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Eugene's kids are in trouble.
Already pounded by a decade of property tax cut measures, the
4J School District is facing another $7 to $8.5 million hit this year.
"There's nothing that's easy to cut," says Superintendent
George Russell. "We would be looking at raising class sizes and cutting teachers."
The district may have to close schools, lay off up to 100 teachers
and slash administrative, sports and custodial funding to close the budget gap caused
by declining state and local revenues during the recession. "We have quite a
problem on our hands," says 4J Finance Director Hillary Kittleson.
"It would be a dramatic reduction," says local teachers
union President Paul Duchin. "It can translate into classes in the 40s."
But it doesn't have to be this way. The city of Eugene could step
in and save the schools.
Portland, Ashland and Lake Oswego have given their school districts
millions of dollars in the 1990s, successfully reducing the impact of Measure 5 and
47 budget cuts. Through the city's general fund or a new tax, Eugene could do the
same for its kids.
"It would be a substantial boost," says Russell.
"It would be a wonderful idea, says Duchin.
Portland
Over the past six years, the city of Portland has pumped
$37 million out of its coffers and into city schools, says the city's Education Advocate
Carol Turner. "It went to the school district into their general fund as cash."
The city funding helped avert hundreds of layoffs and a threatened
teachers' strike, Turner says. In 1998, Multnomah County voters helped by passing
a one-year business income tax that raised $12.3 million for local schools.
"We have a city that prides itself on its public schools,"
Turner says of the strong backing of city funding for education. The public and elected
officials saw the funding as a way to reduce crime by keeping kids out of trouble
and promote economic development by creating a skilled workforce.
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Substitute
teacher Natasha Ruckwardt teaches 34 students in an 8th-grade
Algebra class at Cal Young Middle School. Budget cuts could force
even bigger class sizes.
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"The public schools system is truly the lifeline
of the city. Without quality education, a city cannot create and sustain
a workforce capable of being competitive in the global workforce of
the 21st century," Portland Mayor Vera Katz said in a 1996 speech
advocating the funding.
The city used a variety of mechanisms to help the schools over
the years. The city funded athletic and after-school programs, bought surplus school
property for parks and took over funding of the school police. By reducing these
school costs, the city freed up money that the districts could spend on academics
to avoid teacher layoffs and reduce class sizes, Turner says.
This year, Portland has scaled back its assistance due to deep
city budget cuts from the recession. But in helping schools, Portland is on the cutting
edge of what cities are doing nationally. The city recently won a grant from the
National League of Cities to study ways cities can better help schools.
"Traditionally cities and schools have kind of ignored each
other," Turner says. But that's not true in Portland where the mayor and City
Council see schools as vital to the city's future.
"All the good work of the past and the dreams for tomorrow,
everything included in this budget I am presenting today, would be irrelevant if
Portland was facing a teacher's strike," Katz said in a 1996 speech. "If
our children were not in school and their parents were facing decisions to move to
another jurisdiction so their children could continue to attend school would cause
deterioration in our city faster than any other factor. This city would have lost
everything that my predecessors worked so hard for the last 20 years."
Ashland
Ashland in southern Oregon is another city that hasn't
turned it's back on its schools.
Ashland, like Eugene, didn't support 1990 Measure 5's deep cuts
in public education. Former Mayor Cathy Shaw thought citizens would support the city
stepping in to help by levying taxes it would then give to the schools. "I made
it really clear it was an end run around Measure 5," she says.
In 1993, an Ashland property tax levy for school "youth activities"
failed when people hoped a state sales tax would solve the school funding problem,
Shaw says. In 1994 the measure passed by a wide margin as school cuts deepened.
Since then, the levy has passed twice more by two-thirds margins,
says Loren Luman, business manager for the Ashland School District. "The folks
here support their schools."
The levy generates about $1.6 million per year for the schools
through a tax of $1.38 per $1,000 of assessed value, according to Luman. The city
gives the money to the schools through a contract and the money funds sports, physical
education, grounds maintenance, art, music, librarians and other things that are
not part of the state's core school requirements.
More academic subjects are helped indirectly, Luman says. "It
frees those dollars that we would otherwise be using so we can keep our class sizes
down."
The "partnership" with the city has enabled the schools
to avoid cuts by providing about 7 percent of the district's funding or about $500
per student per year, according to Luman.
"It helped us immeasurably," says Shaw, a mother of two
who served 12 years as the city's mayor. The funding helped the schools maintain
their academic standards while the state slashed funding. Crime was reduced by adding
school activities and extra-curricular activities that "save kids that are apt
to fall through the cracks," she says. Top students got the electives, foreign
languages and extracurricular activities they needed to go to college, she says.
Saving the schools was also key to Ashland's economic development
efforts to attract and retain quality jobs, Shaw says. "It really played a huge
part in the economic viability of Ashland."
Shaw says one of the first questions she got from executives considering
locating their businesses in Ashland was about the quality of the schools. "They
do not want to relocate where the community does not value public education."
Luman says he's sent out packets of information to cities around
the state, including Corvallis and Pendleton, who are considering following the Ashland
model of school funding.
Lake Oswego modeled its school levy after Ashland, says Lake Oswego
City Manager Doug Schmitz. The levy raised $1 million a year for three years before
the city levy was replaced by a local option school levy. "It worked well,"
he says. "This community takes great pride in its school system."
In the current recession, Ashland is also facing another round
of state funding cuts. But Luman doesn't sound overly worried. "We could run
another levy in May," he says.
Eugene
While Ashland was saving its schools in the 1990s, Eugene
let its kids suffer. Since 1990, 4J has lost about $18 million a year in funding
to Measures 5 and 47 tax cuts. To cover the loss, the district has increased class
size by 12 percent, cut a third of its physical education teachers and more than
half its librarians and counselors, reduced the number of periods high school students
are in class, cut electives, eliminated most school nurses, cut middle school athletics,
increased student fees, eliminated buses for high school students, cut staff training,
cut administration by 25 percent, cut vocational programs, cut remedial help for
struggling students, etc.
Now, it could happen all over again. "We have not seen a situation
like this since the passage of Measure 5 in 1990," Russell recently told the
School Board.
City officials are beginning to realize that they can and should
do something. In his State of the City Address last month, Mayor Jim Torrey called
on the city to study helping the schools. If we don't "we must look carefully
at what we're failing to do," he said.
But Eugene is still taking a go-it-slow approach on the issue and
so far hasn't made helping schools a priority. In the last two weeks, Eugene city
staff have met twice with district staff from 4J and the Bethel School District,
which faces a $1 million cut this year and likely teacher layoffs.
"I've got a bunch of other things on my plate right now,"
says Jason Heuser, city intergovernmental relations manager. Huser says he'll begin
looking into what Ashland and other cities have done next week after the state Legislature
decides just how deeply to cut schools. "Once we know how bad the problem is,
we'll start doing what we can to help."
One issue the city will have to study is that city boundaries don't
match those of 4J and Bethel. About 10 to 25 percent of 4J families and about 10
to 15 percent of Bethel families don't pay city taxes, according to school officials.
City taxes for schools could unfairly subsidize non-city residents.
Portland, with five different school districts, had a similar issue
of mismatched jurisdictions. "We would just divide it [the city money] up among
the districts by student head count," Turner says. As for subsidizing non-city
students, "nobody complained about that. It wasn't a big deal."
Eugene taxpayers already subsidize some services for non-city residents
such as city parks, pools, and the airport.
Ashland schools successfully solved the equity issue by charging
the non-city residents that make up about 20 percent of the district a fee to use
the city subsidized services, Luman says.
Using city money for schools could also raise legal questions.
Ashland and Portland were not penalized or sued by the state or others for the tactic.
The state did not reduce its school funding to the districts because of the city
funding.
Luman says Ashland was careful to not directly fund core classroom
and academic programs required by the state to avoid legal entanglement with Measure
5 limits on school taxes.
Shaw says anti-tax crusader Bill Sizemore once threatened to sue
Ashland over the funding but never followed through. Ross says she's now considering
using a new $5 monthly charge on utility bills to provide more funding to Ashland
schools. To avoid Measure 5 legal issues, the money could be funneled to a private
school foundation and then to fund academics in the schools, she says. "It's
real easy to get around this."
But that caution may have been unnecessary. Nancy Heiligman, school
finance manager for the state Department of Education, says cities can directly fund
core school programs without violating state laws or rules. "Any grant or donation
from the city, the schools could keep that and it wouldn't be equalized through the
school fund."
Under Measure 5, grant funding can legally go to reduce class size
and other academic measures, according to Heiligman. "We wouldn't distinguish
who gave the grant."
Heiligman says some cities may be limited by their charters in
funding schools. But that doesn't appear to be the case in Eugene. The Eugene city
charter offers few restrictions on how the city can help its citizens, "The
charter shall be liberally construed, to the end that the city have all powers necessary
or convenient for the conduct of its affairs."
Duchin of the teachers' union says any money from the city should
be directed first at reducing class size. "There's too many kids in the same
room," says the math teacher. "You just can't deliver the same education."
Funding Options
Eugene could save schools out of its general fund, with
a new property tax levy or with a variety of more progressive taxes.
The city's general fund is facing a deficit next year due to the
recession. The city plans to cut $375,000 from its budget next year, eliminate planned
spending increases for growth for the two following years and spend down a $2 million
reserve account to handle the expected decline in revenues.
But the city has other funding sources it could direct to schools.
Rejecting Hynix's request for a tax break on $156 million of new equipment installed
at its chip factory could generate about $3 million in tax revenue for the city over
the next five years.
The city also has several reserve accounts it could use to save
schools. A "Hynix Volatility Reserve" (created to provide a cushion if
the chip plant closes) will grow to $4 million in the next few years. A city facilities
reserve (for replacing City Hall and other offices downtown) has about $3.2 million.
If the city spent these reserves on schools, it still wouldn't
be broke. About $1.6 million a year in city revenue is tied up in a lawsuit with
Qwest over city fees for the utility using public right of way. If the city wins
as it expects, that accumulated revenue plus interest could come back to the city
by 2005.
When Portland dedicated money to its schools, there was some internal
grumbling from city managers who wanted the money to increase their own department
budgets or fund their priorities, according to Turner.
The same could happen in Eugene. City spokesperson Tom Olshanski
points out that Eugene is already trying to find funding for a new downtown fire
station and new library operations. "Really, the city's plate is full right
now," he says. "We've got programs we're focused on right here, just like
the schools are."
In Portland, internal resistance was overcome by strong political
leadership and public support, Turner says.
Portland's Mayor Katz made schools a top priority. "Imagine
what we could have done with $37 million of one-time money in terms of building the
infrastructure of this community," she said in a 1999 speech to the Portland
Chamber of Commerce. "But the most important infrastructure are our children
and our schools, and that's the commitment that we've made as a city and the City
Council."
If the city doesn't want to use its general fund, it could pass
a serial levy.
A four-year serial levy on property taxes that raised $5 million
a year would cost the average homeowner roughly $105 a year, based on the city's
experience with the recent library levy. A levy that raised $10 million per year
would cost about $210 on average.
But the city doesn't have to use a property tax. The city is studying
a variety of more progressive taxes that could partially replace property taxes and/or
increase city revenues. Most of the taxes would hit corporations and the wealthy
harder than people on low incomes.
-- A 1 percent individual income tax would raise about $43 million
a year.
-- A 10 percent surcharge on individual state income tax liability
would raise about $27 million a year.
-- A surcharge on state income taxes for those earning more than
$100,000 a year (beginning at 2 percent and increasing to 4 percent for incomes over
$500,000) would generate roughly $5 million per year.
-- A 0.1 percent tax on gross business receipts would raise about
$11 million per year.
-- A 1 percent corporate excise tax would raise about $2.14 million
a year.
-- A 10 percent surcharge on state corporate excise taxes would
raise about $1.42 million per year.
Even the more regressive property taxes would likely be supported
by Eugene voters. In 1998, 4J passed a $12.2 million bond measure with 66 percent
support. In 2000, 64 percent supported 4J's local option levy. Last year, a 4J survey
found 68 percent support for a possible $150 million bond measure to build new schools
that would cost the average homeowner $150 a year.
With such strong support for schools in Eugene, Shaw says she's
surprised the city hasn't stepped in for kids earlier. "It's a natural for Eugene."
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