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Published in Print: July 10, 2002, as Ore. Plan Would Mitigate School Budget Cuts

Ore. Plan Would Mitigate School Budget Cuts

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Perhaps the third time is the charm.

During its third special session of the 2002 fiscal year, in the early morning hours of June 30, the Oregon legislature approved a budget plan that may restore some school money lawmakers had earlier slashed.

The final proposal, which Gov. John Kitzhaber, a Democrat, is expected to sign, would erase an estimated $860 million shortfall from the state's $12 billion budget for fiscal 2003, which started July 1. The key measures in the final budget include delaying income-tax breaks, raising some taxes, and cutting programs.

Yet even with those changes, Oregon's budget troubles—which have forced many school districts to lay off employees and cut educational programs—are unlikely to go away. And many school administrators are still confused as to just how much education money will be available this year.

That confusion exists, in large part, because lawmakers have passed on part of the budget dilemma to voters.

On Sept. 17, Oregonians will decide whether to raise cigarette taxes from 68 cents to $1.28 a pack, which would infuse the budget with an additional $115 million in fiscal 2003, some of which would benefit schools. Voters are also set to decide whether to tap $150 million from the state's K-12 rainy-day fund to send to schools. This second proposal is a new version of Measure 13, which proposed giving schools $220 million from state lottery proceeds, but which voters rejected earlier this year.

Last year, in passing a biennial budget, lawmakers set state education aid at $2.4 billion for fiscal 2003, but revenues have since failed to meet expectations. In September, if both measures pass, the $2.4 billion figure would still be reduced by $82 million, but far less than a previously estimated reduction of $312 million, said John Marshall, the legislative director for the Oregon School Boards Association.

But the compromise budget has few if any ardent fans among legislators. Some say the proposal is a "Band-Aid" attempt to fix a chronic budget shortfall through one-time revenues and creative accounting practices. One tactic that troubles lawmakers and educators is an accounting maneuver that will give schools double their May 2003 state payment by borrowing money from the next fiscal biennium.

"It solves the immediate problem, but we are borrowing against the future," said Gene Evans, the communications director for the state department of education.

'Operating in the Dark'

As it is, educators are grimly awaiting the Sept. 17 ballot results, and bracing themselves for more budget cuts if the measures fail in the polls. Many schools have already suffered through layoffs, shortened their school years, and slashed programs and other spending to cover this fall's budget plans.

"We're operating in the dark right now," Mr. Evans said. "This is not a victory at all for schools, but that's not because of legislative action. They did the best they could."

Even if voters approve taking $150 million from an education trust fund, it's only a one-time revenue.. "It's not stable funding, and that's what schools are looking for," said Reginald McShane, the superintendent of the 900-student Amity school district and immediate past president of the Oregon Small Schools Association.

Like many school districts, Amity has laid off teachers and cut programs to cover its $6.4 million annual budget. Its elementary and middle school music programs are gone, as are one school counselor and a part-time librarian.

Mr. McShane said smaller schools are hit just as hard as the larger school districts, but in a different way. While a student in a large school district may find his chemistry class size has increased to 30 or more pupils, a student in a small system may have to wait until the following school year to take chemistry.

Some school districts, desperate for needed funds, are considering other ways to raise revenue, such as through local sales taxes or income-tax surcharges.

The Eugene School District 4J is one of them. The 18,000-student system has cut 79 full-time employees, closed an elementary school, and raised athletic and student fees because of budget constraints.

But that's still not enough, said Hillary Kittleson, Eugene 4J's finance director.

"We're just coming to the end of the line here in [budget] reductions," she said. "It's been a very, very difficult time."

Vol. 21, Issue 42, Page 31

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