Schools, city await word on what next year's financial picture will look like
June 3, 2020
The Sweet Home School District, like other districts and state agencies, is bracing for big hits to its budgets next school year, while hoping that other funding streams may help it maintain its current service levels.
School officials listened last week to the state’s revenue forecast, released on May 20. Supt. Tom Yahraes said the state anticipates revenue declines of $2.7 billion in the second half of the current biennium, ending on June 30, 2021. It projects $4.3 billion less in 2021-23 and $3.3 billion less in 2023-25 as part of the economic effects of the response to the COVID-19 pandemic.
“We have a very bleak funding forecast for the next two biennium cycles,” Yahraes said.
Oregon has experienced 266,000 job losses in the past two months, and the unemployment rate increased from 3.5 percent in March to 14.2 percent now, with more than 300,000 Oregonians unemployed.
The forecast translates to a reduction of 4 percent, $308 million, in the state school fund, Yahraes said, and the Oregon Lottery is projecting a 20-percent decline in revenues, for a $428 million reduction in school funding.
That means a roughly $1.7 million shortfall for Sweet Home School District, he said. The good news is that it’s less than the $656 million hit some economists were predicting.
“With very cautious optimism, I am hopeful that by using some of the state’s reserve funds, new corporate activities tax and by our actions to furlough days this year to next year, this funding gap may be closed,” he said.
“We will be monitoring any special legislative sessions to see if legislators use any of the above mechanisms to provide relief for next year.”
The district also expects to receive $428,000 in federal CARES Act funding, the same federal action that provided $1,200 to each adult tax payer, $600 extra per week to the unemployed and relief to various businesses.
While the corporate activities tax was slated to fund expansions in school programs statewide, Yahraes said, he is hoping to be able to use Sweet Home’s share of the revenue it does generate to maintain the district’s current budget levels.
The district’s new furlough policy, which includes a four-day school week through the end of the school year and a four-day work for year-round employees through the summer, will generate $250,000 to $300,000 in savings that can be used next school year, Yahraes said.
He said the district would build various budget scenarios and adapt, depending on legislative action or inaction.
The legislature has yet to be called back into session by the governor.
“It kind of feels like the governor’s running her own show and keeping the legislature at bay,” said District 17 Rep. Sherrie Sprenger. She has heard that the legislators may meet in June.
“When you’re this far into a biennium, the only thing you can do is cut, which is terrible, and it’s about choice,” Sprenger said. As far as the state’s emergency reserve funds, the state can only access them based on triggers. “If we meet the trigger then we have a choice.”
If the legislature does not find ways to ensure its full education budget, the district has some mechanisms it can use locally to balance its budget, Yahraes said. That will include labor, which is the largest part of the budget, and deferring long-term maintenance.
“I remain hopeful that when our economy makes a comeback, it will come roaring back,” he said.
The picture is less bleak for city governments, which rely primarily on property taxes, franchise fees and direct user fees, like utility bills, for revenue. The impact to state shared revenue is mixed.
“I’m waiting for an ODOT (Oregon Department of Transportation) estimate on street funds,” said Brandon Neish, City of Sweet Home finance director. “And I anticipate a hard hit there. I reviewed the liquor, marijuana and cigarette tax distributions in their estimates, and all are up from our original estimates for this year and next.”
Liquor tax revenue projections are up by 8.5 percent from the League of Oregon Cities estimates, Neish said, and marijuana tax revenue from the state is up 10 percent from the state’s original estimates in 2019.