Oregon is in the middle of its deepest recession in a generation. For the first time in decades, the state general fund budget is going to shrink this year.
Schools, the single largest line item in the state budget, are being asked to share the pain. This suggestion was met with the usual Capitol-step rallies, protests and lobbyists demanding that schools be held harmless from the state's economic woes.
We need our schools to succeed, which means we have to face a simple fact: the cost structure of the school system is not sustainable.
School districts in Oregon require 5 percent to 6 percent revenue increases each year just to stay even. It takes a robust economy indeed to generate enough tax revenue for the state general fund to give schools a 12 percent biannual increase. Whenever the economy turns sour, tax revenues fall, and the required 12 percent increase is out of the question. The school system falls into fiscal crisis. Every time.
Why do school district costs go up so fast? Employee compensation is roughly 85 percent of a school district's budget, and these costs are programmed to go up every year. Collective bargaining contracts lock in step raises, cost-of-living raises, raises for accumulated graduate school hours, skyrocketing health insurance premiums and uncontrollable PERS contribution increases. The only control districts have on these costs must be won at the bargaining table, where the deck is stacked against them.
During a recession when budgets shrink, the schools' hands are tied. The only way a district can reduce employee costs without permission from the union is to either shorten the school year or lay off staff - both of which reduce the quality of the product.
And that is why whenever there's a recession in Oregon, the talk turns to shortening the school year. It's about the only tool school districts have available to adjust their budgets.
When our school system lurches from crisis to crisis with every recession, it's easy to see why people think Oregon underfunds its schools.
In a recent scientific poll of 1,200 Oregonians done by the Friedman Foundation, about 70 percent of respondents thought that Oregon spends $8,000 per student or below. Only 8 percent had an accurate idea of what Oregon schools really spend: a little more than $10,000 per student.
It's a paradox: most people think we underfund schools, but most people think we spend a lot less than we actually do. When people learn about Oregon's true per-student spending, most wonder why $10,000 isn't enough.
Why indeed? It's because of the cost structure. It would be great if we could just increase school spending by the 6 percent each year that the system needs in order to avoid cuts. But it isn't realistic. At that rate of growth, it wouldn't be too long before K-12 education consumed the entire general fund budget.
Unless we are satisfied with our schools cutting school days every time the economy turns down, Oregon must start taking steps to deal with its cost structure problem. There's no better time to start than a deep recession, when budget realities can help apply the pressure necessary to overcome some of the political obstacles that would otherwise stifle the changes required.
One such step would be to encourage the growth of charter schools in Oregon, especially online charter schools that can quickly scale up and serve thousands of students. These innovative 'virtual charter schools,' such as the Oregon Connections Academy and the Oregon Virtual Academy, serve about 4,000 students in Oregon for an average cost per student just barely more than half of what the other public schools in Oregon spend.
School districts are a 19th century model of educating kids. If this deep recession gives cause to embrace 21st century reforms, the schools might be positioned to weather the next one without a crisis.
Rob Kremer is president of the Oregon Education Coalition, which advocates on behalf of charter schools. He lives in Southwest Portland.