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How much income tax do Oregon schools get?

Oregon has a unique system in the nation for funding schools


TRIBUNE FILE PHOTO - Preschoolers at Clarendon School have a snack. Schools are where the majority of income taxes go. With income tax returns due today, you may be wondering just where all that hard-earned cash is going. For your state returns, look no further than your schools.

Oregonians have a high income tax rate. A 2015 Legislative Revenue Office report says Oregon has one of the highest personal income tax rates in the nation, averaging $1,494 per person.

Schools across the nation are funded through property taxes, and so are Oregon's. But because of our unusual property tax system, a higher percentage of our income tax dollars go to education than any other category by far.

The state famously does not have a general sales tax, but the newly implemented marijuana sales tax is also mostly expected to go to schools. There are several other revenue sources for schools, too, such as timber land payments, county taxes, lottery dollars, and more.

In Portland, we can also add in the city’s Arts Tax, the majority of which goes to schools, the local option levy and the school construction bond program.

So, of every property tax dollar in Multnomah County, 36.8 cents goes to schools, including the levy and bond measures.

But 50.6 percent of the state’s general fund (mostly from income taxes) also goes to schools. Why is this?

Every year, the Oregon Department of Education calculates how much each district should receive per child. For 2015-16, this is estimated to be $6,940. (Different needs can add “weight” to a student’s funding requirements, for example children with special needs get two weights, those who are not native English speakers get one-and-a-half, etc.)

Craig Gibons, head of Multnomah County’s Tax Supervising and Conservation Commission, says the state’s income tax collections flow in to districts via the State School Fund, adding to the property tax collections until the amount per pupil gets to the level the state says each district should receive.

Boom-bust

Oregon’s property tax structure is unusually complicated, and not all of the dollars voters have approved for schools actually make it there. This is because back in the 1990s, Measure 5 put a cap on the amount of funding schools can receive at $5 per $1,000 of assessed value. Then Measures 47 and 50 capped the amount real estate’s value can increase at 3 percent per year.

This has created a boom-bust cycle for Oregon’s schools, which are more sensitive to fluctuations in employment than most other states’ schools.

Stanford University researcher Eric Hanushek says Oregon has led the nation in the swings to its education funding and urged a longer-range strategy.

“Education is an investment,” Hanushek says. “It’s an investment in our kids and it’s an investment in our nation. If you run a start-stop program, you hurt the kids and that eventually hurts the state.”

Last year, Portland Public Schools lost 21.8 percent of its local option levy money to compression — the difference between how much is able to be assessed (under Measure 50) and the maximum schools can get (under Measure 5). It also lost almost one percent from the permanent tax rate to compression. And this was a good year for the PPS budget.

Don’t forget federal taxes. About three cents of your federal tax dollar goes to education, according to Politfact.com.


Shasta Kearns Moore
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