1. Regional Solutions September 4, 2015 Brian DeForest Department of Administrative Services Chief Financial Office (503) 378-5442

2. Oregon’s Demographic Trends

3. A century of growth … and beyond (in millions) Sources: U.S. Census Bureau, and OEAOffice of Economic Analysis

4. Population Change in Percent, 2000-2030 CLATSOP WASHINGTON MULTNOMAH COLUMBIA DOUGLAS LANE LINCOLN POLK YAMHILL TILLAMOOK MARION COOS DESCHUTES MALHEURHARNEYLAKEKLAMATHJACKSON JOSEPHINE CURRY HOOD RIVER BENTON LINN JEFFERSON CROOK WALLOWA UMATILLA MORROW GILLIAM WASCO SHERMAN WHEELER GRANT BAKER UNION Less than 21 % 21 to 42 % Source: U.S. Census Bureau CLACKAMAS Over 42% Office of Economic Analysis Oregon: 42.3%

5. Office of Economic Analysis Source: U.S. Census Bureau, Census 2000 & 2010 Population change in the U.S. and the Western states, 2000-2010

6. Components of population change during economic boom and recovery periods Source: Census Bureau, and OEA Office of Economic Analysis 1990-20002008-2014

7. Components of population change: 2010-14 and 2015-30 Source: Census Bureau Office of Economic Analysis 2010-20142015-2030

8. Population Change in Percent, 2000-2030 CLATSOP WASHINGTON MULTNOMAH COLUMBIA DOUGLAS LANE LINCOLN POLK YAMHILL TILLAMOOK MARION COOS DESCHUTES MALHEURHARNEYLAKEKLAMATHJACKSON JOSEPHINE CURRY HOOD RIVER BENTON LINN JEFFERSON CROOK WALLOWA UMATILLA MORROW GILLIAM WASCO SHERMAN WHEELER GRANT BAKER UNION Less than 21 % 21 to 42 % Source: U.S. Census Bureau CLACKAMAS Over 42% Office of Economic Analysis Oregon: 42.3%

9. Office of Economic Analysis Sources: U.S. Census Bureau; CPRC/PSU; OEA Young-age Population: 1980-2030

10. Office of Economic Analysis Sources: U.S. Census Bureau; OEA Working-age Population: 1980-2030

11. Office of Economic Analysis Sources: U.S. Census Bureau; Office of Economic Analysis Elderly Population: 1980-2030

12. Budget Driver Populations: Past and Future Decades 2000-15 and 2015-30 Office of Economic Analysis Sources: Census Bureau; OR Office of Economic Analysis

13. Average number of working-age adults per elderly Office of Economic Analysis Sources: U.S. Census Bureau; Office of Economic Analysis

14. Household Income, 2013 Source: U.S. Census Bureau, Small Area Income and Poverty Estimate Office of Economic Analysis

15. Oregon’s Economic Trends

16. Oregon Economic Update Statewide job growth continues with employment levels now surpassing pre- recession levels –Job growth of 3% significantly outpaces the typical state –In past 18 months, rapid wage gains as well Oregon’s recovery is now more broad-based across regions and industries –Nearly 9 out of 10 Oregon counties are adding jobs, matching what was seen during past economic expansions –All of Oregon’s major industries have added jobs since the depths of the Great Recession Notably, even durable goods manufacturers have seen employment rise by more than 13% Professional and business services, health services, and leisure and hospitality industries are leading employment growth, accounting for 48% of all jobs added over the past year Real estate agents, publishers and local governments are among the weaker industries The outlook calls for Oregon to continue to outperform the typical state should the nationwide economic expansion continue –Oregon’s population growth advantage has returned –Oregon’s major manufacturers remain on stable footing but are at risk from weakness among major trading partners 3

17. Great Recession Worst recession since the Great Depression May 2015 employment 3.3 million above pre-recession levels

18. Oregon Historical Comparison Unfortunately Oregon has been here before May 2015 employment 1.5% above pre-recession peak

19. Recovery Now More Broad-Based Second tier metros surging, rural Oregon growing The Portland metropolitan area, the primary economic engine in the Oregon economy, is leading the State’s strong recovery

20. Oregon’s Lost Decade Over? It has been a rough 15 years but we’re through, at least for now

21. Unemployment Rate by Region, May 2015 (Not seasonally adjusted for counties) Oregon: 5.3% (seasonally adjusted: 5.3%) U. S.: 5.3% (seasonally adjusted: 5.5%) Columbia Gorge 5.2% Central Oregon 5.7% South Central/Southeast Oregon 6.6% Northeast Oregon 5.9 % Portland MSA 4.7% Southern Oregon 6.9% Willamette Valley 5.5% Northern Coast 5.7% Southern Coast 7.1%

22. Oregon Exports Strong Trading Ties with Pacific Rim Countries

23. Oregon Housing Permits Actually underbuilding in some locations relative to population growth, data through May 2015

24. State Revenue Trends

25. General Fund Forecast Comparison Fiscal Years, in Millions

26. Lottery Resources Better economy and new video lottery terminals result in strong sales growth today

27. State Expenditure Trends and Budget Drivers

28. Legislatively Adopted Budget 2015-17 Total Funds

29. * Includes beginning balance & carry forward Legislatively Approved Budget 2015-17 General Fund and Lottery Funds Combined

30. General Fund and Lottery Funds Budget Trends Overall Expenditure General Fund and Lottery Trends General Fund & Lottery Funds Budgets Over Past Four Biennia $18,899 million $13,601 million $14,659 million $16,728 million

31. General Fund and Lottery Funds by Program Area State School Fund Level

32. Expenditures by Category General Fund and Lottery Funds 2013-15 Governor’s Recommended Budget Total: $16,244 million Updated 11/29/12

33. 2015-17 Full-Time Equivalent Positions Total: 38,616* * Does not include Universities; does not foot because of rounding

34. What has caused the General Fund expenditure growth since 1989? Primary –Population –Initiatives –Policy decisions Secondary –Inflation –Lawsuits

35. State and Local Resources for K-12 School Funding

36. Oregon Educational Goals 40-40-20 Target

37. Oregon University System Revenue Per Student FTE

38. Violent Crime Rates

39. Powder River CF 1989 – (316) Eastern Oregon CI 1985 – (1,767) Oregon State CI 1955 – (894) Oregon State Penitentiary 1866 – (2,308) Santiam CI 1977 – (440) South Fork FC 1951 – (204) Facility Date Opened – (Capacity) Primary Use: Minimum Medium Maximum All Custody Women/Intake Prior to 1990

40. Powder River CF 1989 – (316) Snake River CI 1991 – (2,948) Eastern Oregon CI 1985 – (1,767) Columbia River CI 1990 – (593) Oregon State CI 1955 – (894) Oregon State Penitentiary 1866 – (2,308) Santiam CI 1977 – (440) Mill Creek CF 1990 – (290) Shutter Creek CI 1990 – (302) South Fork FC 1951 – (204) Facility Date Opened – (Capacity) Primary Use: Minimum Medium Maximum All Custody Women/Intake Prior to 2000

41. Powder River CF 1989 – (316) Two Rivers CI 2000 – (1,802) Snake River CI 1991 – (2,948) Eastern Oregon CI 1985 – (1,767) Columbia River CI 1990 – (593) Deer Ridge CI 2007 – (1,867) Oregon State CI 1955 – (894) Oregon State Penitentiary 1866 – (2,308) Santiam CI 1977 – (440) Mill Creek CF 1990 – (290) Shutter Creek CI 1990 – (302) South Fork FC 1951 – (204) Coffee Creek CF 2001-02 – (1,759) Warner Creek CF 2005 – (436) Facility Date Opened – (Capacity) Primary Use: Minimum Medium Maximum All Custody Women/Intake Today

42. Department of State Police 2011-13 Governor’s Balanced Budget Sworn Patrol Positions

43. Poverty Rate, 1999 CLATSOP WASHINGTON MULTNOMAH COLUMBIA DOUGLAS LANE LINCOLN POLK YAMHILL TILLAMOOK MARION COOS DESCHUTES MALHEURHARNEYLAKEKLAMATH JACKSON JOSEPHINE CURRY HOOD RIVER BENTON LINN JEFFERSON CROOK WALLOWA UMATILLA MORROW GILLIAM WASCO SHERMAN WHEELER GRANT BAKER UNION > 15 % Source: U.S. Census Bureau, Census 2000 CLACKAMAS Office of Economic Analysis % of persons under poverty 10 – 15 % Less than 10 % Oregon: 11.6%

44. Poverty Rate, 2004 CLATSOP WASHINGTON MULTNOMAH COLUMBIA DOUGLAS LANE LINCOLN POLK YAMHILL TILLAMOOK MARION COOS DESCHUTES MALHEURHARNEYLAKEKLAMATH JACKSON JOSEPHINE CURRY HOOD RIVER BENTON LINN JEFFERSON CROOK WALLOWA UMATILLA MORROW GILLIAM WASCO SHERMAN WHEELER GRANT BAKER UNION > 15 % Source: U.S. Census Bureau, Data Integration Division, Small Area Estimates Branch CLACKAMAS Office of Economic Analysis % of persons under poverty 10 – 15 % Less than 10 % Oregon: 12.9%

45. Estimated Poverty Rate, 2008 CLATSOP WASHINGTON MULTNOMAH COLUMBIA DOUGLAS LANE LINCOLN POLK YAMHILL TILLAMOOK MARION COOS DESCHUTES MALHEURHARNEYLAKEKLAMATH JACKSON JOSEPHINE CURRY HOOD RIVER BENTON LINN JEFFERSON CROOK WALLOWA UMATILLA MORROW GILLIAM WASCO SHERMAN WHEELER GRANT BAKER UNION > 15 % Source: U.S. Census Bureau, Small Area Estimates Branch CLACKAMAS Office of Economic Analysis % of persons under poverty 10 – 15 % Less than 10 % Oregon: 13.5%

46. Estimated Poverty Rate, 2009 CLATSOP WASHINGTON MULTNOMAH COLUMBIA DOUGLAS LANE LINCOLN POLK YAMHILL TILLAMOOK MARION COOS DESCHUTES MALHEURHARNEYLAKEKLAMATH JACKSON JOSEPHINE CURRY HOOD RIVER BENTON LINN JEFFERSON CROOK WALLOWA UMATILLA MORROW GILLIAM WASCO SHERMAN WHEELER GRANT BAKER UNION > 15 % Source: U.S. Census Bureau, Small Area Estimates Branch CLACKAMAS Office of Economic Analysis % of persons under poverty 10 – 15 % Less than 10 % Oregon: 14.3%

47. Estimated Poverty Rate, 2010 CLATSOP WASHINGTON MULTNOMAH COLUMBIA DOUGLAS LANE LINCOLN POLK YAMHILL TILLAMOOK MARION COOS DESCHUTES MALHEURHARNEYLAKEKLAMATH JACKSON JOSEPHINE CURRY HOOD RIVER BENTON LINN JEFFERSON CROOK WALLOWA UMATILLA MORROW GILLIAM WASCO SHERMAN WHEELER GRANT BAKER UNION > 15 % Source: U.S. Census Bureau, Small Area Estimates Branch CLACKAMAS Office of Economic Analysis % of persons under poverty 10 – 15 % Less than 10 % Oregon: 15.8%

48. Estimated Poverty Rate, 2013 CLATSOP WASHINGTON MULTNOMAH COLUMBIA DOUGLAS LANE LINCOLN POLK YAMHILL TILLAMOOK MARION COOS DESCHUTES MALHEURHARNEYLAKEKLAMATH JACKSON JOSEPHINE CURRY HOOD RIVER BENTON LINN JEFFERSON CROOK WALLOWA UMATILLA MORROW GILLIAM WASCO SHERMAN WHEELER GRANT BAKER UNION 20 % and over Source: U.S. Census Bureau, Small Area Income and Poverty Estimate CLACKAMAS Office of Economic Analysis % of persons under poverty 18 - 20 % Less than 12 % Oregon: 16.5%; U.S. 15.8% 14 - 18 %

49. Temporary Assistance to Needy Families – 1969-present 1996 Federal TANF Reforms 2007 Recession 2001 Recession 1990 Recession 1981 Recession 1973 Recession 1993 Client Self- Sufficiency Plans Total Persons Total Cases

50. Oregon Health Care Uninsurance Rates: 1990-2013 Adults 18-64 Children 0-17 Sources: Oregon Population Survey, 1990-2006; American Community Survey, 2008-2013 *Please note that OPS uninsurance estimates are collected every two years and ACS data is collected annually

51. Oregon’s Budgetary Reserves (in millions)

52. Budget Framework Principles that Transcend Administrations Start with mandatory items. Implement core missions: –Focus on the essentials. –Emphasize programs with widely-distributed benefits. Target investment where it will provide the most impact in the long run: –Focus on prevention. K-12 Education should be a top priority. Reduce overhead costs. Plan for the Future

53. Other Issues General Risk Reserves/Other Fund Balances PERS/Labor Kicker Additional Lawsuits Bond Rating Annual Sessions Accountability/ oversight vs. Reduced Administration Regulatory Reform Economic Growth/Downturn Pent-up Budget Demand Potential Initiatives One-time Revenues