Oregon Budget Proposal Focuses On Schools, Health Care And Plenty Of Cuts

By Dirk VanderHart (OPB)
March 7, 2019 10:52 p.m.

With an eye toward schools, health care and saving for a rainy day, top lawmakers unveiled their first crack at a spending plan for the next two years on Thursday — and it didn’t take long for aggrieved factions to begin taking shots.

The $23.7 billion proposal is a framework for how the chairs of the Legislature’s budget-writing committee believe Oregon should use money in the state’s general and lottery funds in the 2019-21 fiscal years.


It includes more than $2.1 billion in spending above the current budget — a nod to Oregon’s fast-growing economy. Even so, lawmakers are mulling more than $360 million in cuts to state services because of rising costs and a focus on savings.

Public safety, judicial services, human services and many elements of the education system would all see less funding. Administrative and legislative departments — think the Oregon Liquor Control Commission, Public Employees Retirement System and the Governor’s Office — would share in that pain to varying degrees. The high-level proposal contains few specifics on cuts to services.

“It means a lot of difficult decisions, it means looking at a lot of areas for reductions,” said state Rep. Dan Rayfield, D-Corvallis, a co-chair of the Joint Committee on Ways and Means and one of the proposal’s authors. “It means challenging members of the Legislature to focus on the core services we support.”

Oregon Rep. Dan Rayfield, D-Corvallis, sits in the House chamber.

Oregon Rep. Dan Rayfield, D-Corvallis, sits in the House chamber.

Casey Minter / OPB

Two areas held at a mostly steady funding rate under the proposal: K-12 schools and the Oregon Health Plan, the state’s system for insuring low-income people.

The State School Fund used to pay for K-12 education would see a $100 million increase above current service levels under the plan, the only part of the budget identified for an increase. School districts and advocates said that is not enough to make up for rising benefit costs. Other areas of the education budget would see a $141 million decrease compared to current services.

The Oregon Health Plan would see no cuts to the benefits it offers, and no change to eligibility requirements for participants — partly because of a $379 million funding package lawmakers passed last week. But that package didn't account for the entirety of the funding shortfall faced by the health plan, a hole currently being filled with general fund money that could be spent elsewhere.

The budget also retains more than $459 million for the state’s rainy day fund, twice the amount lawmakers are statutorily required to deposit. That’s a safeguard to protect against an economic downturn state economists believe could be on the horizon, but also a way to constrain spending.

Related: Oregon Legislature To Pay $1.1 Million In Damages To Victims Of Harassment

In a briefing with reporters, Rayfield and his Ways and Means co-chairs Sens. Betsy Johnson, D-Scappoose, and Elizabeth Steiner Hayward, D-Beaverton, said they targeted cuts in a way that would allow the state to spend sustainably. But they reiterated a critique made frequently these days: that property tax changes approved by voters in 1990 had blown structural holes in the way Oregon funds education.

“We are saying this is a step toward sustainability,” Johnson said. “There are still lots of areas of concern across our budget. This is not an end-all, be-all document.”

That sentiment didn’t stop education advocates from railing against the budget proposal Thursday.


“This budget fails students and is impossibly out of touch” Oregon Education Association John Larson said at a press conference. “Now is the time to invest in our schools, not make cuts. Now is the time to fix this crisis and turn around 30 years of disinvestment.”

Joe Larson pushes back against a proposed budget during a press conference with the Oregon Education Association.

Joe Larson pushes back against a proposed budget during a press conference with the Oregon Education Association.

Elizabeth Miller / OPB

"This number represents a significant step backwards," Jim Green, executive director of the Oregon School Boards Association, said in a statement. He noted that a budget proposal Gov. Kate Brown released in November included roughly $100 million more for K-12 schools.

“We recognize that this budget will still end up with deficits for many of our school districts,” Steiner Hayward said. “We don’t like it and yet we’re constrained to the resources we have available.”

The co-chairs’ budget proposal is a first draft, subject to change prior to final passage in June.

A special committee of lawmakers traveled the state over the course of 2018, visiting school districts and developing a laundry list of needs Oregon’s beleaguered educational system needs. The committee is in the process of formulating ideas for finding new revenue to pay for those needs — potentially up to $2 billion worth.

That plan, if it passed, would completely reframe the budget ideas unveiled Thursday, freeing up general fund money currently dedicated to schools for other purposes.

The Ways and Means co-chairs on Thursday also emphasized the importance of finding savings in the ballooning cost of the state’s Public Employees Retirement System, a growing problem that is a frequent flashpoint in Salem.

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Johnson called on teachers “to be full partners” in solving the PERS puzzle, a suggestion that employee concessions could be necessary.

Meanwhile, one business group focused on slashing PERS costs called for more attention on the issue.

“While the focus in Salem thus far has been on tax increases, efforts to reduce the cost of operating our state government have received little attention,” Preston Mann, of the group Oregon Manufacturers and Commerce, said in a statement. "More money alone will not lead to better outcomes for Oregonians, particularly when unfunded PERS obligations are increasingly impacting budgets in every community.”

House Minority Leader Carl Wilson, R-Grants Pass, made a similar call.

“This budget proposal makes clear the futility of attempting to fund our education system without addressing the PERS crisis,” he said.

Wilson’s Senate counterpart, Sen. Herman Baertschiger Jr., R-Grants Pass, had a sunnier take.

“For the first time in my career in the Senate, it is refreshing to get a glimpse at a budget framework that is fiscally responsible and will leave a healthy ending balance,” he wrote. “I hope the co-chairs stay true to their plan.”

Elizabeth Miller contributed to this report.