How much is $7 billion?

Last week the Ways and Means Committee passed HB 5017, the bill to fund K-12 education for the 2015-16 and 2016-17 school years. The bill puts $7.255 billion into the State School Fund, which is distributed to school districts and makes up the majority of school funding. If, as expected, the $7.255 amount is legislatively approved by the full House and Senate, it would represent a slight increase in funding over the current service level. It would also, for the first time, return Oregon to its pre-recession level of K-12 funding.

k-12 budget

But as noted in our 2015 Progress Report, Oregon’s high school graduation rate of 69% is the second-lowest in the nation — and quite a bit away from 100% graduation by 2025, the goal set by Oregon’s 40-40-20 initiative. Although levels of funding alone aren’t determinative of school performance, how much schools receive from the state does influence how large class sizes are, how long the school year is, and other factors that contribute to student success. In other words, reaching levels of funding from before the recession is a) a relatively low bar to reach and b) probably the wrong comparison to be making.

The more important questions are, how much does a $7.255 billion K-12 allocation buy the state in terms of academic outcomes for children? And is $7.255 billion truly enough to achieve the outcomes we expect?

One way to look at the first question is to see how much money per student is flowing to school districts. After all, if school districts are receiving about the same amount of money they did 8 years ago but are serving more students, they are in effect receiving less. The Oregon Department of Education disburses money according to Weighted Average Daily Membership (ADMw), which is per pupil funding that takes into account factors like students in need of special education and the number of English Language Learners. As the below chart shows, funding per student is considerably lower than it was 25 years ago — meaning that schools have to do more with less. This recent budget won’t change that dynamic.

ADMw adjusted for inflation
What about the second question of whether $7.255 is sufficient to achieve our desired outcomes? We can approximate an answer by looking at the effort put forth by other states and seeing what level of investments in public education they have deemed necessary to achieve the outcomes they expect. Where does Oregon’s investments stand in relation to the other states? In a word: average.

The most recent comparative data from the US Census Bureau is from 2012, but the story it tells is clear — taking into account the number of students and the wealth of the state, Oregon’s state contribution to K-12 education is at or slightly below the national average. Although Oregon slid slightly in the rankings of school funding during the recession, even during the 2007-08 school year Oregon’s state contribution to K-12 education was only slightly above average at best. Explore the data below to see where Oregon compared to other states in both 2011-12 and 2007-08 in terms of state funding per pupil and as a percentage of state personal income.

So how much is $7 billion? Not as much as you would think. Although Oregon is beginning to dig itself out of the hole caused by the recession, a $7.255 billion school budget does not come close to reversing the long decline in school funding over the last 25 years and compares poorly to the effort put forth by most other states.

Note: Regional adjustment is done using the Bureau of Economic Analysis‘ Regional Price Parities data, which takes into account price differences between states.