Legislative Update OSBA/COSA Thursday, November 12, 2009 OASBO Fall Conference

Welcome & Introductions Tricia Yates, OSBA Associate Executive Director David Williams, OSBA Legislative & Public Affairs Specialist Chuck Bennett, COSA Legislative Director

Agenda 2009 Legislative Session Review Education Funding Revenue Package Capital Construction Package Looking Ahead Questions, Answers & Discussion

Political Context November 2008 General Election Outcome (Candidates & Measures) 2009 General Legislative Assembly Senate: 18 Democrats, 12 Republicans House: 36 Democrats, 24 Republicans Governor: Democrat National Fiscal Crisis

Education Funding biennial budget Fiscal crisis forced budget rebalance K-12 reduction limited to $121 million ($67 M in December, $54 M in March) biennial budget Overall general fund shortfall of $4.4 billion from Essential Budget Level $6.0 billion ($5.8 B in SSF + $200 million in automatic triggered reserves) Override of Governor’s Veto of K-12 Budget

Education Funding: In Perspective SSF Appropriation: $5.753 (w/o ARRA) 7.9% decrease from (-3.9% w/ARRA) Public Safety: +1.2%; Natural Resources: -15.9%; Human Services: +10.4% QEM Level (09-11): $8.348 Billion ($2.6 B gap) Share of General Fund & Lottery : 44.7%; : 41.3%; : 38.95% If share:$6.460 B or $700 M more American Recovery & Reinvestment Act (ARRA) Federal stimulus package approved in February Adds $226.1 M to SSF numbers (for a $6.0 B total SSF) Adds $541.9 M to Human Services, $103.8 M to Corrections

Education Funding: Revenue Package Potential Impact of Revenue Package Total revenue raised: $733 million K-12 proportionate share: $285.5 million HB 2649: Increases Personal Income Tax For tax years 2009, 2010 & 2011: 10.8% for households between $250,000 & $500,000; 11% above $500,000. For tax years 2012 and beyond: 9.9% for all households above $250,000. Applies to approximately 28,000 income tax filers (LRO) New rates are marginal tax rates Total revenue raised by HB 2649: $472 million

Education Funding: Revenue Package HB 3405: Increases Corporate Taxation S-Corps & LLCs: filing tax increases from $10 to $150. C-Corporations reporting no Oregon profits: Less than $500,000 in Oregon sales: minimum tax is increased from $10 to $150 $500,000 or more in Oregon sales: minimum tax is increased from $10 to approx. 1/10 of 1% of OR sales (a corporation with $1 mil in OR sales will pay $1,000) C-Corporations reporting Oregon profits: For tax years 2009 & 2010, new tax rate of 7.9% for all corp. income above $250,000 For tax years 2011 & 2012 rate decreases to 7.6% For tax years 2013 and beyond income threshold increases from $250,000 to $10 million Total revenue raised by HB 3405: $261 million

Capital Improvement HJR 13: Constitutional Revision Expands constitutional definition of capital expenditures for local bonds Allows state to issue general obligation bonds for K-12 capital construction HB 2013: School Facilities Task Force HB 2014: Construction Excise Tax Fix

2009 OSBA/COSA Legislative Report Full analysis of all new laws affecting K-14 public education No print version for 2009, report is only available online Access the report at: or

Legislative Challenges (Bills did NOT pass) SB 574: ESD Mergers/Governance Would have merged 20 ESDs down to 13 Would have eliminated all elected ESD boards SB 555: Transportation Grant $ Cut Would have cut transportation reimbursement from 70/80/90% down to flat 63% HB 2831: PECBA Reform/Repeal of Expedited Bargaining Other Unfunded Mandates (Year-Round school, mandated full day K, foreign language instruction, other curricular mandates)

Looking Ahead 2010 Supplemental Legislative Session Other Ongoing Challenges Online Charter Schools Uniform Chart of Accounts Public Contracting Legislation

For more information consult the OSBA/COSA 2009 Legislative Report contact OSBA at contact COSA at Follow us on Questions & Answers