Funding Oregon’s Future Michael Elliott State School Fund Coordinator Oregon Department of Education The first question I have for you is what do want to know about school funding?

Introduction History Philosophy Revenue Disbursements Formula Supplemental Revenue

History K-12 Funding 1990-2017* *2015-2017 Estimated Question: So we can see what happened in the 1990s. Do you know why the sudden shift in funding between state and local revenue? Pre measure 5 Local revenue primary funding source This resulted in inequity across the state as those districts with more revenue possibilities generally had more revenue Property taxes are more stable and thus stability in the system was higher. Answer: Measure 5, Measure 47 and Measure 50. Measure 5 put a total cap on K-12 funding for property taxes. This did several things: It capped total property taxes to $5 per $1,000 of market value It forced the state to make up the funding to any district that lost funding because of the cap. It made the state the primary source of education funding which led to the current funding formula Measures 47 and 50 reinforced Measure 5 Capped assessed values to their 1995 level minus 10% Capped assessed value growth to 3% a year. The results of this: Local revenue percentage of total funding dropped from 65% from 35% State revenue percentage of total funding increased from 35% to 65% State became primary funding of education and created the current funding formula to create equity Make sure to further talk about how the graph shows this switch and how state revenue has controlled total revenue for awhile. Bonus question: the difference between the real market value and assessed value creates an opportunity to pass what kind of tax? *2015-2017 Estimated

History Define ADMw Define that this is total formula dollars which includes all distributions that occur before money is sent to the district.

History

Philosophy Discussion: Is the formula a distribution formula or a spending formula and what is the difference? Is the formula based on equity or equality and what is the difference? There are three types of possible equity for school funding: Equity of inputs: This type of equity ensures that everyone pays their fair share. Answer if they say this: Measure 5 has imposed some level of equity among the inputs from the taxing districts, but this is not in the formula proper Equity of Outcomes: This means that every student is given the resources needed to achieve the same level of outcomes Equity of Opportunity: This is means that students that need different resources to have the same opportunity to get an education are given different level of resources to obtain the opportunity. The end result of this is that unequal groups of students are treated unequally. What are some examples of unequal groups of students? Which of these groups do you think receive unequal funding?

Philosophy The State School Fund is a distribution formula. That means that the formula takes the available revenue and distributes it equitably among all the districts. Thus, if you think about it the formula and the revenue in the formula is a tide. As the revenue in the formula increases, then all boats, districts, rise together. As the revenue in the formula drops, then all districts drop equally. The size of the district is the only thing that changes. This also has other implications. The largest implication is that because the formula is a distribution formula, it is a zero sum game. The amount of revenue is static. There is only state and local revenue in the formula. Thus, if your district is increasing in size them that means that either another district is decreasing in size, and thus receiving less funding, or it means that in general there will be less funding for all districts. The more water it takes to float your district, the less water available for the other districts. The next implication is that because this is a distribution formula, there are very little strings attached to the formula. Districts have a lot of requirements in rule and statute that they have to meet. However very few of those requirements are tied to funding such that if you do not meet the requirements, you lose funding.

Philosophy Other Equities in Formula: District Equity District & ESD Equity While each student has the equity of opportunity, there are other equities embodied in the formula The first is equity between the districts. Each district is to get the same amount of funding per weight. Districts with more weights get more funding and districts with smaller amount of weights get less funding. However, the funding per weight is equal across the state. The second equity is equity between ESDs and districts. This equity is set by statute with districts receiving 95.5% percent of the formula dollars and ESDs receiving 4.5% of the formula dollars.

Philosophy Formula is NOT: Cost reimbursement Entitlement Guaranteed Accountability System

Philosophy Questions?

Revenue

Current State and Local Revenue 3/14/06 Current State and Local Revenue Total Formula Revenue for the 2015-17 biennium is estimated at $10.9 billion. This is a $1.0 billion increase over the 2013-15 biennium. For 2015-16 the total estimated revenue in the formula is $5.4 billion 2015-17 Biennium LRO

State School Support 2015-17 Funding Level (estimated millions) 3/14/06 State School Support 2015-17 Funding Level (estimated millions) 2015-16 Estimated 2016-17 State Revenue $3,617 $3,747 Local Revenue $1,728 $1,860 Total SSF $5,345 $5,607 LRO

State Revenue ($7.37 B) 3/14/06 Total State Revenue is $7.37 billion. Lottery funds account for $342 million. LRO

Local Revenue * Means that Common School Funding was increased for this biennium.

Local Revenue Stays with the district where collected

Local Revenue Local revenue remains with the district. However, this is a distribution formula that ensures that each weight equals each other weight across the state. In order to do that, local revenue dollars must be counted in the formula. The result is those districts with high local revenues get less state revenue. Those districts will little local revenue get more state revenue. However, the revenue per weight for each district is equivalent.

Formula 𝑆𝑡𝑎𝑡𝑒 𝑅𝑒𝑣𝑒𝑛𝑢𝑒+𝐿𝑜𝑐𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 − 𝐷𝑖𝑠𝑏𝑢𝑟𝑠𝑒𝑚𝑒𝑛𝑡𝑠 𝑇𝑜𝑡𝑎𝑙 𝑊𝑒𝑖𝑔ℎ𝑡𝑠 =𝐸𝑞𝑢𝑖𝑡𝑦

Disbursements Programs Sub-Grants Programs are disbursements that are for specific purposes. Sub-grants are funds that go to districts, but districts have to meet specific qualifications to obtain these grants.

Programs Tag support at ODE - $175,000 Speech Pathology Program - $75,000 Network of Quality Teaching and Learning - $22,500,000 Local Option Equalization Grant - $1,767,791 Skill Nursing Facility ~ $2,600,000 Long Term Care and Treatment ~ $11,500,000 Oregon School for the Deaf ~ $1,500,000 Oregon Virtual School District - $800,000 What is one of the consequences of having programs that are funded through the state school fund? They lower the amount of funding available for districts as part of the general purpose grant They require the districts that receive funding to take on additional responsibility They help provide resources to specific populations that need resources above and beyond the general funds They provide indirect support to districts to further the mission of education Oregon’s students Total funds per biennium going to program is about $78.8 million.

Sub-Grants Transportation Grant High Cost Disability Grant Facility Grant Small High School Grant Address each of these in this slide. We will show the transportation grant graph The High Cost Disability grant is to help districts offset the costs of special education services for high needs students. In order to qualify a district must spend more than $30,000 on an individual student in a given year. That $30,000 threshold can include prorated salaries of staff that work with the student, transportation and other special education services provided to the student. The total available funds for this grant are $35 million. These funds are prorated if the eligible expenses exceed the amount of funds. Currently, the grant is paying about 75% of eligible costs. The facility grant is $20 million a biennium. It is used to help districts offset the costs to furnish new classroom construction. The grant reimburses up to 8% of total eligible construction costs. Question: what is included in new classroom construction? A: 1. New building; 2. New campus; 3. Portables; 4. Remodel of space not used as classroom in 5 years; 5. New addition Small High School Grant. This grant is given to districts with a high school in the district that has less than 350 ADMr for 4 grades and 267 ADMr for 3 grades. The district cannot have more than 8,500 ADMw. The total grant is $2.5 million. Scheduled to end June 30, 2015 Transportation Grant is there to offset transportation costs. Districts receive up to 90% of eligible transportation expenditures reimbursed from the state. The reimbursement rates are 70%, 80%, 90%. The rates are determined by the districts transportation costs per ADMr with the top 10% of districts receiving 90%, the next 10% receiving 80% and the rest receiving 70%. There is no cap nor proration to this subgrant. Also included in the eligible costs are depreciation for buses over ten years for the bus.

Transportation Grant Transportation Grant from 2005-06 to 2015-16* 3/14/06 Transportation Grant Transportation Grant from 2005-06 to 2015-16* Transportation Grant has had slight increase over the years For 2014-15 transportation grant estimated at $194,977,971 million The growth has been there, but has been slow and steady *2014-15 and 2015-16 Estimated LRO

Disbursements There are several things to remember about disbursements: They reduce the amount of funding available to the general purpose grant. Thus reducing the amount per weight that districts can receive They target funds to secondary support of districts or to assist districts with specific programs and grants that will better serve the students of Oregon as a whole. They help with equity because it means all districts in the state are sharing in the burden rather than a few, for the sub-grants at least This last point is very important. For some of the student needs like high cost disability, School For the Deaf, and Long Term Care and Treatment, it is important that all districts share the cost of ensuring these students receive equity of opportunity. It would not be equity between the districts to require that a few districts shoulder the cost for all districts.

Weights Average Daily Membership (ADMr) 1.0 Special Education Category Weight Amount Average Daily Membership (ADMr) 1.0 Special Education Special Education above 11% Cap Variable ESL 0.5 Poverty 0.25 Neglected/Delinquent/Foster Pregnant and Parenting Small High School Correction Remote Small Elementary School Correction Make sure to explain each weight. All weights are cumulative except P&P. If the student is IEP eligible then they cannot also be SpEd eligible. SpEd and ESL are capped at 2.0 Cap Waiver, and the small school corrections are formulas.

Weights School district has the following students: 1,000 ADMr 100 eligible for Special Education 200 ESL 100 Poverty What is the total weight? Assume no small school corrections or cap waiver weights. Answer: ADMr = 1,000 IEP = 100 ESL = 100 Poverty = 25 = 1,225

Weights District has following students: 1,000 ADMr 200 IEP 50 ESL 250 Poverty 50 Neglected/Delinquent Total Weights? Assume no cap waiver weights or small school corrections Answer: ADMr = 1,000 IEP = 110 ESL = 25 Poverty = 62.5 Neglected/Delinquent = 12.5 Total = 1,210

Weights Assume a per student funding of $7,000 How much does District #1 get? How much does District #2 get? District #1 = $8,330,000 District #2 = $8,228,000

YEAR vs YEAR Extended ADMw Compare the current and preceding year’s ADMw. Whichever is bigger is the funding level.

Extended ADMw The first year’s ADMw is 1,225 and the second year’s ADMw is 1,210, and the per student funding is $7,000. How much will the district receive? $8,330,000

Teacher Experience District Average – State Average Positive or Negative

Actual Formula 𝐸𝑥𝑡𝑒𝑛𝑑𝑒𝑑 𝐴𝐷𝑀𝑤 ∗ $4,500+ $25∗𝑇𝑒𝑎𝑐ℎ𝑒𝑟 𝐸𝑥𝑝𝑒𝑟𝑖𝑒𝑛𝑐𝑒 𝐷𝑖𝑓𝑓𝑒𝑟𝑒𝑛𝑐𝑒 $4,500+ $25∗𝑇𝑒𝑎𝑐ℎ𝑒𝑟 𝐸𝑥𝑝𝑒𝑟𝑖𝑒𝑛𝑐𝑒 𝐷𝑖𝑓𝑓𝑒𝑟𝑒𝑛𝑐𝑒 ∗𝑅𝑎𝑡𝑖𝑜 We know each of these variables but the ratio. The ratio simply ensures that all of the funding is distributed and not just the $4,500 per student amount of funding.

Timeline Month Action December of prior year School District Business Managers submit estimates of the year’s attendance and local revenue First Monday in March Official Estimate for upcoming year published March through July Estimates are updated July 15th First State School Fund payment made July through January Monthly payments made with update possible January/February/March/April Update ADM and Local Revenue data May Last payment made May of following year Reconciliation

Revenue Outside the Lines Local Option Tax Measure 5 Limit Local Option Tax Describe local option tax: This is a tax that allows a local community to agree to tax the difference between the real market value cap imposed by Measure 5 and the assessed value cap imposed by measures 47 and 50. This tax has to be passed by the voters. This tax is outside of the formula and not considered local revenue. That means that all revenue collected by local option taxes not only stays with the district but does not reduce any state funding for the district. Taxes can be for capital improvement of operating costs. So what happens when real market value drops closer and closer to assessed value? This is called compression and local option taxes are the first to suffer. Measures 47 & 50 Limit

Revenue Outside the Lines Construction Excise Tax New construction only Funds for capital improvements $1 for residential $0.50 for non-residential $25,000 cap

Reporting Annual independent audit File budget and audit with ODE Other required collections

Questions?

Michael Elliott Oregon Department of Education 503-947-5627 Michael. s Michael Elliott Oregon Department of Education 503-947-5627 Michael.s.elliott@state.or.us