Will Eugene throw kids a lifeline?
by Alan Pittman
With local schools floundering in deep budget cuts, will the city of Eugene throw kids a lifeline?
A grassroots group of parents and other school funding supporters is pushing the Eugene City Council to refer a temporary, $20-million local income tax for schools to the May ballot to rescue local kids.
The council voted 8-0 Jan. 24 to continue to consider referring the revenue measure for 4J and Bethel schools. But the grassroots group faces continuing opposition from conservative school funding opponents. The fate of local kids could be decided at a Feb. 14 meeting when the council has planned a final vote.
Heres a rundown of the key issues, arguments and concerns that have come up in discussions about the local school funding measure.
|On a school furlough day,ûkids protest against budget cuts.|
Class sizes and days
State law prohibits local voters from passing property tax levies to increase local school operating funding. School supporters want a city income tax to pay for reducing class sizes and school closure days.û
Budget cuts may force Bethel and 4J schools to lay off up to 100 teachers. That could boost average 4J class sizes about 25 percent and force some classrooms to pack in up to 50 students. The budget cuts could also force the districts to effectively move to a four day school week.û
South Eugene High School teacher Kyle Yamada urged the council to support the school revenue measure. Yamada said he has struggled to teach his kids how to write with 40 students crowded into his classroom. øNext year it will likely be 46," he said at a public forum. øThis is untenable."û
The 4J and Bethel teachers union has endorsed the citys effort to fund local schools.û
South Eugene Principal Randy Bernstein urged the council to refer the tax to voters. The cuts will be øextremely painful and very, very difficult for our schools to bear," he said.û
While many parents have focused on proposed neighborhood school closures, the proposed city measure doesnt appear likely to directly target those cuts. The school closures save comparatively little if any money and district officials have said they support them regardless of budget deficits because bigger schools are easier to manage and offer more student electives, they claim.û
Supporters of the school revenue measure wrote the council that the additional money will help reduce but not solve all of the budget cuts. øWe know that both school districts will still have to make cuts in facilities and personnel to balance their budgets."
Some school funding opponents have argued that the city should take at least six more months to carefully study whether or not they should give voters a chance to vote on school funding.û
But school supporters strongly argue for a May election rather than waiting until November. If the revenue measure passed in May, the school district has said it would be able to count on the money before having to make more cuts because of a budget due by state law in June.
The actual local revenue collected by the state wouldnt arrive until after income taxes were filed in April 2012, but the school district has said it could try to bridge the gap using a combination of limited reserves and/or loans in anticipation of revenue, a common practice for governments.û
Waiting for November could force another round of budget cuts that will be highly disruptive for students and teachers, according to school supporters. øSchools will take years to rebuild.ûOur most talented new teachers will leave the districts, and we will lose their contribution," the group wrote the council.
Dismantling and then rebuilding school programs will waste money, school supporters argue. They also note that ballot costs to the city for a special election in November could be about $200,000 higher than a May election.
Perhaps most importantly, delaying to November could hurt the measures chance of passage by failing to capitalize on the current uproar around school cuts. øWe have the public support right now," Hillary Johnson, a leader in the grassroots school funding group told a council subcommittee. In November, øwere not going to have the same energy for fixing this dire situation."
One outstanding issue is whether the 4J and Bethel school boards will put school construction bond measures on the May ballot that could compete with the city measure to fund school operations.
Under Oregons complicated tax system, voters can approve as much local funding as they want for school buildings, but they are severely limited in approving property taxes to actually pay for the teachers and other operating costs to keep those buildings open.û
District 4J Superintendent George Russell has said hes concerned that putting a proposed $130 million construction bond measure on the same May ballot as a school operations measure could result in one or both measures failing due to voter confusion.û
øIt would be very difficult for me to recommend a bond measure on the same ballot," Russell told the School Board last week. øIf the decision is made to put an income tax measure on the May ballot, by default that makes the decision about our bond measure, in my view."
øPutting the [construction] bond at the same time as the [city] measure will doom both," said Johnson of the school supporters group.
Delaying the school construction measure might mean that the district isnt eligible for $15 million in federal matching funds. But the district may be able to use a portion of the city income tax funding to fund $15 million in borrowing and/or may be able to borrow from reserves or the city to get some or all of the federal match.û
The group of school funding supporters have asked for the city council to refer a measure that would raise about $20 million per year for about four to six years.
The city has asked the 4J and Bethel school districts to provide figures on the amount of money needed to avoid increases in class sizes and school closure days, but the school boards have not yet discussed the issue in full.
Russell has included $10 million to $12 million in funding for 4J from the city tax in his proposed budget and about $4 million has been proposed for Bethel.û
Russell said hes concerned that asking for a large amount of money could hurt the chances the ballot measure will pass. But school supporters argue that the measure has to include enough revenue for a significant reduction in class size increases and school closure days.û
The city income tax for schools should have rates increasing with income similar to the progressive rates of the federal income tax, according to school supporters. The group suggested rates øsuch as 0.5, 1 and 1.5 percent."
The school supporters also said that the income tax should protect the poor by exempting those under øapproximately the median-income level for Eugene, i.e., in the range of $30,000 to $35,000/year."
About 45 percent of Eugene residents would pay the proposed school tax, based on state data and assuming Eugene has a similar income distribution to Lane County.
The local proposal would have a lower threshold than the $250,000 income floor for the State Measure 66 income tax increase, which passed by a 3-1 margin in Eugene last year. û
Supporters could increase the income threshold to lessen the impact of the tax on those struggling in the down economy and increase its chances of passage without losing much revenue. For example, exempting incomes below $70,000 would cut the number affected by the tax to about 20 percent while only reducing revenue by 32 percent, according to the state data.
School funding opponents have argued that school funding is not a city of Eugene problem, and that citizens should wait for a statewide solution.û
But school supporters argue that the state has been under-funding schools for decades and doesnt appear likely to act.
øWeve been cutting schools since 1993," said local state Rep. Phil Barnhart, co-chair of the House Revenue Committee. øThe state of Oregon is not going to fix this problem anytime soon," he said. øThe students we can take care of in Eugene, we should."
Newly elected Gov. John Kitzhaber hasnt proposed any concrete solution to school funding in his budget. The state Legislature is just starting to wrestle with a projected $3.5 billion budget gap this biennium and $10 billion over the decade. With the state Senate split closely between Democrats and Republicans and the two parties sharing power in an evenly split state House, gridlock appears more likely than increased school funding from the state anytime soon.
Current state law allows the city to pass an income tax to fund local schools, according to attorneys with the city and the school funding group.û
Of course, the Legislature could pass a new law forbidding the city from supporting schools. But such a vote against school funding could face strong opposition from many parents here and in other cities hoping to save their schools.
One wild card is Kitzhaber, who has called a meeting for Feb. 2 (just after EW goes to press) to discuss local school funding efforts with officials from Eugene and Lake Oswego and Portland, other cities that have considered local school funding.û
Superintendent Russell told the school board that he suspects that the governor is concerned about proposals for local funding for schools. øI dont know what he will say to us, but I can predict that he will say he does not think that is the way to go."
Eugene Mayor Kitty Piercy said two days before the meeting that she didnt know what the governor wants, but knows from past experience that øhe doesnt like local solutions for statewide problems." Piercy said Kitzhaber opposed Eugenes Toxics Right to Know Ordinance when he was last governor. øI am supportive of the governor, but I disagree with him on that."
Piercy said she supports the local school funding measure unless the governor can come up with an adequate and immediate state alternative. øIf he can come up with a solution" that prevents classroom crowding and cutting school days, Piercy said, øthen Im happy not to have to do something locally." But if not, the mayor said, øwere back where we started the conversation" about the city measure to save schools.
School supporters have proposed that Eugenes measure include a provision that the local tax would be repealed if the state somehow provided adequate funding.û
About 25 percent of 4J and Bethel students live outside city limits and their parents would not pay a city income tax for the districts schools.û
School supporters recognize that fact. øThese children are part of our broader community," they wrote the council. øIt is only sensible to improve our schools for all children who attend our schools."
To account for the non-resident issue, school supporters have proposed that the city distribute the tax to 4J and Bethel based on the number of Eugene children they serve.
Schools wont be the first service enjoyed by non-residents who dont pay city taxes. The city recently passed a street repair bond measure that taxes residents to repair streets heavily used by outside residents commuting to Eugene, a regional job center. The city has also passed property taxes for city parks, swimming pools, fire department and other services used by outside residents who dont pay city taxes.
School funding opponents have argued that school kids shouldnt get any more money because the states Public Employee Retirement System (PERS) is too costly.
But the city and local school district do not control the statewide PERS system. Nor do they control a state exemption of federal and state retirement benefits from local and state income taxes.û
øThese are practical and legal realities that lie outside of Eugenes control," local school supporters note. øWe should not let any such anomalies hold our childrens education hostage."
Barring the unlikely and expensive step of declaring bankruptcy to escape its contracts with employees, as some corporations with large pension liabilities have done, its also unclear how the state could legally force public employees to give up their retirement benefits.
Although school funding opponents have made the PERS argument to oppose taxes for kids, they have not made similar arguments to oppose taxes for street maintenance and jails, which also involve PERS.
School funding opponents have argued that the income tax will have a negative economic impact. But school supporters argue that the cost of doing nothing will have a greater economic impact.
Officials from the UO, the citys largest economic engine, the medical community, the citys second largest economic engine, and other local employers such as PaloAlto Software and Sporthill, have testified to the council that the school funding crisis is making it hard for them to recruit new employees and/or keep jobs in Eugene.û
øThe current state of our schools is making it difficult to attract a skilled workforce to our community, which has serious economic consequences," school supporters wrote.
Other economic damage includes the elimination of up to 100 teaching jobs plus administrative and support jobs, reductions in teacher pay and increased parent spending on childcare and/or lost productivity due to the many school closure days.û
Opponents of state Measure 66 argued last year that many wealthy people would leave the state after the income tax increase on the wealthy passed. But theres been little or no actual evidence of a significant number of wealthy people leaving due to the relatively small tax increase.
State law centralizes school property tax revenue and equalizes funding among school districts.û
But the state property tax laws do not apply to the proposed city income tax for schools, according to attorneys for the city and school supporters.
The Legislature could change the law to include city taxes for schools in the state equalization formula. But the Legislature did not take that action with similar city taxes for schools in the past.û
The Legislature has also backed away from equalization in recent years by allowing local option levies by school districts. The levies, based on quirks in state tax law, vary widely in how much they can raise based on how rapidly individual properties have increased in value.û
Letting the People Vote
The strongest argument that school supporters have to persuade the City Council to approve the school funding measure may be that they arent actually asking councilors to approve the tax, theyre just asking them to refer the measure and let voters decide.û
If the school funding measure gets on the ballot, will it pass? Supporters say their polling says yes, and they have already mobilized hundreds of parents and other voters to support the measure.û
øWe can figure these things out," Joy Marshall of Stand for Children said of the outstanding issues and details around the tax. øThe public gets it," she said of the positive polling. øThey will pay."
øIt is pretty heartening to see a community come together around the needs of its school children," Bethel Superintendent Colt Gill said at a council subcommittee meeting.
Passionate testimony at a council public forum last month ran 5-1 in support of the school funding proposal. Calls and emails to the city last month overwhelmed other issues and also ran 5-1 in support.û
The school revenue measure appears to have broad appeal. Bethel parent Sarah Bowman emailed the council to urge support. She wrote, øMy child lost eight school days this year because of budget cuts!" û
øWere at your back," school supporter Kirsten Haugen told the council. øWe ask you to do whats right." û û