REVENUE MEASURES PASSED
1997 OREGON LEGISLATURE

SCHOOL FINANCE

Submits state education lottery bond program to the voters at a November 4, 1997 special election. Allows lottery bonds to finance up to $150 million for acquisition, construction, improvement, remodeling, maintenance, or repair of school facilities. This could include land, site preparation, buildings and equipment, telecommunications equipment, computers, software and related technology, textbooks, library books, furniture and furnishings, vehicles, capital planning costs, revenue bond debt service, and reserves. Allows debt payment from Education Endowment Fund earnings, lottery proceeds, and any Legislative appropriations.

School Districts: See HB 3411.

Allows up to 65% of the Education Endowment Fund to be invested in common stocks. Increases the share of the Common School Fund allowed to be invested in common stocks from 50% to 65%.

Modifies the student count used in the State School Fund distribution formula in "overlap" areas - places where one unified K-12 district operates high schools and a different unified K-12 district operates the elementary schools. Assigns the 1.2 union high school weight for each high school student in the overlap area and the 0.9 elementary weight for each elementary student in the overlap area.

Takes effect July 1, 1997.

School Districts: Increases Education Endowment Fund earnings by about $2.3 million in 1997-99 and by higher amounts in future biennia as the fund balance increases from additional lottery deposits. Increases Common School Fund earnings about $1.5 million per year or $3 million per biennium.

Preserves 1996-97 student count calculation in the Klamath Falls overlap area. Without this bill, the merger of Klamath Falls Elementary and Klamath Falls Union High would cause the merged district to lose about 200 student weights ($900,000 per year) to the Klamath County Unit School.

Allows Columbia School District 5J to divide into two smaller K-12 districts. Sets administrative procedures for division. Option applies from July 1, 1997 to July 1, 2000.

School Districts: No direct effect. The district has not yet decided to divide. If it does, the total SSF distribution to the smaller districts should be about the same as to the undivided district. Thus other districts would not be affected. The new districts would be equalization districts because no 1996-97 base year amount would exist for a flat grant or stop loss calculation.

Distributes state school aid among K-12 schools and education service districts (ESD's). Continues a constrained equalization formula based on total state aid and local revenue for the next four years. Phases down districts above $4,800 per student. (All "per student" calculations are based on weighted and extended student counts.)

Allocates to each district the higher of (1) its equalization grant - the permanent grant in current law; (2) its flat grant, or (3) its stop-loss grant.

Sets flat grant to the district's 1996-97 allocation per student plus $50 in 1997-98 and plus $100 in 1998-99. Sets stop-loss grant in both years to the district's 1996-97 total allocation. However, in 1998-99 the flat and stop-loss guarantees are phased down by one-third of the amount the guarantee exceeds $4,800 per student. In addition, the guarantees of districts above $7,000 per student in 1996-97 phase down to $6,720 in 1997-98 and $6,079 in 1998-99.

Sets flat grant for both years to the district's 1998-99 allocation per student. Sets stop-loss grant for both years to the district's 1998-99 total allocation. Phases down guarantees by two-thirds of the amount they exceed $4,800 in 1999-00. Limits guarantees to $4,800 per student in 2000-01.

Allows Portland to fund its PERS and desegregation program costs from local revenue without including this revenue in the distribution formula. Adjusts 1996-97 base year revenue accordingly. Limits growth in excluded desegregation costs to 3% a year. Repeals desegregation cost exclusion July 1, 2005.

For two years, increases funding for Education Service Districts from 71.3% to 75% of Measure 5 losses and funds 100% of Measure 50 losses. Sets aside $1 million each year for ESD network technology and training.

Recalculates state-managed county trust forest distribution for counties in Northwest Regional ESD. Transfers calculated difference from County School Fund to school districts in the county. Sunsets recalculation on April 1, 1999.

For two years, allocates $400,000 per year from the State School Fund to the Out-of-State Disabilities Placement Education Fund. Gives grants to districts with disabled students in facilities in other states. Pays costs that exceed of twice district allocation (excluding transportation) for these students. Prorates grants if funds insufficient.

Adjusts permanent formula to treat state YCEP like an equalization school district with no transportation. Makes grant per student the target grant ($4,500) multiplied by equalization formula percentage. Makes permanent local district responsibility to educate youths in county corrections facility.

Distributes one-time classroom needs grants (see SB 5519) in 1997-98 based on prior year student count.

 Facility Grants

Creates new facility grant within State School Fund to pay startup (not construction) costs of new school facilities. Sets grant to 6% of construction cost, excluding land acquisition. Limits grants to $10 million per biennium. Delays effective date of grant until the 1999-01 biennium.

For 1997-98 only, allows districts to request an advance payment of 1998-99 estimated revenue growth and accelerates December SSF payment into November. For both years, if actual state and local revenue falls short of forecast, distributes shortfall proportionally to all districts.

Adds a preamble. Includes distribution formula factors in annual audit. Adjusts definition of resident student to prohibit switching the district counting the student each year. Allows Department of Education to create reserve when district student count estimates are less than statewide projections.

Eliminates county contribution to County School Fund beginning in 1999-00.

School Districts and ESDs: See Simulation 56 for 1997-98 district estimates for state and local revenue and comparable 1996-97 numbers.

In 1997-98 the total difference between the proposed distribution formula and full equalization formula is less than 1%. This means about 95% of the inequality that existed before passage of Measure 5 will be eliminated. In 1998-99 and later, the phasing down of high revenue districts will virtually achieve full equalization under the permanent equalization formula.

Based on a total appropriation of $4.15 billion, this bill distributes the funds as follows:

The bill also distributes $50 million in classroom need grants to school districts in 1997-98.

The Northwest ESD adjustments shift about $1 million per year to school districts in the ESD from other districts statewide.

Repealing the county contribution to the County School Fund will reduce school revenue by about $5 per year, beginning in 1999-00.

Counties: No revenue effect. Repealing the county contribution to the County School Fund will save the counties about $5 million per year in expenditures, beginning in 1999-00.

State: Decrease in 1997-99 General Fund and lottery interest earnings of up to $800,000 due to acceleration of December SSF payment.

Exempts elementary school district from requirement to merge if it operates a school more than 30 miles from the nearest union high school.

School Districts: Applies to Agness School District. If Agness does not merge with Gold Beach in May as scheduled, Agness will retain about $150,000 per year in state and local school revenue.

Repeals mandatory merger for elementary and union high school districts not yet merged.

School Districts: Applies to about 26 elementary, component elementary, and union high districts required to merge in 1997-98. If some of these districts do not merge, state and local revenue allocated by the State School Fund formula will shift from the unified district back to the districts not merging.

Allows an Education Service District (ESD) to create a county education bond district from a county in the district. Makes ESD board the bond district governing body. Requires approval by two-thirds of ESD component school districts having a majority of the students. Requires bond district boundaries to follow boundaries of school districts with offices in the county.

Allows county education bond district to issue bonds to (1) build, repair, equip, or furnish buildings, (2) remove asbestos, (3) acquire or improve property including buses and (4) refund debt. Requires voter approval of bonds. Gives county education bond district same authority as school and ESD districts in school bonding statutes.

Education Service Districts: No direct impact. ESD boards still have to designate county education bond districts and voters have to approve bond levies. The bill is designed to permit the Northwest Regional ESD to seek voter approval of bonds for the CAPITAL Center in Washington County.

Qualifies Washington, California and Nevada students who attend Oregon community colleges as Oregon residents for distribution of the Community College Support Fund.

Community Colleges: There is no distribution impact in the 1997-99 biennium because the current distribution formula uses a two-year lag in FTE count. After 1997-99 funds distributed will shift to community colleges with a higher proportion of non-resident students from these states because the non-resident enrollment cap is eliminated. The full distribution impact will be delayed by the current formula using a three year weighted average FTE.

Repeals requirement that money paid for unredeemed gift certificates reverts to the state as unclaimed property.

School Districts: Common School Fund revenue reduction of $350,000 in 1997-99 and $400,000 in 1999-01. Common School Fund revenues are invested and the earnings are distributed to districts.

Allows Tillamook Bay and Oregon Coast community college service districts to sell bonds. Applies same bonding conditions as for a community college district.

Includes community college service district in definition of community college district. Clarifies that community college district applies to community college service district in various statutes.

Community Colleges: No direct impact. Tillamook Bay and Oregon Coast bonds would require voter approval. Klamath Community College service district would still not have bonding authority.

Allows K-12 school districts to seek voter approval of a local option property tax if voters reject state education lottery bonds on November 4, 1997. (See SB 346). Sunsets local option elections January 1, 2003. Limits local option levy to $250 per weighted student. Excludes levy from local revenue in State School Fund formula up to $250 per weighted student.

School Districts: No direct impact. If the education lottery bond program is defeated, school districts must seek voter approval for a local option tax. About 77% of the districts will be limited by the difference between Measure 50 and Measure 5. The rest will be limited by the $250 per weighted student.

Implements sale of $150 million in education lottery revenue bonds if voters approve SB 346 at the November 4, 1997 special election. Distributes proceeds to K-12 school districts in 1998-99 based on prior-year weighted students. Allows proceeds to be spent on acquisition, construction, improvement, remodeling, maintenance, or repair of facilities. This could include land, site preparation, buildings and equipment, telecommunications equipment, computers, software and related technology, textbooks, library books, furniture and furnishings, vehicles, capital planning costs, revenue bond debt service, and reserves.

Requires bond sale on request of the Superintendent of Public Instruction. Limits net bond proceeds for projects to $150 million. States intent to pay debt service after 1997-99 from Education Endowment Fund earnings. Dedicates 75% of Education Endowment Fund earnings to repay bonds beginning July 30, 1999. (This changes dedication in HB3695.)

Establishes Education Lottery Bond Fund to repay debt and pay administrative costs. Credits unobligated net lottery proceeds, appropriated funds, and earnings to the fund. Requires state to continue operating lottery until debt paid.

School Districts: Raises $150 million for K-12 school projects in 1998-99 if voters approve the bond sale and the full bond authority is used.

Enacts Oregon School Bond Guaranty Act. Permits the state to guarantee general obligation bonds issued by qualified school districts, education service districts, and community colleges. Applies to bonds issued after the effective date.

Allows State Treasurer to issue qualification certificates to eligible districts valid for one year. Permits Treasurer to limit guaranteed debt per district. Allows the state to pay guaranteed indebtedness by using available state funds, borrowing from the Common School Fund, borrowing short-term, issuing state bonds, or imposing a state property tax.

Requires district to reimburse state for payments, interest, administration costs, and penalty. Repays state from district resources, state funds allocated to district education programs, district Common School Fund receipts and any other state payments to the district.

Takes effect if voters approve HJR 71.

Education Districts: Reduces property taxes due to savings on bond interest. District interest cost reductions will depend on the financial conditions of qualified districts using the guarantee and the amount of bonds guaranteed. Districts will have the state's AA bond rating. Interest savings in 1997-99 will be minor because of the November 1998 election date. Assuming an average interest rate reduction of 0.15% and $244 million of bonds guaranteed each year, savings will be about $365,000 in 1999-00 and $720,000 in 2000-01. Interest savings will grow over time as more bonds are guaranteed. Annual interest savings would be roughly $3 million in the tenth year and $4.5 million in the twentieth year.

Requires Department of Education to develop uniform budget and accounting system for K-12 schools. Requires data in system to be accessible to the public through the Internet or similar technology. Sets minimum standards for the system. Requires Department to consult with legislative staff, the Department of Administrative Services, and educational interests in developing system.

None.

Allocates Education Endowment Fund earnings.

Transfers first $3.5 million of earnings in 1997-99 to the State School Fund. Transfers any additional earnings during 1997-99 to the State Scholarship Commission for need grants. Beginning in 1999-01 transfers 75% of earnings to the State School Fund (SSF) and 25% to the State Scholarship Commission for need grants. (Note: if voters approve SB 346, HB 3411 further changes the dedication for 1999-01 and beyond.)

Repeals community foundation role in determining distribution of Education Endowment Fund earnings.

School Districts: Increase in SSF aid to schools in 1997-99 of $3.5 million. (Note: SB 5523 reduced the General Fund appropriation to the SSF by $3.5 million thus negating the revenue effect of this bill.)

In 1999-01, the 75% dedication to the SSF will increase school district revenue an estimated $10 million. This transfer will grow in the future as the Education Endowment Fund grows. (Note: If voters approve SB 346, this revenue will be used to repay school lottery bonds.)

Amends state Constitution. Permits the state to guarantee general obligation bonds issued by qualified school districts, education service districts, and community colleges. Allows the state to pay guaranteed indebtedness by using available state funds, borrowing from the Common School Fund, or issuing state bonds. Limits state bonds to one-half of one percent of state taxable property value. Repays state for any district bond payments from state funds allocated to district education programs, recoverable district funds, other designated state funds, and, if necessary, a state property tax.

Requires Legislature to enact implementing legislation (HB 3556).

Submits amendment to voters at the November, 1998 general election.

Education Districts: See HB 3556 which implements this constitutional amendment.

Makes $4,150 million in General Fund appropriations and lottery fund allocations to the State School Fund (SSF).

Appropriates $50 million from the General Fund for one-time school classroom needs in 1997-98.

Limits total SSF distribution to $2,891.1 million in 1997-98 and $2,985.9 million in 1998-99. Dedicates any excess to repaying lottery bonds if program (see SB 346) approved by voters. Repeals 1998-99 limit if lottery bonds not approved.

Designates amount needed from SSF appropriation and community college support appropriation to fully replace Measure 50 school losses. Clarifies this means schools can impose fees without a local vote.

Designates $3,317.2 million from SSF appropriation and community college support appropriation to be tax relief under the state spending limit.

Makes other education appropriations.

See HB 2192 and the appropriation summary at the end of this section.

Makes numerous education and non-education appropriations to Emergency Board, including $5 million for school security needs that was part of the final school funding budget discussions.

Reduces the 1998-99 General Fund appropriation to the State School Fund by $3.5 million. Allocates $3.5 million in Education Endowment Fund earnings to the SSF.

Establishes expenditure limit for school lottery bonds.

Makes other budget changes.

School Districts: The Department of Education must propose a distribution of the security funds and ask the Emergency Board to allocate the funds.

Allocates lottery funds.

Adjusts State School Fund (SSF) appropriations and allocations to shift $5 million from the first year (1997-98) of the biennium to the second.

Sets process for reducing lottery allocations if lottery revenue insufficient.

School Districts: The SSF shifts compensates for changes in the Measure 50 revenue estimates to preserve the year-to-year school funding level in the final school funding budget agreement. See HB 2192 and the appropriation summary at the end of this section.

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