment options to close a $1.4 billion budget hole are heating up. Here are some of the major pieces in play at the Capitol over the next few weeks.
State School Fund
On Thursday, June 8, the Oregon Senate approved a State School Fund Appropriation of $8.2 billion 25-5 after less than 15 minutes of debate and discussion. Senators who spoke in favor of the bill described the funding level as a “floor” and committed to finding more funding for K-12 if revenue and cost containment measures are approved. Those who spoke against reiterated their commitment to their local school districts that anything less than $8.4 billion was not acceptable. The bill, SB 5517, now heads to the House for a vote early next week.
Democratic leaders in the House and Senate appear to have reached agreement on a compromise corporate tax plan. The proposal includes a phased in corporate activity tax (CAT) and temporary corporate income tax increases. The plan would raise about $900 million during the 17-19 biennium, with most of the money dedicated to education. Under the proposal the State School Fund would be increased to $8.5 billion and Measures 98 and 99 would be fully funded. The plan is expected to get a public airing early next week. More information can be found in this Oregonian article: New Tax Plan.
Cost Containment and PERS
Major legislation has been introduced to control state costs (SB 1067) and make changes to PERS (SB 1068).
SB 1067 includes provisions to stop including automatic inflation increases in state budgets for services and supplies, a hiring freeze and slow-down on filling vacant state jobs, and eliminating state jobs that are vacant for more than six months. For K-12, the relevant proposal in the bill is to combine the boards/operations of Oregon Educators Benefits Board (OEBB) and Public Employees Benefits Board (PEBB) in an attempt to limit health insurance premium increases to 3.4 percent annually. Although some legislators have discussed requiring all school districts to join OEBB, that provision is currently not included in the bill. The bill is sponsored by House Speaker Tina Kotek and Senate President Peter Courtney.
SB 1068 would require all PERS members to contribute/redirect a portion of their IAP contribution to new “risk sharing accounts.” As drafted, beginning in 2018, 1% of the 6% would be directed to this new account, increasing to 2% in 2019. Depending on pension costs and returns, up to 4% of the 6% could be redirected to these accounts to help pay for the defined benefit portion of PERS pensions. Contributions can also be reduced as system liabilities decrease. The proposal does not include items previously discussed such as a $100,000 cap on final average salary or changing to a 5 year period to determine final average salary. As with earlier proposals, these changes would all be prospective and have no impact on benefits earned already. The bill is sponsored by Senate President Peter Courtney and Senator Mark Hass.
Combined, the two bills could save as much as $600 million per year when fully phased in.
The revenue and cost-containment proposals will likely be linked together if there is to be bipartisan agreement before July 10.
Continued conversations with our elected officials is critical. Please take a moment to reach out to them and express your views on revenue and cost-containment initiatives today.
Budget NewsMonday, May 8, 2017On Thursday, May 4, the Budget Committee unanimously approved the Proposed 2017-18 Budget, which assumed a statewide K-12 allocation of $8.15 billion, providing Hillsboro School District with a General Fund budget of $218 million – an amount that is approximately $7.5 million short of what we would need to maintain current service level.While the Budget Committee members were also unanimous in their agreement that reducing $7.5 million is unacceptable, especially given the fact that more than $60 million has been reduced from the District’s current service level budget since 2009, the $8.15 billion allocation level currently represents a best-case scenario. The allocation could be as low as $7.8 billion, which would mean cuts of approximately $12.3 million for HSD.Budget reductions are as follows:Use of Reserves and Adjustments
- State School Fund adjustments for 2015-16 and 2016-17 - $1,000,000
- PERS Reserve Fund - $1,000,000
- Construction Excise Tax to offset Facilities budget - $1,000,000
- Reduce Ending Fund Balance to 4.5% - $1,000,000
- Total use of reserves and adjustments: $4,000,000
Remaining Reductions/Efficiencies to Reach Target
- Central Office reductions and efficiencies - $2,258,000
- Student Services reductions - $455,000
- Better align staffing to enrollment - $1,000,000
- Total reductions: $7,713,000
Total Use of Reserves, Adjustments, and Reductions: $7,713,000
2017-19 BUDGET SCENARIOS AND ADVOCACY
April 17, 2017 - As the Oregon Legislature continues to wrestle with the state’s 2017-19 budget allocations, districts are fast approaching the time when they need to present and approve their local budgets for the upcoming school year. Most indications are that the K-12 budget will result in significant cuts for schools, which means that the time is now to reach out to your elected officials and advocate for increased funding.
Hillsboro School District has chosen to prepare a budget assuming a statewide allocation of $8.15 billion to K-12, which is in line with decisions other large districts like Portland, Beaverton and Salem-Keizer are making. An allocation at this level would result in cuts of approximately $7.5 million in the 2017-18 school year. Those reductions would be managed by utilizing both reserves and one-time sources of funds, better aligning our staffing ratio with actual enrollment, reducing staffing and programming at the district office level, and implementing efficiencies identified through our Smarter School Spending process.
Now, however, we are hearing that the $8.15 billion level may prove to be overly optimistic. There is still talk at the legislative level that the allocation may come in at $8 billion or lower. If that is the case, reductions in Hillsboro will be deeper and will almost certainly result in an increase to the staffing ratio (class size).
The graphic below shows the anticipated impacts at various funding levels:
Reducing class size is a priority for us, our School Board, staff, parents, students, and community members alike; however, we may simply have no other option but to increase it if the K-12 budget is below $8.15 billion.
Your voice in the matter is very important! Elected officials want to hear from their constituents about the things they care about, like education. They want to know that they have your support if they vote to increase the K-12 budget, propose revenue reform, and so on. An updated 2017 Legislative Contact List has been posted to the Budget Matters page of the website for your reference.
Staff will present their budget proposal to the Board and Budget Committee during the Board’s work session on Tuesday, Apr. 25, at 6:20 p.m. in Room 218C of the Administration Center, 3083 NE 49th Place. The following week, on Thursday, May 4, at 7:00 p.m. in the Administration Center Board Room, the Board and Budget Committee will convene for the annual Budget Hearing where they will take action to impose and levy the permanent education tax rate as outlined in state law. Both meetings are open to the public, and public testimony is allowed at the Budget Hearing.
Bills and Hearings
Legislative Session Bill Tracker
Below are some resources for staying current on what's happening in the current legislative session: